IRA 10% Interest Return with Private Money Loans

Better Return on Investments

After the onset of the U.S. Banking Crisis in 2008, the majority of banks in the U.S. disappeared overnight. Real estate investors have had to rely heavily on private money lenders to provide hard money loans in past years. Without the availability of these non-bank loans, I truly believe the real estate market would not have seen such a rapid recovery.

Many people have started to leverage their IRAs, Self Directed IRAs, and Roth IRAs to provide these private money loans to real estate investors. While some will use their IRAs to invest in real estate themselves, others have chosen to leave the work to the expert real estate investors, while they provide the financing in the form of private money loans.

 

IRA Alternative Investments

For example, a private lender can charge 10%, interest only, on a private money loan to a real estate investor. This loan is secured by the property being used as collateral and the real estate investor makes monthly payments on the loan to the lender until the property is sold or refinanced by another lender.

If the loan goes into default, the private lender’s exposure on the loan is only 65-75% of the value of the property. (And most of the time the property is already discounted having been acquired via foreclosure or short sale). This means the private money lender can sell the property if the borrower defaults and can expect a spread of between 25-35% once the property is sold.

Using an IRA is a clever way to pull out this cash and use it to lend to savvy real estate investors on a tax-deferred basis. And with annual returns hovering around 10%, private money lenders have discovered a way to diversify their retirement portfolios and take advantage of discounted real estate sales. Call or contact California Private Money Lenders today to see how can possibly assist you in getting a better return on your IRA.

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