Q: Isn't real estate awfully risky?
That's like saying "Aren't knives deadly?" Well, they can be…but they can also be life-savers. As with most things, it's all in how you use the tool.
This site is not about investing in some speculative land deal over a Superfund site. Instead, we focus on making standard, bank-like loans on property. And we're not overly concerned about the repayment ability of the borrower, because the real security for each loan is in the substantial collateral of the property.
Make no mistake: Investing has risks. However, the trick is in how you choose those investments, and what kind of safety net (collateral) you build under them. That's what we're good at.
Q: If this is such a good investment, why isn't Wall Street advertising it on TV?
As we mentioned before, these are not mass-produced investments. You get to know exactly which property you are making your loan on. In contrast, Wall Street wants to raise $50 million at a whack, stuffing people into generic investments that are as mixed together as hot dog meat. They have no interest in matching up individual lenders with single properties. So they tell you real estate is not allowed in your self-directed IRA, and they steer you in the direction of their fee-bloated mutual funds.
Q: What if I want to get out of the investment earlier than I had planned?
You should only be investing an amount of money that you can leave in the investment for the term of the loan. Because the real estate borrower will be most likely using the loan to renovate a property and sell it, that process must take its course before the borrower will be repaying the loan. Therefore, unlike a money-market account, these investments are not able to be withdrawn on a moment's notice. Of course, that's one reason why you can expect far more profits than a money-market account will deliver.
Q: What are the tax consequences of these investments?
We're not your tax advisor, and we urge you to speak to one before making any investment. But in general terms, because you are a lender, you will not receive depreciation benefits. You will be receiving interest income. You may or may not be able to offset that income with some of your other investments.
Q: Do I invest in one property or several?
You make a loan on one specific property at a time. That's the beauty of this type of investment: You know exactly where your money is going. Of course, if you decide you like this form of investing, there's nothing to stop you from making multiple separate investments.
Q: Investing in only one property means I'm not diversified, right?
You should already have a diversified portfolio of investments, and should only be thinking of adding private lending to that portfolio. It will make your portfolio even more diversified. We certainly don't suggest that you put all your investable assets into one private loan (or one stock or mutual fund, for that matter!).
Q: Where do I go from here if I have questions, or just want to get started?
We're only a few mouse clicks away. Just fill out your info on the top right of this page, using our completely private confidential system.