X

Choose an account type

5 Ways to Start Lending Money From A Self Directed IRA

August 19, 2021

Method # 1: Buy existing notes.

Lending money doesn’t have to start from the beginning. A lot of clients use their IRA to buy existing notes.
In this scenario, you’re still the lender. Or, in this case, your IRA is the lender, and you can buy existing notes from financial institutions.
So, one way is buying existing performing notes, using your retirement account.

Method # 2: Buy existing notes that are non-performing.

Oftentimes, banks or financial institutions may have assets or loans that are in default. Maybe the borrower needs some rehab work done. These can be good investment opportunities.
A lot of times, banks or financial institutions with non-performing notes will offer them at a discount. In these scenarios, you – or your IRA in this case – can buy those discounted notes at pennies on the dollar.

Method # 3: Lend to companies, not just people.

Your IRA can be a lender to startup company.
Think about Microsoft back in the days when they started out of their garage, and they were looking for capital to start their business.
Maybe you found an opportunity like that, but the money you have to invest is tied up in your retirement account.
You don’t have to take the money out of the retirement account to offer a loan to a company.
Your IRA can provide that loan. And we can facilitate that a NuView Trust Company.
Oftentimes, what I’ve experienced is that you can get really creative with these types of loans.
I’ve also seen clients take their IRA and lend money to a company through a convertible note.
Convertible notes are structured where the interest or payments on a note can convert to shares in the company if they go public, or becomes very successful.

Method # 4: Lend out of your IRA by creating a note.

This is probably the most popular way clients lend out of their IRA. This is something I like to do personally with my IRA.
The creation of a note requires you to find a borrower, like a real estate investor.
They may be looking for capital to buy a house and flip it. Your IRA can be the lender on that transaction, and your loan can be secured by the property.
This is a great way to unlock your IRA money, outside of the stock market and invest in things that are tangible.
And, you can do this within your own community to local real estate investors who pay the interest back to your retirement account.
By the way, this is all tax-free or tax deferred. It’s also a great way to be socially conscious with your capital by investing in your community.
It’s just like you’re a bank. And we know very well that banks make a lot of money issuing loans to us as individuals. So, think about turning your IRA into a bank by creating notes to local real estate investors.

Method # 5: Start the asset as a real estate asset.

Let’s say your IRA purchases a home, an apartment building or a commercial property.
Oftentimes, I’ve seen that after it’s purchased, there might be a prospective buyer who wants to own that investment.
You could sell the investment to them out of your IRA, or you can sell it on terms. Seller financing is what I’m talking about.
Basically, you are turning that real estate asset into a note asset which is secured by the real estate.
That way your IRA’s investment is still tied to a tangible asset, which is the real estate.
However, now you own the note, secured by the real estate, and the new buyer pays interest payments to your IRA until the note’s paid off.

Many benefits to lending, investing in notes or creating notes in your IRA.

Most notes, if you do it right, are secured by collateral. That would be the house or the property that you’re lending against. It’s a great way to hedge in the event that the investment goes bad. You have collateral.
Another benefit is that it’s no work (or very little on your part). You just need access to deals or the real estate investors.

Stick with us for future webinars. We’ll show you where you can find access to deals. Having these types of investments provide your IRA with residual income that may come in on a monthly basis.

We like to call it “mailbox money,” where you just sit back and watch the money come in, knowing exactly what the payment’s going to be. You don’t have to check CNBC to see what it is.
You know exactly what the payment’s going to be. And, you know exactly where your money is.

You don’t have the stress of broken toilets or bad tenants. You just have big profits. If you do it right, it’s also passive. That is, you don’t have to do a lot of active work on the investment.

These are great investments for your IRA. Great investments to produce residual income back to your retirement account in a tax-free or tax deferred manner.

If this was helpful to you, make sure to stay connected with NuView Trust by doing the following:

  • Subscribe to our YouTube channel
  • Follow us on Facebook.
  • Contact us directly with questions or ideas at: [email protected]

We go live with education almost daily.

We love to provide investors the true story of what’s possible inside of an IRA, and possible inside of a 401k.

See you soon!