Posted by JT-FL on November 07, 2002 at 20:13:55:
Now that’s creative! Great idea. I’ll explore this one.
Thanks again.
JT
Using Self-directed IRA’s to loan money - Posted by Jasonrei
Posted by Jasonrei on November 06, 2002 at 20:53:30:
Years ago I flipped a few seller-held real estate notes, mostly to individual investors. One (very smart) lady I flipped to used a self-directed IRA in two purchases.
Now I buy and sell houses. I have had friends and relatives loan me money to buy houses (secured by the property), but their cash on hand is limited. They have plenty in IRA’s and want to let me use some of it, too.
The lady I referred to above used MidOhio Securities as trustee(?). Anyway, now I’m looking through this site and see MidOhio’s name come up again.
I would like to have my private lenders use IRA funds to loan me money secured by real property. I know through experience one can use a self-directed IRA to buy existing notes, but can a person use IRA funds to loan money? Technically they aren’t buying any assets, it’s a loan. I suppose I could create a note and do all kinds of other fancy dancy creative stuff, but being a simple guy I would prefer a simple solution.
Any of you done this before? Of course I will be calling MidOhio in the morning.
Re: Using Self-directed IRA’s to loan money - Posted by Nate(DC)
Posted by Nate(DC) on November 06, 2002 at 23:09:59:
Yes, they can do it, as long as they are not a prohibited party (basically, your parents, children, grandparents, grandchildren, spouse). Non-lineal relatives (i.e. siblings, aunts, cousins) ARE allowed to do it. So are friends, business partners, unmarried domestic partners, etc.
NT
Re: Using Self-directed IRA’s to loan money - Posted by JT-FL
Posted by JT-FL on November 07, 2002 at 08:05:05:
Nate, is there any way a son or daughter (adults) can invest in a father’s real estate investment business (a corporation) using their self directed IRA’s? Can they be given (by the corporation) some sort of lien on a property? Is there any arrangement that could legally make this a non-prohibited transaction?
JT
Re: Using Self-directed IRA’s to loan money - Posted by Nate(DC)
Posted by Nate(DC) on November 07, 2002 at 14:33:59:
Not that I’m aware of. Why not just have the son and daughter’s IRAs buy the property directly?
NT
Re: Using Self-directed IRA’s to loan money - Posted by JT-FL
Posted by JT-FL on November 07, 2002 at 16:35:50:
What I’m specifically thinking of is the cash needed to bring pre-foreclosures current in subject-to situations. This is usually $5K - $10K. The company gets ownership through the transfer of beneficial interest in a land trust. I suppose the beneficial interst could be assigned up front. However,the paperwork needed to satisfy Mid-Ohio in this case appears to get complicated . Anyway, thanks for your thoughts.
JT
Re: Using Self-directed IRA’s to loan money - Posted by Nate(DC)
Posted by Nate(DC) on November 07, 2002 at 16:39:45:
And you also have problems with the IRAs owning a property with debt on it if they buy in directly.
Why not find someone else with IRA funds that they want to tap and do a “swap” - have son/daughter’s IRA loan that person funds, in exchange for having their IRA loan you funds?
NT