Private money lending is possible from your self directed IRA to anyone that isn’t a “disqualified person.” Learn how to do it correctly from Quest Trust Company.
Top Ten Things You Need to Know When Investing in Real Estate Notes with Your IRA
Investing in real estate notes with your IRA is one of the most popular self-directed IRA investment options available. With it becoming more and more difficult to qualify for a loan with a traditional lender, the need for private lenders is increasing. Private lending can be a great source of passive income and is accessible to everyone. But with this popularity comes common mistakes that investors make when lending their IRA (and non-IRA) money out secured by liens on real estate. Follow these 10 tips to avoid potentially costly mistakes when choosing a real estate investment note. 1) Never loan on an investment property you wouldn’t want your IRA to own. Many passive investors loan so they do not have to deal with all of the issues of owning a property, but remember that you may end up owning this physical property if your borrower defaults. While the potential risk of loaning your IRA investments toward real estate notes is matched by the reward (I routinely see yields from these loans at 12% and higher making it an attractive investment), borrowers can default and you may be left with the property in foreclosure. If you would be upset by the potential ...
Either a Lender or a Borrower Be: Private Money Lending Out of Your IRA
Personally, I think Shakespeare had it wrong when he penned this advice in Hamlet: “Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.” Perhaps he may be forgiven for his error, however, since Shakespeare suffered from a lack of the tremendous benefits of a truly self-directed IRA. Money in self-directed IRAs can be loaned out to any person who is not a “disqualified person.” While this means that you cannot loan yourself or other related disqualified persons money from your self-directed IRA, you can loan the money to anyone else. Loans can be secured by real estate, mobile homes, equipment or anything you like. If you are really a trusting soul, you can even make a loan from your IRA unsecured (although in that case I personally would tend to support Shakespeare’s advice). First, let’s look at it from the borrower’s perspective. At our office we offer a seminar entitled “Make Money Now With Self-Directed IRAs.” One of the ways you can make money for yourself right now with your knowledge of self-directed IRAs is by creating your own “private bank.” To do this, simply share the news that ...
Tapping Into Trillions: Using Self-Directed IRAs for Private Funding
Whether you’re a first time home buyer, an experienced fix and flipper, or an expert in rentals, one aspect will be present for almost everyone: funding. Investors will always need money for deals and sometimes the traditional bank loans aren’t possible for everyone. Others just prefer the flexibility of being able to work out a deal on their own terms. There’s plenty of options available, but private lending by using self-directed IRAs has proven time and time again to be an option many investors seek out when it comes to their real estate or other alternative investments. According to a recent study from the Investment Company Institute, $28 trillion dollars were in retirement assets, and of that, $9.2 trillion dollars was reported to be in IRAs alone. With that much money available for use in IRAs, it’s nearly impossible not to be curious about how to use those funds for private funding. For lenders and borrowers alike, private loans with self-directed IRAs have provided opportunities for successful deals and have given investors the ability to have options. Whether you’re looking to borrow private funding or loan out your own, here is everything you need to consider when getting involved in a private loan! Why ...
How to Streamline Private Loans in your SDIRA with Quest Supervisor Robyn Ruston
Thank you for joining me today. I have Quest’s Dallas Office Supervisor and transaction specialist Robyn Ruston here with me today. She’s an expert when it comes to almost anything involving real estate, notes, or private entity purchases. Today, we are going to be talking about how to streamline the process for lending and borrowing when a Self-Directed IRA is involved. Sarah: If someone is interested in doing a private loan with their Self-Directed IRA, what does one even need? Whether that be making sure preliminary boxes are checked or providing forms, what is needed to make sure that funding gets taken care of? Robyn: Well, first and foremost, the IRA accounts have to have funds. Then, it depends on what type of note they want to do. So, they decide that with the borrower, what kind of note they want to do, (secured or unsecured). For instance, we’re always going to have to have a Direction of Investment Form. It doesn’t matter what kind of loan they’re going to do, they will always need the Direction of Investment. It’s our internal form that tells us, you know, where to send the money, their interest rate, maturity date. It just gives us ...
Does Your Custodian No Longer Hold Private Investments?
New custodian requirements are causing headaches for some retirement investors and are causing them to look elsewhere. Investors that have their retirement accounts at some of the common publicly traded custodians are being told that they can no longer hold private investments under certain thresholds. The biggest challenge is that these custodians are no longer holding private investment opportunities for under $1M. For investors with smaller accounts that choose to remain with these certain custodians, they will no longer have the option to put their money into private investments. Assets such as real estate, notes, and private entities could all be eliminated from the list of possible investment options. How Can a Self-Directed IRA Help? Self-directed IRAs could be the answer to the problem. With a self-directed IRA, you have the ability to diversify your investment portfolio by choosing from the broadest possible spectrum of investments, including those not traded on a stock exchange, and you’ll never have to worry about investment minimums or maximums. Self-direction means you get to make all the decisions about your financial future, and your custodian will provide account administration. Remember! Not all custodians are created equal! You can build wealth faster with the freedom to purchase almost any ...
The SVB Banking Collapse and Its Impact on Private Lenders
Silicon Valley Bank (SVB) was a regional bank that specialized in serving the tech industry, especially startups and venture capital firms. It was founded in 1983 and grew to become the 16th largest bank in the US, with $210 billion in assets at the end of 2022. However, on March 10, 2023, SVB collapsed after a bank run and a capital crisis, marking the second-largest bank failure in US history and the largest since the 2008 financial crisis. What caused the collapse of SVB? The collapse of SVB was the result of several factors that converged in a short span of time. One of them was the Federal Reserve’s aggressive interest rate hikes, which started in 2022 to combat inflation. Higher interest rates hurt the tech sector, which had benefited from low borrowing costs and high valuations during the pandemic-era boom. Higher interest rates also reduced the value of SVB’s bond portfolio, which consisted mostly of long-term Treasury and mortgage bonds that had low yields. Add on the slowdown in the tech industry’s fundraising and IPO activity, which reduced the demand for SVB’s services and deposits, it was clear to see the issues. Many startups withdrew their deposits from SVB to keep ...