Private Lending Through a Self-Directed IRA

Not everyone wants to be a landlord. And not everyone wants to play the market. Some investors prefer something simpler: lending money and earning interest. That’s the heart of private lending, and with a Self-Directed IRA, you can do it all inside a retirement account. It’s a way to generate income without managing properties or researching stock trends. And for the right investor, it can be a perfect fit, offering you a non-correlated asset that keeps bringing in money no matter what the markets may be doing.

How Private Lending Works When You Use a Self-Directed IRA

With a Self-Directed IRA, you can lend money to individuals or businesses, then earn interest on those loans. That interest goes back into your IRA account, where it grows tax-deferred—or tax-free, if you’re using a Roth.

You set the terms. You choose the borrower. Oftentimes, you secure the loan with collateral, such as a piece of real estate. That means if the borrower defaults, the IRA can claim the collateral to recoup losses. It’s a structured way to mitigate risk while still earning a return. Think of it as adding an additional layer of security to your retirement investments. And after all, there’s no peace of mind like knowing that you have additional security on each investment you make within a Self-Directed IRA.

Many private loans range from short-term rehab loans to longer-term notes. As long as the borrower isn’t a disqualified person (like a family member or business partner )you’re free to structure the deal in a way that works for both parties.

What Makes Private Lending So Appealing?

The big draw is passive income. Passive income is that income in which an existing asset does the work for you—you simply collect the money. In this case, it’s your IRA that’s collecting the money. You’re not fixing toilets or tracking stock charts. Once the loan is funded, you wait for the repayments to arrive. That kind of consistency can be especially appealing in retirement planning.

Private lending also gives you more predictability. Unlike market returns, which rise and fall daily, interest payments follow a set schedule. That makes it easier to plan—and easier to sleep at night.

The process is straightforward, too. Once you open and fund your Self-Directed IRA, you will find a lending opportunity that fits your comfort level. You direct the custodian to issue the loan, collect the paperwork, and handle the payments. From there, it runs like clockwork.

What to Watch Out For When Trying Private Lending

As with any investment, due diligence is key. You’ll want to research the borrower, review their track record, and understand the terms. And remember: the loan must benefit your IRA, not your personal finances.

It’s also important to work with a custodian who understands the private lending process. They’ll help keep the transaction compliant and the paperwork organized.

For investors who want income without the hassle of property management or crazy amounts of stock volatility, private lending with a Self-Directed IRA offers a compelling path forward. It’s flexible. It’s steady. And it might be just what your retirement plan needs.

Using a Different Path to Retirement

What if you didn’t have to work so hard to secure a retirement? With private lending in a Self-Directed IRA, you’re not. You’re putting your money to work. It’s your money that grows while you’re free to focus on other things, like your family, your health, and your career.

Have questions? Call TurnKey IRA today at 844-8876-IRA (472). We’ll walk you through what’s possible and help you structure a lending strategy that works for you.