Question about Using Roth IRAs as claimed by Eddie Speed

[Alin Toncz]

Can anyone tell or explain to me how can you use a ROTH IRA to buy notes? I was watching Eddie Speed video and he said something to the effect that he used $100 to open up a ROTH IRA and used that account to buy a $70,000 note. The answer might be a bit extensive but if someone can explain it in a summary, I'd appreciate it.

Thans a lot... 

[Pari Thiagasundaram]

The minimum investment per IRA to do something like this is $100. To keep it simple, you purchase a note (lets say for simplicity sake) at $100K.

https://www.dropbox.com/s/xnezovfk76mqwts/note-par...

Using the above partial calculator, for C3 put 100K, for 180 months at 11% interest rate. (Lets assume this is the note that you had purchased). 

Lets say you find an investor who can invest $99,900 and you agree to give him an interest rate of 8%. If you look at the excel sheet, he will be paid off in 133 months. 134th payment until 180 is all yours.

Click the "Graph" tab to look at the amortization schedule. 

Now, if the buyer pays off early or he refinances the loan at month # 72. (Just an assumption here). The pay off amount would be little less than ~78K. Your investor gets paid ~60K and you get ~18K. 

An investment of $100, got you approx 18K.