Highest LTV Loan for Self Directed IRA

7 Replies

I am looking to covert my IRA to a Self Directed IRA to help purchase investment properties. With the self directed IRA's the loan has to be non recourse and the highest LTV i I have been able to find is 70%/30% depending on the cash flow of the property. Is there a lender that offers a higher LTV than 70%/30% non recourse loan for Self Directed IRA's?

Thank you,

Shawn

@Shawn Casinader

No bank will offer a non-recourse loan with a higher LTV than 70% that I am aware of. This is by nature a more conservative loan due to the fact that the property is the only security.

There are some private funds, or of course you could network to attract private individuals to be lenders.

That said, one should be very careful not to over-leverage in an IRA. There is no back up plan if your property is not performing. The IRA has to make the payments.

@Shawn Casinader

I'm not sure if you would like or need a caution here, but I have seen many people get stuck with a loan against their SDIRA on a property that can become a liability.  

Performing mortgage notes are a better investment for your SDIRA as they are assets only.  

If you purchase a home and max out a loan with your SDIRA and the tenant thrashes the property, and the home sits vacant, you MUST use your SDIRA to pay for the repairs and hold costs.  What if your SDIRA runs out of funds?  You get stuck!

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@Shawn Casinader ,

Could you share where you are finding that high of a LTV and what type of property it is for? I know there is a list somewhere here on this forum that has been shared that has a list of most of the national types of non-recourse lenders.

I am working on exactly what was mentioned above - looking for alternatives such as owner financed deals that would be open to non-recourse lending, but I want to make sure that when a balloon come due in 5-10 years that I will have enough equity to easily get a loan. 

Thanks, Dan Dietz

I agree with @Darren Eady, performing loans are a great vehicle to keep things clean, earn a double digit return, and have the security of real estate with far less hassle. That is how I utilize my SD IRA.