Need advice on lending - Posted by Ken Fratt

Posted by Mike Daly (Atlanta) on July 12, 2002 at 08:39:46:

I’m pretty sure you can do this with a self-directed IRA. Try Mid Ohio Securities at

Need advice on lending - Posted by Ken Fratt

Posted by Ken Fratt on July 11, 2002 at 17:23:24:

I am considering loaning money to certain investors for them to use as down payments on properties. I would like to keep the interest I earn in a retirement account where it would be tax deferred. Do I need to open a special account to provide that money from to allow this ? Would it matter? If I need to make sure any money I provided would earn interest tax deferred, how should I label the account? If I make an original deposit into this account to loan from, is there anything I can, or need to do, to assure that it is treated like a contribution to an IRA or tax deferred retirement account? I have a sale pending and an investor waiting for a down payment so I need to know pretty quickly whether something like this would be required, necessary, or even beneficial to me, and if so, how to go about doing it the simplest way.

Basically I want to put some money into an account and treat it as a tax deferred retirement contribution, then loan the money and put all the interest and the principal when it becomes due, back into the account and keep doing this until I retire, and defer taxes on any earned interest along the way. Can this even be done? If so, how? Is there anything special I need to know?


Re: Need advice on lending - Posted by Tony-VA

Posted by Tony-VA on July 13, 2002 at 09:14:50:

The procedure you are seeking is commonly done and you have received good advice in regards to pursuing this through a Self-Directed IRA via Entrust or Mid-Ohio. Both have “How to Articles” here as well as banner links.

The one problem you may initially face is unless you are rolling over an existing IRA or 401k type plan, you will not have much money to lend.

If you do not have such a plan to rollover, then you may want to get creative. I would suggest you speak with the above mentioned IRA custodians about creating a Self-Directed Roth IRA, funding it with the max contributions for the year, then since the investor will likely need more cash than that, you can discuss how to partner with the Roth to provide the funds needed and at least put a portion of the proceeds away tax-free via the Roth.

Best Wishes,


Re: Need advice on lending - Posted by JHyre in Ohio

Posted by JHyre in Ohio on July 13, 2002 at 06:59:11:

I think Mike is correct…you should be able to do this in an IRA. The details are cheaply and efficiently dealt with via Entrust or Mid-Ohio.

John Hyre