Note Investing

How would you like to be the solution to the problem small businesses face (and build your retirement at the same time)? During this Covid-19 pandemic many businesses find themselves in need of capital. If you have a retirement account, you can help through Note Investing. With a self-directed IRA, you can lend money through a Promissory Note to those in need of short-term (or long-term) financing. Your IRA can lend to individuals and business entities alike. Money lending using your IRA could be a good move for your future and it benefits your chosen community in hard times like these. 

There are several ways your IRA can invest in Notes.

Promissory Notes

Investing in Promissory Notes can be done via a new Note or the purchase of an existing Note.  Your IRA can also make or purchase a fractionalized interest in a Note whereby there are multiple beneficiaries.  Our account holders invest in both secured and unsecured Notes alike.

Secured Note Investing can be either collateral against residential real estate via a Deed of Trust or Mortgage. The type of deed will depend 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.

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 provide an Assignment from the seller of the Note to the IRA. If purchasing the Note for less than face value you will need a Bill of Sale between the IRA and the Note seller outlining the price to be paid. Often-times, an amortization schedule is necessary as well (when purchasing an existing Note for less than face value). Furthermore, if the existing Note Investment being purchased is bought from someone other than the original lender stated on the Note, a full history of all assignments of record is required. This history shows that the current seller of the Note Investment 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).

***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.

Due Diligence

You will want to make sure that your borrower can repay the debt. Therefore, you may require income documentation, verification of employment, rents, deposits, as well as appraisal and title commitment. A credit report is also a standard underwriting condition for most lending. You can obtain the assistance of a title or escrow company in putting this together.

Minimum Required Note Investing 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