Investing in Notes with Self-Directed Retirement Accounts

Investing in Notes with Self-Directed Retirement Accounts

A good friend and client of mine sent me a text message asking about the best note investing course available.  We exchanged a few texts as I was trying to determine what he was looking for.  After narrowing it down, I realized that some of the principles I shared with him and at NoteExpo 2018 would be good subject matter for some posts.

A self-directed retirement account is an ideal vehicle to use when investing in notes secured by real estate because of the amount of liquidity in a self-directed account and because of the ease with which notes can be titled and custodied in conjunction with the investment.  The diversity of the types of notes, the flexibility with modifying various notes, and the consistent cash flow from good performing notes allows profits to flow tax free into a self-directed retirement account.   In fact, my preferred self-directed retirement account investment is either paper or notes.  More and more of my practice is helping investors do note deals with their self-directed retirement accounts or, on occasion, helping them unscramble the omelet when a deal has gone sideways.

If you recall what I shared in previous emails about my “Roth Theorem”, this is a very good way of getting an enhanced, tax-free rate of return through the focused intensity applied to those Roth dollars.  Everything that glitters, however, is not gold.  In my next few posts, I will be sharing with you some essential due diligence elements you must do before taking any of your hard-earned, highly-protected, valuable, tax-qualified retirement dollars and using them to invest in a note or any note-related transaction.

Due diligence needs to be done in three important areas.  First, you need to do your due diligence on the seller or guru who is offering the note or asset for sale.  Second, you need to do a tremendous amount of due diligence on the asset and the underlying collateral.  Third, you need to do an appropriate level of due diligence that is requisite for it being a self-directed retirement account investment.

In my next few posts, I will talk about each of those aspects of due diligence.