Self Directed IRA Investing

I just finished negotiating and creating 2 new Notes for my Self Directed Roth IRA that will contribute another $591 /mo for at least the next 6 months, unless extended.   That will bring the monthly Cash Flow to $1500.   1 is a Short Term note that matures in 6 months and the other is 24 months long Mobile Home Note.   I’ll share the details below.  These are small Notes but nevertheless I think they are worth doing. 

Details of the Short Term Note for 6 months.

The property owner contacted me to borrow a total of  $15,000.  I had half in my IRA and had a friend that wanted to lend the other half.  We went to look at the property that the borrower wanted to secure the loan against.  On it he is operating a business with a monthly cash flow that will be able to make the payments on the loan he is seeking.   The property is worth between $750-1 million and less than half encumbered.  That means that the LTV is no more than 50%.    I knew the property owner from another deal I help put together.  So now I could see how he used the money he borrowed from the previous deal.  Telling me that is using the money he’s borrowing for what he says he is. 

I’ll let you figure out the Yield on this little Interest only Note but as I’ve heard others say it’s good enuf.

Note Face: $7,500   Interest rate/Yield: ????  Term: 6 months   Payment: $312.50 

Details of my New 24 month Mobile Home Note.

My favorite Mobile Home Park Manager called me last week.  She wanted to see if I would help out one of her tenant’s.  She told me that the person had a free and clear home worth about 12-15K.  Since I knew this park and where the home was located I agreed that the value was about right. 

The MH Owner wanted to borrow about 5K for various things.  I called and talked with the owner and verified that she has the desire and income to pay back the loan. 

Again the Yield is good enuf, as some folks I know say.    The Yield is greater than the interest rate becuase the borrower is borrowing $5,000 but the note is for $6,000, creating a discounted Note.

Note Face: $6,000   Interest Rate: 12%  Term: 24 mo.   Payment: $ 279.64 

Yield: 33%

 Will