Over the years I have received numerous calls from stock brokers and the like asking me to look into their latest and greatest. My response has always been, "Truthfully, I don't invest in anything other than private hard money mortgages because that's my business, I've worked in hard money lending and real estate for the past 23 years and I understand it. I use my Self-Directed IRA to purchase 1st Mortgage Notes and I'm not interested in putting my money into something that is not secured by a tangible asset and I require real estate." Unless I hang up first, that's usually the end of the conversation.
No one can argue that investments such as stocks, bonds, and mutual funds have lost money for investors and in some cases have lost everything through a bankruptcy or business failure, all you end up with is a worthless piece of paper. If anything goes wrong with my investment I end up with a property that I can sell or rent out and I cannot be wiped out through a bankruptcy or business failure.
The mortgage Notes I purchase are funded through my Self-Directed IRA. Most are purchase-rehab loans for investment houses and in some cases the house may already be owned by a real estate investor and they only need the rehab money. Make sure the rehab funds are always escrowed in a fund control to be paid out in releases after inspections are made. The Notes are written for a short term, typically 13 months, just enough time to finish the repairs and cover possible ownership seasoning requirements. The borrower can then refinance to pay off the mortgage or sell to an end buyer who will pay off the mortgage.
As a licensed mortgage lender our company goes through all of the usual paperwork; we take a loan application, run the borrower's credit, verify income, have the property appraised by one of our appraisers (I also personally inspect the property), close and insure the transaction through a local title company using a full set of mortgage documents, much like a conventional lender's loan file. The most I will lend is 50% of the current appraised value so we have plenty of equity protection.
If you need more details or have a question about hard money or private money lending and using a self-directed IRA please e-mail me at Trent@Metro-Mi.com or call my office at (248) 547-3006 or my cell phone at (248) 854-0625.
Metro Mortgage Investments LLC
26789 Woodward Ave., Suite 107
Huntington Woods, MI 48070