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Investor Insights Blog|Helping a Local Car Dealership with IRA Funds

Investor Insights Blog

Helping a Local Car Dealership with IRA Funds

private lending to local business

Matt, from Pennsylvania, began investing in the stock market at a young age. Despite some early success, he wasn’t thrilled with his overall strategy or results. When he discovered self-directed IRAs, his goal was to buy and sell homes for a profit.

From Searching for Investments to Filling a Need

Like any savvy investor, though, Matt was adaptable. He was willing to change course for the right opportunity.

He was looking through his local newspaper one day and came across a classified ad from a local used-car dealer seeking financing to repave his business’ parking lot.

It’s common for business owners to seek financing for these types of projects. The National Small Business Association even estimated that 27% of  businesses they surveyed are not able to receive the business funding they need. This is dependent on industry, but to grow a small business, typically some type of financial assistance is needed.

This is where Matt’s self-directed IRA came into play.

Helping a Local Business and Building for Retirement

Matt met with the business owner and negotiated a private lending agreement with funds from his self-directed IRA. After the success of this initial loan resulting a newly paved car lot, Matt and the dealership continued their relationship.

He now uses his self-directed IRA to provide floor-plan financing to the dealership and other non-franchise dealerships in the area.

This structure provides Matt with an attractive 10-percent return, and also provides the owner of the dealership with financing he was unable to secure from a bank.

The dealership secures the loan with car titles and, every time the dealer sells a car, he pays a title exchange fee of $250 (back to Matt’s IRA) and provides a new title to secure the loan.

For new people who are just getting into self-directed investing, there are a ton of opportunities to do stuff like this.

Matt, Self-Directed Investor

Filling a Need in the Community

The beauty of this type of private lending is that the need exists in almost every industry.

“It doesn’t have to be cars. There are probably safer or better deals out there, but I happen to be comfortable with the dealers I’m working with,” says Matt.

Matt believes there are many small business owners searching for capital for various reasons, the key is to find and vet the opportunities you come across to determine if it’s the right fit for both parties.

In the end, Matt gave his retirement a boost while helping a local business improve and grow. His experience demonstrates the democratization of capital at work.

It’s an example of how self-directed IRAs can help position investors like Matt to profit their retirement beyond the stock market, while also contributing to the well-being of small businesses and local communities.


15-Minute Guide to Notes Investing with a Self-Directed IRA

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