Can I finance properties in my Self Directed IRA?

Can I finance properties in my Self Directed IRA?

Yes! You can use your self-directed IRA to purchase real estate with a non-recourse loan.

What Is Non-Recourse Debt?

Non-recourse debt is a type of loan secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount. This is one instance where the borrower does not have personal liability for the loan.

Because in many cases the resale value of the collateral can dip below the loan balance over the course of the loan, non-recourse debt is riskier to the lender than recourse debt.

Key Takeaways

1) Non-recourse debt is a type of loan that is secured by collateral, which is usually property.
2) Lenders charge higher interest rates on non-recourse debt to compensate for the elevated risk (i.e., the collateral's value dipping below the amount owed on the loan).
3) Non-recourse debt is characterized by high capital expenditures, long loan periods, and uncertain revenue streams.
4) Loan-to-value ratios are usually limited to 60% in non-recourse loans.

Recourse debt allows the lender to go after the borrower for any balance that remains after liquidating the collateral. For this reason, lenders charge higher interest rates on non-recourse debt to compensate for the elevated risk.


The NORTH AMERICAN SAVING'S BANK (NASB) can help you use your self-directed IRA to purchase real estate as a tax-sheltered retirement investment. https://www.nasb.com/lending/solutions/home-loans/ira-lending
Submitted by: Team Member Sara

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