Private Lending

One of the most popular alternative investment options available to Self-Directed IRA holders is private lending. By utilizing a Self-Directed IRA, you can loan money to fund real estate transactions as if you were a bank, without distribution penalties.

An Alternative

If you’re like most investors right now, you’re probably tired of the stock market volatility, low (or sometimes negative) returns, and the headaches that go with these types of investments.

Many investors choose to make mortgage loans to individuals looking to purchase properties. Another opportunity is funding start-ups or other small businesses. Typically, these are hard money loans that require repayment over a specified period of time, with the interest rate determined by the amount of the loan.

Your Self-Directed IRA earns a profit based on the amount of interest you and the loanee agree upon. When loaning funds for a mortgage for either a personal or commercial property, you have the ability to secure the loan with that property. If the loan defaults, you retain ownership of the property. This can then be sold or rented to create a passive income stream. This security is one of the reasons private lending with a Self-Directed IRA has become so popular.

Private money lending, as well as a number of different investment types available to you in your Self-Directed IRA, have the ability to build real wealth within your retirement account. As with any investment opportunity, we recommend consulting an attorney for your best option.