Mortgage Funding With Your Self-Directed IRA

Real estate is a proven, solid wealth generator and long-term store of value and wealth. But the current real estate bull market is getting a little long in the tooth. We’re seven years into it already. And of course, the real estate bull market could last another seven years – or we could see a correction start tomorrow. We’re already seeing a reduction in the pace of rental price growth and some tightening of cap rates, which poses some challenges for owners of a Self-Directed IRA.

Furthermore, not every Self-Directed IRA owner wants to be a fix and flipper, and not everybody wants to be a landlord.

What if there was a way to stay involved in the real estate market, enjoy an above market rate of return, and potentially provide some security against a downturn in the real estate market?

Well, there is – and thousands of Self-Directed IRA owners are already doing it: Funding mortgages with their IRAs.

Self-Directed IRA Lenders Service An Underserved Market

Here’s how it works:

Many people want money to buy houses or fund construction and renovation projects. But for whatever reason they can’t get funded by their neighborhood bank. Maybe they have credit issues, or maybe the property doesn’t fit the bank’s lending profile. Or they’re not looking for a traditional 15-30 year mortgage. They may be looking for shorter-term loans from a few months to five years.

Traditional lenders are more accustomed to underwriting based on income – and if their income is irregular or from self-employment, again, they may have difficulty with traditional financing, and turn to non-traditional funding sources, such as hard money lenders and individuals willing to lend money from their Self-Directed IRAs – and that’s where you come in.

As a Self-Directed IRA owner, you have capital that you would like to put to work earning interest. Currently, most mortgages are under 5 percent. But many people looking to fund their small real estate projects who can’t get funded via a traditional bank may be willing to pay 7 or even 10 percent for a shorter period of time in order to complete their projects and sell their real estate investments.

From there, you and the borrower can work out terms that make sense for the particular project. Is it a bridge loan to complete a major remodeling for six months? Or a larger development that will take two years to complete? They may not be able to make interest payments, but will be able to make a balloon payment when the project is complete and sold – and be willing to pay an above market interest rate in the meantime.

Meanwhile, as a lender, you can secure your downside with a combination of construction performance surety bonds and a collateral interest in the property.

The terms are up to you. Many lenders will only lend up to 50 percent of the estimated value of the collateral. More aggressive lenders may go up to 70 percent. If the borrower defaults, you have the right to foreclose on the property.

Remember to abide by the following rules that apply to Self-Directed IRAs:

You cannot lend money to yourself, a spouse, nor to your parents, grandparents, children or grand children, nor those of your spouse. You also cannot lend to any entities they control.

American IRA, LLC works with scores of successful Self-Directed IRA lenders from coast to coast. Our offices are in Charlotte and Asheville, North Carolina, but we are able to work with IRA owners from coast to coast.

For more information, call us today for a no-obligation consultation at 866-7500-IRA(472), or visit our website at

We look forward to working with you.

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