Do you wish you could get into investing in notes but feel they are out of reach? Well, average people are doing just that every day. How you’re asking yourself? Most people are using a self-directed IRA to fund their investments. It works similar to a regular IRA allowing you to invest in stocks, bonds or mutual funds, but since it’s self-directed you also have the choice of investing in things that a regular custodian may not offer. Investments such as real estate, businesses, promissory notes, tax lien certificates, and more.
A self-directed IRA is self-explanatory in the manner that you direct what you would like to invest in. This isn’t a new concept. They’ve been around like regular IRA’s since 1974. But it’s not something you hear offered or promoted by traditional custodians because they only offer traditional investments such as stocks and bonds. You will never hear of a self-directed IRA being offered at you local workplace as a retirement planning option so it’s just not that widely known about other than investment circles.
This opens the door to invest in such things as real estate, secured or unsecured notes, tax liens, deeds etc. There are also some restrictions as far as what you can invest in such as anything that involves dealing with a “disqualified person” or that is perceived to be “self-serving”. An example of a disqualified person is yourself, a spouse, or a lineal descendant of yourself or your spouse. You also cannot invest in any corporation a disqualified person owns over 50% of. Nor can you buy real estate for your own personal use.
You will need to do some due diligence and research into what is or is not allowed with a self-directed IRA, since not every situation is covered in this article. But it starts with opening your eyes to new opportunities you probably didn’t know was in your reach. As well as the possibilities in partnering with other IRA investors to accomplish even more.