Lending with a SDIRA

Lender · CA · Member since 2023 · 31 posts · 30 votes

Anyone here using a self-directed IRA to fund real estate deals or private loans? Would love to hear what your experience has been like — good, bad, or confusing.

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Brett SynickyPro Member

Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 868 posts · 489 votes

3mo

@Susanita VanGood Depending on the bank, there may not be a minimum account balance so keep only whatever you need in the checking account to cover something quick. Otherwise, you can have another IRA at a brokerage life Vanguard to invest in public assets at the same time as alt assets with the self directed. And no limit to IRA to IRA transfers so you can pretty easily move money back and forth.

There is one brokerage that will allow an IRA owned LLC to open a non-custodial brokerage account and that is TastyTrade. This way instead of doing transfers between custodians you can simply ACH money from the checking account to TastyTrade and back anytime.

Make sense?

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Steve Garthe
Real Estate Broker · Des Moines, WA · Member since 2025 · 57 posts · 21 votes
3mo
I've seen more investors exploring SDIRAs for lending opportunities recently.

Are you primarily looking at:
- First-position loans?
- Gap financing?
- Construction lending?
- Short-term bridge loans?
The structure and risk profile can vary quite a bit depending on the strategy.
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- Tammy White
  OP
  Lender · CA · Member since 2023 · 31 posts · 30 votes
  3mo
  @Steve Garthe I'm already lending with my personal funds but would like to use SDIRA as an additional means of investing. I partner with someone who structures and underwrites my deals and others in our network. Fix and flips. Only first position and clear exit strategies.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3mo
We know hundreds of people who lend with their SDIRA. whats the question at hand?
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- Tammy White
  OP
  Lender · CA · Member since 2023 · 31 posts · 30 votes
  3mo
  @Chris Seveney
  
  Here are a few questions..for starters.
  
  1. How to convert existing accounts to SDIRA
  
  2. where are the funds housed so we can manage and disperse then into investments
  
  3. what kinds of fees are involved
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- Susanita VanGood
  Member since 2018 · 21 posts · 0 votes
  3mo
  Quote from @Chris Seveney:
  
  We know hundreds of people who lend with their SDIRA. whats the question at hand?
  
  Hi Chris. I just setup a SDIRA. I was able to get a bank account where they understand and allow them (many banks won't). However, that bank account doesn't earn any interest and they don't have any accounts that do. I was hoping to open a SDIRA LLC brokerage account or a high yield savings account, but I have been rejected by Schwab, Fidelity, Interactive Brokers, NewTek Bank, and Axios Bank. Do you have any ideas on where/how I can invest when my IRA funds aren't busy/loaned? TY
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- Susanita VanGood
  Member since 2018 · 21 posts · 0 votes
  3mo
  Do you want checkbook control or are you okay with the custodian handling the transactions? It seems to me that the fees vary by custodian significantly. Some charge based on the $ of assets they manage (AUM). Some have flat fees. Some charge high transaction fees + annual fees.
  
  I found that there are only a few banks that understand and allow SDIRA LLC bank accounts, but you don't need to set it up that way.
  
  I am looking for a place to park IRA funds when they aren't used/loaned and I can't find anything. If I knew my funds would stay busy, it wouldn't be a problem. I had no idea that part of setting this up would be so difficult. I was able to setup a bank account, but it earns no interest and they offer no interest-bearing accounts.
  ____
  
  1. How to convert existing accounts to SDIRA
  
  Select a custodian and then transfer your IRA or part of your IRA to them. Then start your deals/investments. If you want checkbook control (not required), they will transfer the funds to the LLC bank account, and you direct the funds. You would need an LLC (EIN, operating agreement, articles of org, etc.).
  
  2. where are the funds housed so we can manage and disperse then into investments
  
  That varies. You can leave them at the custodian and direct them to fund your investments. I think some of them have investment arms, but Idk anything about that. With checkbook control, you direct them from the LLC bank account.
  
  3. what kinds of fees are involved
  
  That varies depending on your custodian and bank if you setup and LLC (wire fee, min balance, etc.). Most banks and custodians have their fee schedule on their websites
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Brett SynickyPro Member
Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 868 posts · 489 votes
3mo
Quote from @Tammy White:
Anyone here using a self-directed IRA to fund real estate deals or private loans? Would love to hear what your experience has been like — good, bad, or confusing.

Tons! It's not confusing per say. Same as lending personally, just somebody else's money that you're "managing". Checkbook IRA & Solo 401k are great ways to do this.
What information are you looking for?
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- Susanita VanGood
  Member since 2018 · 21 posts · 0 votes
  3mo
  Quote from @Brett Synicky:
  
  Quote from @Tammy White:
  Anyone here using a self-directed IRA to fund real estate deals or private loans? Would love to hear what your experience has been like — good, bad, or confusing.
  Tons! It's not confusing per say. Same as lending personally, just somebody else's money that you're "managing". Checkbook IRA & Solo 401k are great ways to do this.
  What information are you looking for?
  
  Hi Brett. Regarding Checkbook IRA, do you know where they keep their cash when not invested in notes/real estate? I am in the process of setting up Checkbook IRA and I am having a hard time finding any high-yield savings accounts or brokerages that will allow a checkbook IRA/Manager-Managed LLC type of account. TY!
  
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Brett SynickyPro Member
Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 868 posts · 489 votes
3mo
@Susanita VanGood Depending on the bank, there may not be a minimum account balance so keep only whatever you need in the checking account to cover something quick. Otherwise, you can have another IRA at a brokerage life Vanguard to invest in public assets at the same time as alt assets with the self directed. And no limit to IRA to IRA transfers so you can pretty easily move money back and forth.
There is one brokerage that will allow an IRA owned LLC to open a non-custodial brokerage account and that is TastyTrade. This way instead of doing transfers between custodians you can simply ACH money from the checking account to TastyTrade and back anytime.
Make sense?
1 Reply
- Susanita VanGood
  Member since 2018 · 21 posts · 0 votes
  3mo
  
  Yes, thank you so much! I will try Tasty trade. It looks like they don't have any mutual funds, but they have some liquid Treasury ETFs.
  
  I read about direct custodian-to-custodian transfers, but I didn't know how cumbersome that might be or how long they might take. Will my custodian see that as a partial liquidation? I think they charge $75 for partial liquidation + incoming/outgoing wire fees. I was planning to keep a little in my Schwab traditional IRA because I have a little bit of stock that I don't want to sell. Who is your custodian? Do you have experience with any banks? So far I found Solera and Titan Bank allow IRA owned LLC checkbook control accounts. If I do the custodian-to-custodian transfer frequently, it might be better for me to go with a different custodian. I appreciate your help.
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- Brett SynickyPro Member
  Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 868 posts · 489 votes
  3mo
  Quote from @Susanita VanGood:
  
  Yes, thank you so much! I will try Tasty trade. It looks like they don't have any mutual funds, but they have some liquid Treasury ETFs.
  
  I read about direct custodian-to-custodian transfers, but I didn't know how cumbersome that might be or how long they might take. Will my custodian see that as a partial liquidation? I think they charge $75 for partial liquidation + incoming/outgoing wire fees. I was planning to keep a little in my Schwab traditional IRA because I have a little bit of stock that I don't want to sell. Who is your custodian? Do you have experience with any banks? So far I found Solera and Titan Bank allow IRA owned LLC checkbook control accounts. If I do the custodian-to-custodian transfer frequently, it might be better for me to go with a different custodian. I appreciate your help.
  
  Solera. Not sure about partial liquidation but there will most likely be wire fees.
  
  You can open an account for the LLC anywhere you'd like that will cooperate.
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- Susanita VanGood
  Member since 2018 · 21 posts · 0 votes
  2mo
  Quote from @Brett Synicky:
  
  Have you seen issues if the LLC owned by the IRA is issued a 1099?
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Alex Boyadzhyan
Member since 2026 · 3 posts · 0 votes
2mo
Private lending's been pretty smooth once you get the payment flow down. Big thing is every payment has to go straight to your custodian, never to you personally even for a second. Almost messed that up early on when a borrower offered to just send me the payment to forward along, glad I caught it.

First position loans are the easiest to feel good about. Bridge/gap stuff pays more if you're willing to actually dig into the deal and not just the collateral. Construction loans are more work since the balance grows as you fund draws.

One tip for you, figure out servicing before you close. One note, just have payments go to the custodian and track it yourself. Once you've got a few notes going, a servicing company is worth it.
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Brett SynickyPro Member
Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 868 posts · 489 votes
2mo
@Susanita VanGood No. Keep it for your records. If the IRS comes knocking it's not difficult to show that the LLC is owned by an IRA.
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