Portfolio loan in SDIRA

[Dave Lawrence]

A wealthy childhood friend and I were talking about my SFH REI. I have 10 conforming loans on cash-flowing properties, and we're trying to come up with a win-win. He's not a RE investor, but he has about $1M in his Roth.

He's getting a bit nervous about having so much in equities, but doesn't have an appetite for becoming a landlord. As we were discussing diversification options, we started kicking around the idea of his opening up a SDIRA with a 3rd party administrator, then becoming a portfolio lender on, say, 6 of my properties. Rate would be about 6.5%, probably a 30 year am with a 10 year balloon. His loan to me would be collatoralized by the properties, and I would then have 6 new bites at the Fannie apple. I'd show him all my Sched E's, PnLs, rent rolls, etc. of course, so he could have peace of mind. He knows the general area so we wouldn't have to do appraisals (plenty of comps to suffice), probably do 75% LTV, and he's not concerned about charging me points, origination fees, etc.

What am I/we missing? Red flags? Again, this is a childhood friend, and we've trusted each other implicitly for 40+ years. If it can't be win-win, it simply won't happen. If it is win-win, what are the next steps to set something like this up? If this has been asked and answered in the forums (haven't located it yet in my query), I'm happy to be sent to a different thread. Thanks!