Funding LLCs vs Properties/Deals

[Nghi Le]

I have a partner who invests with me (putting in both money and effort), but her money comes from her (self-directed) IRA. To fund deals, we were thinking about having the IRA hold a note against the LLC (unsecured) as opposed to the property. It seems to require a lot of extra effort and paperwork for hard money lenders to have a 2nd lien-holder on the property, whether it be an IRA or a private investor's cash, so we thought this way would just bypass that and remove some headaches. Plus, we'd only have to do a loan transaction once a year (or however long the balloon is) vs every deal.

I'm just wondering... are there any legal or tax downsides to this?

Side note:  This partner and I have been close friends since middle school, so we basically have complete trust in each other.  We just really want to invest without legal headaches.