Can my IRA make loans to others who want to buy real estate?
Yes. In fact, your IRA may make a loan to any person, other than a disqualified person, for any purpose. Such loans involving real estate act just like mortgages and are generally referred to as “Trust deeds” or mortgage deeds. They are secured by the deed to the property that serves as collateral for the loan if the borrower fails to meet the loan obligations. Just like the bank, the IRA lender can foreclose on the property by following the legal proceedings associated with foreclosure. Usually, there is a loan broker for such loans. Generally these loans are called “hard money” loans because they occur when the borrower fails to secure a bank loan (e.g., due to poor credit or insufficient income), and because they demand higher rates of interest (usually 8% to 15%). Many clients have experienced consistent returns of 12% on Trust deeds year after year, without ever having to foreclose. One client rolled approximately $275,000 from his pension plan to a Self-Directd IRA when he retire
Yes. In fact, your IRA may make a loan to any person, other than a disqualified person, for any purpose. Such loans involving real estate act just like mortgages and are generally referred to as “Trust deeds” or mortgage deeds. They are secured by the deed to the property that serves as collateral for the loan if the borrower fails to meet the loan obligations. Just like the bank, the IRA lender can foreclose on the property by following the legal proceedings associated with foreclosure. Usually, there is a loan broker for such loans. Generally these loans are called “hard money” loans because they occur when the borrower fails to secure a bank loan (e.g., due to poor credit or insufficient income), and because they demand higher rates of interest (usually 8% to 15%). Many clients have experienced consistent returns of 12% on Trust deeds year after year, without ever having to foreclose. One client rolled approximately $275,000 from his pension plan to a Self-Directd IRA when he retire
Yes, your IRA may lend to anyone, provided they are not a disqualified person, for any purpose. When these loans involve real estate, they act like mortgages. You will usually hear them referred to as “Trust deeds” or mortgage deeds. The deed to the property serves as collateral for the loan, and the IRA lender can foreclose on the property if the borrower defaults on the loan. Most loans usually involve a broker.
