1. Teach Your Private Lender the Best Way
to Fund Real Estate Deals
Does your private lender know how to fund real estate deals? Show him
how it’s done and make points in the process.
Most active, full-time real estate investors are interested in recruiting private lenders so
they don’t have to use their own money to fund real estate deals. These lenders are
typically not big time money moguls like Donald Trump. In fact, most of them are
everyday people with a few extra bucks they’d like to invest in the real estate industry.
Typically they’re a bit unconventional and don’t want to invest all their money in the
stock market and low return mutual funds like everyone else. They figure they’re more
interested in how their own investments are performing than a complete stranger.
A good real estate investor will want to guide their private lenders and show them how
they can make a better return on their money. They understand that the private lender
wants to take control of their investments. And one of the best ways any lender can do

2. this is through a Self-directed IRA. This kind of IRA is the perfect way not only to help
investors take control of their investments, but also to help real estate professionals get
funding for their deals.
Self-Directed IRA
The self-directed IRA is perfect for people who want to take control of their investments.
If they have a standard 401K they’ve typically got a group of mutual funds and that’s
about it. But many investors want to get beyond that. They want to be able to totally
control their investment selection. Their thinking is that they have far more interest in the
success or failure of their own investments than some guy in New York who’s running
their packaged portfolio and doesn’t have a personal stake in what happens to it.
So that’s what’s in their mind. They’re wondering how they can take control of their
investment accounts and diversify their portfolio. A lot of them want to put half of their
money in the stock market and the other half in real estate. The real estate gives them a
solid hedge against inflation and stock market downturns. And it’s something they
understand. These folks are more hands-on investors. These are the people interested
in opening up a self-directed IRA plan.
Real Estate Friendly Self-Directed IRAs
There are a few real estate focused self-directed IRA firms out there. One of the best is
the iPlan Group. They’re a firm that handles self-directed IRAs with a focus towards real
estate investment deals. Meaning they understand the real estate industry and know the
ins and outs of how rehabs, flips, wholesaling, and other kinds of real estate investment
deals work.
Key Points of Self-Directed IRAs
A Self-Directed IRA gives the account owner full control over account management and
investment selection. Here are a few points to keep in mind regarding how this kind of
IRA works.
A Self-Directed IRA can be established either by contributing personal money to a plan
or by moving current retirement funds to a company that allows the owner to self-direct
their IRA. The owner of the account can purchase almost any type of assets in their
retirement account with proper investment documentation. This allows them to invest in
what they know and understand.
Almost anyone can establish a self-directed retirement plan as long as they have a
social security number and means of funding the account.
How a Self-Directed IRA Account Works

3. 1. Establish Your Account – Fill out a new account application
2. Fund Your Account – Either from a Contribution (personal funds), a Rollover or a
Transfer
3. Find Your Investment – Real estate, note, private company, etc.
4. Fund Your Investment – Fill out an investment authorization indicating how you
want the funds sent out for your investment.
5. Provide any supporting documentation – You will need to gather and show all
your supporting investment documentation to your self-directing IRA firm.
Prohibited Investments in a Self-Directed IRA:
• Can’t invest in life insurance contracts
• Cant invest in collectables
• Works of art
• Rugs
• Antiques
• Metals
• Gems
• Stamps
• Old documents
• Coins
• Memorabilia
• Rare wines and other alcohols
• Any tangible property (like a car)
• S-corporation stock
Account Options in a Self-Directed IRA
Tax Deferred
• Traditional IRA
• SEP IRA
• Simple IRA
• Individual/Solo 401K
Tax-Free
• Roth - All real estate investors should have a Roth IRA. You can put in $5500 for
the previous year until April 15th
of the current year. So you can put $5500 in for
this year and another $5500 until April 15th
, giving you $11,000 in a Roth IRA.

4. • CESA – Coverdell Education Savings Account. You can put up to $2000 per year
into each one of these, and then use the funds to invest in anything mentioned
above.
• HSA – Health Savings Account
Roth IRA has limits on how much annual income you can earn and still be allowed to
participate. The same thing with CESA. There is no income limit for an HSA, provided
your insurance has a high deductable.
Depending on income, what is almost always available regardless of how much money
you make is the SEP IRA and the 401K. The traditional IRA has limits of how much you
can contribute. SEP IRA eligibility is based on how much income you have from
Schedule C income. It’s 25% of your income up to $52,000.
The Individual/Solo 401K is for people who are self-employed and have no employees
and they have W-2 income from working in their business and they’re also going to
have self-employment income from running the company. So they might make, say,
$500k a year in total income, and say $200k was paid as salary and $300k was profit at
the end of the year, after all expenses. That way you can contribute some as the
employee, the W-2, and some as the employer as well. When you start adding
employees you’re In the end, the private lenders you work with should be educated
about the not eligible for the Solo 401K.
opportunities of Self-Direction, and about your particular offers and what they can invest
in with you. Before you talk to them about your deal, talk to them first about why they
should self-direct in general. Once you’ve shown them how it all works and the benefits
they can enjoy, they’ll be ready to invest with you on your next deal.