Using Your Self-Directed IRA LLC For Hard Money & Peer To Peer Lending

A Self-Directed IRA LLC is a great way for hard money and peer to peer lenders to generate tax deferred & tax free returns.
Most financial institutions continue to require good credit history. They also take a couple weeks to review financial statements, tax returns and business plans, which can be a problem in the real estate business. (Think of deadlines, etc.)
Because of this there is a growing need for quick financing for many individuals, small business and investors. Real estate developers and builders for their real estate projects are a massive piece of this growing population.

What is Hard Money Lending?

A hard money loan is where a lender allows a borrower to receive funds secured by real property. Hard money loans are often used in the real estate business. Interest rates vary, but are often higher than normal business loans.
Due to the limited amount of financing available to most individuals and small businesses, many hard money lenders are eager to use their IRA or 401k funds to make loans and generate tax-deferred income or gains.

What is Peer to Peer Lending?

Peer to peer lending is a method of debt financing that enables individuals (such as yourself) to borrow and lend money without the use of a financial institution as an intermediary.
Peer to peer lending removes the middleman (banks, etc.) from the process. But it also involves more time and risk than using a bank. However, the advantages include more money for investors and more control.
The average American is looking to have more control over the loan process without the high transaction fees. As a result, a growing number of peer-to-peer lenders are eager to use their IRA or 401k funds to make loans and generate tax deferred income or gains.

How To Use Your Retirement Funds To Lend

A Self-Directed IRA LLC offers you the ability to use your retirement funds to make almost any type of investment on your own without requiring the consent of any custodian or person. (Not to mention, tax benefits!)
The most notable advantage to using your Self Directed IRA LLC to make loans, whether peer to peer or hard money, is that you can make the loan by simply writing a check.
Also, all income and gains associated with a Self-Directed IRA loan would grow tax-deferred. Learn more details from our previous article on investing with your Self-Directed IRA LLC.

The Self-Directed IRA LLC Lending Advantages

With a Self-Directed IRA your funds can be used to make secured or unsecured private loans to small business owners or home builders.
Then there's also the LLC advantage, which mind you is extremely helpful, but there are a few cost associated with setting one up.
The Self-Directed IRA LLC involves the establishment of a limited liability company (LLC) which is owned by your IRA and managed by you or any third party you choose. If you want a third party to manage it, you can.
As manager of the IRA LLC, you will have total control over your IRA assets to make traditional as well as non-traditional investments, such as hard money and peer to peer loans.
If lending or making other nontraditional investments with your retirement dollars appeals to you, schedule your personal Self-Directed IRA LLC consultation today.

Last Updated: 
October 27, 2017

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

Learn How To Achieve Total Asset Protection While Growing Your Professional Network

Ready to know more than your attorney? Join our community platform where you'll get immediate FREE access to all our best educational resources for real estate investors. Including 8 Masterclasses, group mentoring replays, and much, much more.



Join thousands of real estate investors in all 50 states as they enjoy exclusive content, special promotions, and behind-the-scenes access to me and my guests. No spam, ever. Just great stuff!




Do you have asset protection questions? We can help!


© 2023 - Royal Legal Solutions