Private lending from a self-directed IRA, also called IRA mortgage lending or note investing, is one of the most straightforward strategies available to retirement account holders who want income without the hassle of owning property directly. At 60, with retirement approaching, the appeal is clear: consistent interest income flowing back into the IRA, secured by real estate, without tenants, maintenance calls, or property management.
The mechanics are simple. Your self-directed IRA originates or purchases a promissory note secured by a deed of trust or mortgage on a real property. The borrower, typically a real estate investor doing a fix-and-flip or a rental property buyer, makes monthly interest payments. Those payments go directly to the IRA, not to you personally. The IRA holds the note as an asset until it's paid off or you sell it.
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The Rates and Terms Involved
Private money loans to real estate investors typically carry rates between 8% and 12% annually, sometimes higher for short-term bridge loans in competitive markets. A 12-month note at 10% on a $100,000 loan generates $10,000 in interest. If that $100,000 came from a traditional IRA, the $10,000 in interest income is tax-deferred. If it came from a Roth IRA, that $10,000 is tax-free.
Securing the Loan Properly
Your IRA is the lender, which means the promissory note should be drawn up naming the IRA as the lender, not you personally. The deed of trust or mortgage securing the property should similarly name the IRA. Title insurance is a good idea on any note secured by real property, and a professional title company can confirm the property has a clean title before the IRA funds the loan. A title insurance policy costs a few hundred to a few thousand dollars depending on the loan size, and it protects the IRA from prior liens that could subordinate its position.
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Prohibited Transactions in Lending
You cannot use your IRA to lend money to yourself, your spouse, your children, your grandchildren, or certain other disqualified persons. You also cannot lend to a business you control. But lending to an unrelated real estate investor, even one you met at a local investment club, is generally permissible. The key is that the transaction must be entirely at arm's length, with commercially reasonable terms.
What Happens If the Borrower Defaults
If a borrower defaults on a note held by your IRA, the IRA forecloses on the property and takes title to the real estate. At that point, the IRA holds real property instead of a note. You're now responsible for managing or selling that property through the IRA, with the same rules that apply to direct real estate ownership: no personal use, all expenses paid by the IRA, all proceeds returned to the IRA.
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At 60, The Distribution Timeline Matters
At 60, you're already past the age at which qualified Roth IRA distributions are completely tax-free. You're also a year away from the age (59½) at which traditional IRA withdrawals incur no early withdrawal penalty. If your strategy is to use IRA note income to supplement retirement cash flow, you can begin taking distributions without penalty, though traditional IRA withdrawals will be taxed as ordinary income. Required minimum distributions from a traditional IRA begin at 73, giving you over a decade of continued compounding.
IRA Financial supports self-directed IRA accounts for private lending and note investing , with a flat-fee custodial structure that doesn't penalize you as your note portfolio grows. For a 60-year-old looking to generate consistent income inside a retirement account, IRA-held private lending is worth exploring alongside more traditional income strategies.
The combination of above-market interest rates and tax-deferred or tax-free income can make private lending through an IRA one of the more efficient income strategies available to retirees who are comfortable with real estate credit risk.
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Building Wealth Across More Than Just the Market
Building a resilient portfolio means thinking beyond a single asset or market trend. Economic cycles shift, sectors rise and fall, and no one investment performs well in every environment. That's why many investors look to diversify with platforms that provide access to real estate, fixed-income opportunities, precious metals, and even self-directed retirement accounts. By spreading exposure across multiple asset classes, it becomes easier to manage risk, capture steady returns, and create long-term wealth that isn't tied to the fortunes of just one company or industry.
Arrived
Backed by Jeff Bezos, Arrived Homes makes real estate investing accessible with a low barrier to entry. Investors can buy fractional shares of single-family rentals and vacation homes starting with as little as $100 . This allows everyday investors to diversify into real estate, collect rental income, and build long-term wealth without needing to manage properties directly.
ARK7
Residential real estate has historically provided investors with income potential and long-term appreciation, but direct ownership can be expensive and time-consuming. ARK7 enables investors to buy fractional shares of rental properties, offering access to potential rental income and real estate exposure without property management responsibilities. By lowering the barrier to entry, the platform gives investors another way to diversify beyond traditional stocks and bonds.
Doroni
Electric aviation is an emerging industry with the potential to transform personal transportation and urban mobility. Doroni is developing eVTOL aircraft designed for personal use, aiming to combine the convenience of a car with the flexibility of vertical flight. As interest in advanced air mobility grows worldwide, the company is positioning itself within a sector that could play a significant role in the future of transportation.
Immersed
Immersed is building technology for the future of work through spatial computing .Known for its AR/VR productivity platform that enables users to work across multiple virtual screens, the company has grown to more than 1.5 million users worldwide. Immersed is also developing Visor, a lightweight headset designed specifically for professional productivity, positioning the company at the intersection of remote work, extended reality (XR), and next-generation computing.
Vinovest
Fine wine and rare whiskey have historically moved independently of the stock market, making them a compelling alternative asset. Vinovest manages authenticated, insured portfolios of investment-grade wine and whiskey starting at $5,000 — sourcing, storage, and insurance all handled for you.
FarmTogether
Farmland has historically held its value through market volatility and delivered returns uncorrelated to stocks and bonds. For accredited investors, FarmTogether offers direct access to high-quality U.S. farmland starting at $15,000 — fully managed, with no landlord headaches.
EquityMultiple
For accredited investors looking beyond stocks and bonds, EquityMultiple provides access to vetted commercial real estate deals starting at $5,000 , with only ~5% of opportunities passing their due diligence process.
Fundrise
Private real estate and private credit can add income and stability to a stock-heavy portfolio. Fundrise offers access to diversified private real estate and credit strategies through an easy-to-use platform, with professionally managed portfolios designed to generate passive income and long-term growth.
American Hartford Gold
American Hartford Gold is a precious metals dealer that helps clients buy physical gold and silver coins and bars, either for direct delivery or within self-directed precious metals IRAs. The company's services include gold and silver IRAs, IRA rollovers, and home delivery of bullion, giving investors a way to use tangible metals to diversify portfolios and seek protection against inflation and market volatility.
Mode Mobile
Mode Mobile is changing the way people interact with their phones by letting users earn money from the same apps and activities they already use every day. Instead of platforms keeping all the advertising revenue, Mode Mobile shares a portion back with users who engage with content, play games, and scroll on their devices. Named one of Deloitte's fastest-growing software companies in North America, the company has built a large beta user base and is scaling a model that turns everyday smartphone usage into a potential income stream.
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This article I'm 60 and Want to Use My IRA to Lend Money to Real Estate Investors. Is That Legal? originally appeared on Benzinga.com
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