Selling notes out of your SDIRA

[Matthew Drouin]

I am trying to think of creative ways to fund my real estate deals using my self directed IRa. I know that I can make a loan to my company using my IRA and pay back interest. However, have you guys ever heard of anyone selling a note in their IRA so they can free up cash to fund another deal?

[Kevin Moen]

I am not sure I am following your thought process. Why are you involving your SD IRA? Firstly, unless your SD IRA owns those buildings, there is no way to do this legally. This is the definition of a prohibited transaction. Secondly, why would you sell a note you originated for yourself? You have to take a discount, especially for a Jr position loan, so you are immediately losing money. Why not just go to a private lender and get a 2nd position loan secured by the property? If you have over 30% equity in the properties you can find lenders to do so. I can help connect you to them. You may also look into a portfolio loan if you have equity in multiple properties, and want to effectively pull equity out.