Hello, this is a repeat question but I provided the numbers below for the deals. I may be investing some funds with a local Flipper who is with Homevestors. He needs additional funding for mostly closing costs and some rehab. He has offered 20% return with a Promissory Note stating the 20% will be garunteed. That seems a little high from what I've heard from other investors.

Also, has anyone used a self directed irá to invest in real estate and what company did you go with?

Thanks for all the information. Below is the information on amount he is requesting / purpose of funds / date funds needed/ payoff date / and return amount. If you have any other input if really appreciate it.

$14,000.00 Finish Rehab ASAP 5/16/2019 $16,800.00

$10,000.00 Start Rehab ASAP 7/26/2019 $12,000.00

$10,000.00 Closing/loan short 3/22/2019 7/12/2019 $12,000.00

$5,000.00 Wholesale Closing 3/29/2019 6/28/2019 $6,000.00

20% might be high or it might not. It depends upon how long it takes him to finish the job and get the house sold.

You many not understand that your self directed IRA has to invest in things at arms length. If there'a problem and you need to take action against this Flipper, the legal costs will zero out your investment to nothing...and you still can owe legal fee's. This is a bad idea.

There are IRA investments in real estate. The returns vary. These are done by large firms and have a proven track record.

Using your numbers; he wants $54,000 before the end of March. He will repay you $64,800 by the end of July, that's a profit of $10,800 on your money for about 4 months of use. Based on the 4 month term that equals a 60% interest rate yearly. Your guy is nuts! I can go to my bank and get money all day long for a max of 6%. So If I borrow $54,000 for four months from my bank I will pay $810 in interest.

If you give him the $54,000, report back at the end of July when the last deal is done, and I'll bet your money will be gone, and you'll have a Promissory note that is worthless.

In the above post are the numbers and below is what I asked him and what he replied:

Me:Hi David, Im talking with a few different companies today on the self directed ira. Also, I had a few questionsb

1. Why are you offering 20% when other hard money lenders can offer a lower rate?

2. Do I have any other security such as a note /mortgage on the properties?

this is also what he just replied to me with. Does it still sound a little sketchy. Thanks for all the input and guidance:

This afternoon has been crazy just signed another purchase agreement. My plan to secure the loans would be a 2nd deed of trust for the guaranteed amount. That way it is paid out through the HUD

this is also what he just replied to me with. Does it still sound a little sketchy. Thanks for all the input and guidance:

This afternoon has been crazy just signed another purchase agreement. My plan to secure the loans would be a 2nd deed of trust for the guaranteed amount. That way it is paid out through the HUD

Here's what I counsel my husband, who runs the private lending part of our business: Write your contracts for the worst case scenario.

What happens if he doesn't make a deadline? Does interest continue to accrue? Does the interest rate go higher? Do you have a grace period? Does he have to start making monthly interest-only payments?

Also, be aware that if you're in second position (which you probably will be on most of these loans) that you can't just "take over the property". The first-position lien holder has to be satisfied first.

Your question about a self-directed IRA company has been answered twice in the other thread.

I think you're undertaking too much at once here. You need to educate yourself about SDIRAs, and you need to learn the ins and outs of private lending. Do either one of them wrong, and you could lose everything. Educate yourself, and then call the guy back.

Jason, Sounds like your gut is telling you that something is not right here. Listen to your gut. Yes, those Homevestors guys have access to funds from the company as part of their franchise agreement.