What would you do with $10K in a SD-IRA

[George P.]

To follow up on "What would you do with $50K in a SD-IRA" (http://www.biggerpockets.com/forums/51/topics/60324-what-would-you-do-with-5-k-in-a-sd-ira-)...
What would you do with $10K in a Self-Directed Roth IRA?? :roll:
I'd be happy with 10% return.

[Loc R.]

So a partial note purchase might look like this:

There's an existing note for:

240 months
8% interest
$60,000 face/principal balance
$501.86 payment

As an investor, you want to make 10% on your money, and you have $10,000 to invest.

So...we are solving for N (number of payments)
Y = 10%
PMT = $501.86 payment
PV = $10,000
N = 21.9

So you can either do one of 2 things:
(1) buy 22 payments, that would cost you $10,049.93
(2) get the 22 payments for $10,000 (your yield would inch up to 10.54%)

There are at least 5 ways I've seen partials structured, in terms of contracts.

The way I buy my partials is that I own the entire note, and after I get what I paid for, the note reverts back to the seller.

In the event that the payor defaults, I would take it to foreclosure. If someone buys at the auction, I would get satisfied first and then the seller of the note would get the rest. If not, I take it back and sell it. I get my portion first, and then the seller gets the rest.