By J.P. Dahdah, Founder & CEO of Vantage
When it comes to Self-Directed IRA investing, there’s always the question of where to put your money. Having lots of options gives you freedom of choice but can in turn make it more difficult to choose. But by diversifying your portfolio, you can choose a combination of investments, which suit you best.
And private lending can be a great option as part of your IRA’s Self-Directed portfolio. Investing your money in the form of credit or a loan means your IRA collects regular income from interest payments. In addition, unlike a private equity investor, who is entitled to the residual value of the company, a private lender enjoys a preference when a company is dissolved.
In fact, one of the benefits of private lending can be security. As an investor, you can compel your borrower to mortgage or pledge a property to secure the payment of the loan. The mortgage becomes an accessory contract that allows your IRA to foreclose on a property in the event of default.
Private lending provides IRA investors with steady recurring income—but only if you choose your borrowers wisely. Like any IRA’s Self-Directed investment, private lending has its own risks, such as the risk of default or the probability that the borrower will not be able to meet repayment obligations. The goal is to find companies or borrowers who have steady financials and consistent cash flow.
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or Info@VantageIRAs.com.