by Jeff Dixon, Business Development Manager

Becoming a hard money lender is one way to grow your IRA.  Promissory Notes, both secured and unsecured, are extremely popular with investors as an option for their IRA.  Investing in Promissory Notes can be achieved via a new Note, or the purchase of an existing Note.  Our account holders invest in both secured and unsecured Notes and as a result they are able to build their financial future outside of Wall Street.

Hard money in the form of a secured Note can be either collateral against residential real estate via a Deed of Trust or Mortgage, depending on the state the residential collateral is located in.  If lending to a business entity, you might even choose to secure your loan against the company’s assets via a UCC-1 filing.  If the Note is to be unsecured, the IRA would require a Hold Harmless letter to be signed by the account holder acknowledging the higher risk of loss involved in an unsecured Note.

Become a Hard Money Lender           

As an IRA account holder, you can choose to purchase an existing Note as opposed to making a new Note to a borrower.  Should you purchase an existing Note, you would also provide an Assignment from the seller of the Note to the IRA.  If purchasing the Note for less than face value, a Bill of Sale between the IRA and the Note seller outlining the price to be paid would also be needed.  Often-times, an amortization schedule may be needed as well when purchasing an existing Note for less than face value.  Furthermore, if the existing Note being purchased is being bought from someone other than the original lender stated on the Note then a full history of all assignments of record would be needed.  This, of course, is to show that the current seller of the Note is in fact the current holder of record.

In addition to the docs indicated above, the account holder would provide us with a completed Direction of Investment (DOI) form instructing us to fund said investment.

Standard titling format and address for the lender/beneficiary would be:

<account holder First Name Last Name>, legal owner via non-trust custodial IRA with AET.  Lender/Beneficiary address to use in the note would be: 6900 Westcliff Dr., Ste. 603 – Las Vegas, NV 89145 (not your personal name and address).  Learn more on our website HERE.

***Note: Checks from your borrower must be made payable to American Estate & Trust, LC <account holder First Name Last Name> IRA (This is so we may deposit the check and further credit to your account). Having the account number on the check is helpful.

 Minimum required Note terms:

-Your Note should contain a defined 1st payment and maturity dates (i.e. month/day/year)

-Note payments should occur at minimum once per year (1 payment minimum every 12 months)

-Payment $ amount to be made should be indicated on Note

-Deed of Trust/Mortgage: account holder cannot be listed as trustee.  Trustee must be a non-prohibited party to the IRA.

Be a Hard Money Lender Today

We want your Note investment process to go as smoothly as possible. Before you get started, call us so we can walk you through the process of becoming a hard money lender. Self-Directed rules differ from the rules of investing with personal funds (non-qualified funds) and we are here to help.

 Preventing a “Prohibited Transaction”

Neither you nor any disqualified people may benefit from IRA. Here is a link to prohibited parties. Click HERE.

Red flags include:

  • Present Benefit
  • Indirect Benefit
  • Personal Benefit

An IRA cannot buy, sell, or exchange property between plan and Self or Disqualified people

A Disqualified person cannot provide goods, services, or facilities to the IRA/401(k)

What we are looking for:

  • Can we see any sign of a prohibited transaction?
  • Is the name of the investor correct (the investor is the retirement account)?
  • Are there enough funds in the account to cover the investment and the required cash cushion?
  • Is the Direction of Investment (DOI) form fully completed?
  • Do the amounts on the DOI and the investment documents match?
  • Did the borrower sign the notes?

In conclusion, it’s not tough to be the bank with Hard Money loans.  We will walk you through the process of becoming a hard money lender.  Call us today to get started at (866) 447-6598 or email us at