How to Make Money through Private Lending in Real Estate

private lending in real estate

By J.P. Dahdah, Founder & CEO of Vantage

Do you ever wish you could take advantage of the high yields offered by a direct investment in real estate?  Most people are unaware they can.

Since the Employee Retirement Income Security Act of 1974 (ERISA) went into effect, retirement account holders can invest in a wide variety of investments outside of traditional stocks, bonds and mutual funds, including loaning others money to purchase real estate.

More and more people are taking advantage of this investment opportunity by establishing a Self-Directed IRA.

In What Types of Real Estate Can I Invest?

Real estate property of any kind is available for private note investing. The good news is that the market is still full of properties below market value.

Is there a demand for private lending in real estate?

Absolutely! Since the real estate bubble burst and banks all over the country closed, real estate investors have been scrambling to find sources of capital. One of the fastest growing sources today is a Self-Directed IRA.

What are some of the advantages of private lending in real estate?

  • It presents an opportunity to invest in real estate without buying the property outright. You do not have to tie up a large amount of money in a single investment.
  • The lower cost of entry enables you the ability to hold debt on multiple properties.
  • Your investment is secured by the property. It is not paper. It is a real, tangible asset.
  • Shrewd investors who identify the right deals enjoy greater yields than available through other traditional investments like the stock market.
  • You can earn income by acting as a bank and earn higher interest rates than traditional lenders charge.
  • Low loan-to-value investment opportunities may provide lower risk.
  • If the borrower defaults and your IRA is forced to foreclose on the property, you may be able to take advantage of the property’s appreciation in value.
  • All income is tax-deferred (or tax-free in a Roth IRA) as long as it remains in your Self-Directed IRA.
  • Professional real estate investors do all the work. You are able to be a passive investor if you so desire.

If you are interested in broadening your retirement fund investment options, and would like to profit from private lending in real estate, consider a Self-Directed IRA.

Would you like to diversify your retirement portfolio and add holdings like real estate notes?