Using a self-directed IRA to invest in real estate debt
Retirement funds, working in first-lien private lending — how it actually works.
A self-directed IRA (SDIRA) or Solo 401(k) is a retirement account held by a specialized custodian that permits alternative investments — including private real estate loans. Tax treatment stays exactly the same; only the asset universe expands.
Why do this?
Retirement capital sitting in stocks and bonds captures market volatility. First-lien private lending replaces that volatility with a fixed monthly return, secured by real estate — often a better fit for the safer sleeve of a retirement portfolio.
How the mechanics work
- Open a self-directed IRA (SDIRA) or Solo 401(k) with a custodian that permits alternative investments.
- Transfer or roll funds from your existing retirement account into the new custodian account.
- Submit a short direction form telling your custodian to invest with AVCG.
- Your custodian wires the placement to AVCG and holds the note in the IRA's name.
- Monthly interest flows back into your IRA account — tax-deferred (traditional) or tax-free (Roth).
Custodians
AVCG works with the major SDIRA custodians. The custodians page on our IRA / 401(k) guide has the current list. If yours isn't on it, we can usually still accommodate — just let us know.
Tax notes
Interest earned inside the IRA is not reported to you on a 1099-INT; it stays inside the retirement account per the rules of your specific vehicle. UBIT is generally not triggered by passive interest income on debt secured by real estate, but this varies. Consult a CPA.
Related guides
Keep reading
How first-lien security protects your capital
What 'first lien' means, why it matters, and what happens in a worst-case scenario.
What monthly interest payments look like — and what happens on payoff
How and when interest lands in your account, and what happens when a loan pays off.
Have more questions?
Talk to a specialist — we'll walk through anything the guide didn't cover.