Making a private loan out of SDIRA to the buyer of a property I own
Hello,
I have an interesting idea to deploy funds from my self directed IRA (SDIRA) into mortgage notes, which I determined is a good way to invest my IRA funds.
I understand that I am not allowed to lend funds from the SDIRA to myself, as I am a related party and this would be a prohibited transaction. I am also not able to have the SDIRA buy a house (or invest into a house) that I own, for the same reason.
However I am looking for advice as to whether the following transaction would be prohibited or not:
I (directly, not through my IRA) purchased a property at 65% of market value, and I am now thinking of selling it with owner financing, in order to create a mortgage note for my SDIRA. I would go and sell the property on the open market to a legitimate and unrelated third party who in turn would take a private mortgage from my SDIRA to pay for the property.
The SDIRA would not be giving me money, it would be loaning money to a legitimate 3rd party who would use these funds to purchase a property from me. But even though there is a title company and escrow account involved, the same funds that the buyer would loan from my IRA would eventually get released to me by the title company when the escrow closes.
What do you guys think about this? Has this been done before? Is it too risky and grey?
Thank you!
Jean