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I want to get you excited about alternative asset investing by showing you some recent examples of deals done in my self directed IRA and solo 401k. I constantly wonder why people are so “stuck” on buy stocks and bonds only and don’t even consider investing in real estate, notes, private lending, tax liens, gold and so on. I know once people see the potential returns and the relatively low risk as compared to the traditional assets they will switch into alternative assets. Let’s look at a few examples of a real estate purchase, note purchase and private lending to an investor.

Real Estate Purchase

I purchased a single family house in South Carolina and after doing cosmetic repairs, the property was rented for 9 months before the tenants purchased the property for $120,000. This resulted in an annual cash on cash return of 36%.

Purchase price: $91,000
Repairs: $5,100
Rental: $1,195/mo
Rental profit: $10,755 (9 months)
Sales price: $120,000
Sales profit: $23,900
Annual return: 36%


Mortgage Note Purchase

I purchased a first lien mortgage note on a single family property in Florida. The note was purchased for $15,900 and the monthly payment was $656/month. The property value is $48,000 which gives a low loan to value of 33%. The note has great upside potential with an UPB (unpaid principal balance) of $79,000.

Note price: $15,900
Property valve: $48,000
LTV: 33%
UPB: $79,000
Payment: $656/month
Annual return: 49%
Upside profit: $63,100

Private Lending

I met a real estate investor who wanted to buy, fix and flip a residential property. The investor had a purchase and sale agreement for $36,000 and the ARV was $79,000. The property needed about $14,000 in repairs. I agreed to lend around $29,000 (a very safe position). The loan was repaid in 6 months for a net annual return of 14%.

Property value: $79,000
Purchase price: $36,000
Loan amount: $28,800
LTV: 37%
Interest rate: 10%
Points : 2%
Term: 6 months
Annual return: 14%

I really hope that these examples and high returns inspire you to go out and think big for your retirement savings plan whether it is in a solo 401k or a Self Directed IRA.


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