Many of our investors, including myself, invest in real estate backed notes with funds from a Pensco or similar Self-Directed IRA account.  As with any investment, it is wise to invest in products that are known or understood by the investor.  Utilizing a Self-Directed IRA allows me to invest my IRA funds into real estate investments in such a way that they remain in the IRA and I am not penalized for withdrawing to purchase real estate or real estate backed notes.

What are we talking about when we are referencing real estate investments made through a self-directed IRA?  We are referring to a variety of investments including but not limited to homes, apartments, condominiums, commercial property, deeds, notes and land made through a self-directed IRA.  This type of investment allows one to utilize an IRA to invest in short-term renovations (“flips”), long-term appreciation and rental income. One can also purchase trust deeds and notes secured by real estate. This sort of investing legally requires one to go through a custodian (I personally utilize Pensco Trust Company).  The custodian permits the use of the IRA to hold non-traded alternative assets, such as real estate.  So now that we know what this type of investment entails, what are the advantages of this type of investment? 

One advantage is that this type of investment has allowed me to diversify my investments. In the past, I have been limited to stocks or funds and my current investments in non-traded assets have allowed me to place my money in a wider array of places.  An article in CNBC from July of 2015 states that “More than 1 in 4 Americans (27 percent) said real estate was the best investment for money they would not need for at least a decade, according to a new survey of 1,000 investors.”  Utilizing my Pensco account has allowed me to freedom to diversify my investments in a way that includes real estate.

Another advantage that I have noticed while utilizing my IRA to purchase secured notes is that I have enjoyed less volatility than I did with stocks.  I have found that in general, I have been able to hold profitable assets for a longer period of time via my Pensco account than I have been able to with stocks.

Generally, I’ve also experienced greater returns with my self-directed IRA than I have over the last decade with stocks.

I am not providing investment advice.  Obviously, one needs to be familiar with the details related to the process as well as the legalities associated with these types of investments/transactions.  Pensco provides a website ( that has made obtaining this information easy for me.  I trust you will find this information helpful in determining what investment strategies work best for you and your portfolio.


Joe Morgan 

Co-Owner – SJ Morgan Private Lending Exchange