Need advice on investing with a self-directed IRA.

[Bradley Miller]

Currently I have a traditional IRA in my Fidelity account sitting in cash that I would like to use to invest in a cre syndication or maybe a note or debt fund... but first I would need transfer funds into a self directed IRA with a company like Equity Trust. I'm hoping others can share what kind of investments are best suited for a self directed IRA as there are many more things to consider such as UBIT. For example, there is one poster here who's business offers a note fund set up as a c-corp rather than an LLC in order to offer dividends that are more tax friendly for IRA accounts (at least that is how I interpreted it). I also spoke with a note fund that does not use leverage (which apparently is a trigger for UBIT). Any sharing of past experience in this area would be appreciated!

[Brett Synicky]

@Bradley Miller You're on the right track with your research.  Many people who choose to self direct their retirement funds choose to become a private lender and either go through brokers who pool money together and loan short term to fix and flippers as an example.  This is a generally safe way to invest since the loan is secured by real property.  Additionally you should be able to get 10-14% return.  

On the private lending there is no UBIT on SDIRA whereas @Rick Pozos is mistaken about financing not triggering UBIT. In an IRA the financed portion of the property triggers whats called UDFI (unrelated debt finance income) which triggers UBIT (unrelated business income tax).

Most of the time the syndication will issue a k1 which can also trigger ubit in both a Solo401(k) and SDIRA.   

If you have legitimate self employment activity then you may qualify for a Solo401k which has many benefits the SDIRA does not.  I encourage you to look at both since having self employment activity is not tough these days.  

As always check with your tax professional.