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Creative Private Lending using you Self Directed IRA

In private lending, normal rules don’t work. And in fact, there is nothing normal in private lending; it is the entire ‘story’ that matters.

When making a decision about a private money loan, it is necessary to gather as much information as possible. The lender and borrow must be creative; not a robot or a decision machine like a traditional bank lending committee. There is no lender matrix in private lending and borrowing.

The human creative and analytical process is powerful in private lending; the direct opposite of the black and white world of the traditional banking world.

The niche private lending is providing is that creative process and, for you as the lender, make a yield, tax free in a Self Direct IRA.

The point is that you need to think about private money in a different way especially the  profit potential of being a lender using your Self Direct IRA. Be a good listener and understand your worse case exit strategy

For example: I was recently approached by a homeowner needing a second mortgage on their home – owner occupied. Most investors would not take a first look at the deal because it was second mortgage. Well, as you can guess, I did do the deal, along with a small group of investors. The CLTV (combined loan to value) was so low, the underlining loan’s terms were excellent and the home would have been easy to see if we did foreclose, I (and the other investors) felt very comfortable. Actually, without sounding harsh, I would have loved to foreclosed on the home and sell it on a ‘wrap mortgage’. We would have made a ton.

So, again, when making a private loan, look at the entire deal and plan for a conservative exit.

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