Options and Opportunity–Individual Retirement Accounts for Private Lenders

Many people think that an individual retirement account can only be used to buy investments such as stocks and mutual funds. Wrong! When individual retirement accounts were initially introduced, the only companies that provided them were large brokerage firms that sold just stocks and mutual funds. When you chose to open an IRA with them , they offered you a variety of investment options to choose from. The part they neglected to disclose was that all the options given to you were investments that they sold and would make commissions on. They left out all the other things that you are allowed to invest your retirement dollars in because they didn’t handle them and would not make any fees on that type of investments.

Enter the Self-Directed IRA. The IRS has set forth guidelines on what you can and cannot invest in with your IRA. You would be shocked at the variety of options available to investors . From gold bullion, to tax liens, to real estate investments and real estate notes, IRA’s are much more powerful than many of us ever realized. Bring to that the power of a Roth IRA, which allows you to enjoy your earnings tax-free, and you’ve got a fast road to retirement.

Many of the private money lenders you talk with will have funds in an IRA account, but a portion of them may not be aware that they can invest those funds, via a self-directed IRA, in real estate Notes that are fully secured by a Deed of Trust or Mortgage, and are also insured. Imagine having a fixed, secured, insured, tax-free gain of 10% to 15% or more annually, then compounded over the next couple of years! That’s a beautiful blend of safe, secure investments, with the high yields usually found only in very aggressive and high-risk investments.

Most people’s IRA accounts have felt a big decline in recent times which has forced them to either monitor their account statements with apprehension , or even transfer their funds to a money market account within their IRA yielding a mere 1% interest. The return and security that you can offer these investors right now will outshine any options they’ve been shown lately , so recruiting new lenders for your business will be far easier than you think .

Most of your new private lenders will have IRA accounts, but not with a custodian that allows for self-directed investments. The new lender will need to roll their current IRA account (or 401k from a previous employer) into a new account with a custodian that offers a self-directed IRA. As the company losing the account will try to do anything they can to retain the business, the transfer process could take as little as a week, or as long as 1-2 months.

Once you’ve found a lender that has an individual retirement account and wants to invest the funds with you, get them started with the account transfer processimmediately . Since the funds could take a while to become available in their account, you won’t be able to rely on their funds until the transfer is complete .

Talk to some self-directed IRA custodians yourself, review their websites, and learn about their paperwork and procedures in advance . Your ability to help your lenders through the application and transfer process will increase their confidence in you and confirms your professionalism and commitment to recognizing their needs.

There are a number of IRA custodians that offer self-directed options. Look for one that specializes in real estate notes to ensure that your transaction structures appear familiar to the custodian company and your deals close smoothly.