Private Lending with Your IRA: Protecting Your Money & Structuring Deals


Description

In this fifth session, we’re diving into one of my favorite strategies — private lending inside your IRA. If you don’t want to own property but still want your money working hard, this is a powerful option. I’ll show you how to think like a mini-bank, structure safe loans, and protect your IRA with the right documents and team. You’ll also learn what to look for in a borrower, how to use draw schedules, and why your paperwork needs to look professional. By the end of this lesson, you’ll know exactly how to lend money from your IRA, protect it with hard assets, and create predictable, tax-free returns for life.


Key Takeaways

  • Lenders’ benefits: safety, security, predictable returns, and hard assets backing your investment.

  • Borrowers’ benefits: quick closings, less hassle, fewer bank requirements, and more flexible terms.

  • Always think like a mini-bank — plan for worst-case scenarios.

  • Protect your IRA by keeping equity high, using draw schedules with escrow, and never letting borrowers walk away with all the cash upfront.

  • Essential documents: appraisal, promissory note, mortgage/deed of trust, lender’s title insurance, hazard insurance, assignment of rents.

  • Professional documents should always be prepared by an attorney or title company — not by you.

  • Consider additional safeguards like keyman life insurance, deed in lieu of foreclosure, confession of judgment, and personal guarantees.

  • Borrowers should pay all closing costs, attorney/title fees, appraisal, and custodian fees — just like a bank would require.

  • Protect your reputation and deals by making your packages professional — it builds long-term trust and repeat lending relationships.

  • Avoid unsecured loans — always tie your money to a hard asset.


Action Steps / Exercises

  1. Create a Lender’s Checklist: Appraisal, promissory note, mortgage/deed of trust, title insurance, hazard insurance, assignment of rents.

  2. Practice a Draw Schedule: Write out a 3-step rehab funding plan where money is released only after specific work is complete.

  3. Draft Loan Terms: On a single sheet, bullet-point interest rate, payments, loan-to-value, term length, and security.

  4. Role Play Both Sides: Write down the benefits for a lender and borrower to see how it’s a win-win deal.

  5. Team Builder: List the professionals you need on your lending team (attorney, title company, CPA, contractor, realtor, etc.).