Using SDIRA for private lending

[David Espana]

I have set up a self-directed IRA account for my real estate investments. I have been approached by an investor/developer to lend second or third position on his projects (which is allowed by my SDIRA custodian as long as there is a Promissory Note and Deed of Trust). He offers 10% interest on private money with the loan & interest being payable in one lump sum upon the sale of the rehabbed property. My thinking is that 10% is a little low due to second or third position loans being riskier than first position loans. I believe that 12% or higher is more realistic for second or third positions. Any thoughts on what is a realistic rate range for these loan positions would be greatly appreciated. Also any general advise on this topic (private lending) is also welcome.