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Tips for Buying Real Estate Notes in Your Self Directed IRA





I can tell you from experience that retirement seems to come faster than you anticipate. The time to begin to prepare for retirement is when you are young and many years before you retire. A self directed individual retirement account can be a wonderful vehicle to build retirement through the years and real estate notes are a perfect asset type for a self directed IRA. Today, I want to share with you some tips for buying real estate notes in your self directed IRA:


1. Set up your self directed IRA before you buy a note- Whether you are moving funds into a self directed IRA or you are just getting started with funding your retirement, it can take some time to set up a self directed IRA. Get your self directed IRA set up long before you even consider purchasing real estate notes.

2. Make sure you understand the process of investing with your self directed IRA- Each IRA custodian has a little bit different process of investing funds from your self directed IRA. In addition, there are some important procedures they must take with you as your custodian to make sure you follow IRS guidelines.

3. Remember, the IRA custodian cannot give you investment advice- Your IRA custodian cannot give you investment advice. They cannot tell you if it is a wise investment or not. Therefore, get help if necessary from someone else!

4. Know your note type- What that means is that you need to know if you want to invest in performing notes or non-performing notes, first position notes or second position notes. Each type has advantages and disadvantages. Talk to an experienced note investor if necessary to discover what type seems best for you now at this point in your life.

5. Check out the property- Make sure you check out the real estate for the real estate note. While it is not important that it be a property you would live in, is it a property in good condition. Are the tenants and/or owners looking after the property? Is the neighborhood a safe place? Do folks show pride in ownership of the property?

6. What kind of skin in the game does the borrower have?- What is the investment to value of the property? Did the borrower put down a good down payment? Is the property appreciating in value?

7. Due diligience: Trust and verify- As Ronald Reagan famously once said, trust and verify. Check out the payment history, paperwork, and such. Check it out and re-check it!

8. Get help from others- If you are like most note buyers, you might need some help to verify things. Get help if needed to do a property inspection… BPO… title report. Better to spend a little money now than to realize it really was not you thought it was.

9. Do your due diligence before you sign the purchase agreement- Check things out before you sign the paperwork. Note sellers do not like you to back out after you sign the paperwork. That can affect your reputation and future note purchases.

10. Once you buy, get ready to wait- It takes time even once your note purchase. While you might get keys to your house once you purchase it, it takes time for the collateral files to be sent out and time for you to receive your first payment. It is not unusual for it to take 4 to 6 weeks. Be patient, and follow up as necessary.


Best wishes in all your real estate pursuits.- Randy Wall

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