PRIVATE LENDER'S SELF DIRECTED IRA..NEED SOME CLARITY HERE..

[Jorge Caicedo]

Ok, I've read that many private lenders lend out of their self directed IRA's to investor's for a return on their money..However I came across this article and now I'm totally confused..Self Directed IRA companies say one thing this article says another...Please click on the link below to view and if anyone can help, it'd be much appreciated..Thank you

http://www.figuide.com/why-you-shouldnt-invest-your-self-directed-ira-in-real-estate.html

[Jon Holdman]

1) Returns on rentals are often best with leverage. Its hard to get leverage inside an IRA. If you purchase with cash, you're reducing your returns.

2) If you do find a lender (they do exist) it will be at a low LTV and a high rate. And you'll pay UBIT on the debt financed fraction.

3) That "debt financed fraction" can actually increase over time as your basis is reduced by depreciation. At best it decreases slowly until you get quite far along with paying off the loan.

4) You can't work on the property. So the least little thing requires hiring someone to do the work. Some investors work this way, but not all. But with a property in an IRA, you have no choice.

5) When you do hire someone you have to get them a check. With most custodians you have to request a check. So you have to find a contractor who's willing to wait to get the payment. And that check request often involves a fee.

I think making loans out of an IRA is a much, much better choice. No UBIT. No issue with "doing work". At most a single check request then one sent back in when its paid off. Perhaps monthly payments.