Finance Articles

Self-directed IRA Investment Helps To Open a New Restaurant and Generates a Great Return for the Investor

Hagerstown, MD (PRWEB) September 10, 2008 -- Ray Millette was in the final stages of opening a restaurant, Da Beef King, but he was a little short on cash due to last minute expenses that were higher than he had expected. $25,000 short to be exact. Lucky for Ray, he had a friend who had faith in both Ray and the Aurora, IL restaurant and was determined to help.

Ray's friend, David Kerlagon, worked with Security Trust Company, his self directed IRA administrator, and Dave's IRA loaned his friend the $25,000 he needed.

Dave knew that the mortality of new restaurants was high, and he also did not want to commit his IRA funds for an extended period of time. And of course he wanted a great return for the risk he was assuming. Therefore, Dave structured his loan so that he receives 2% of the restaurant's total monthly revenue as interest. Even if a principal payment is made, Dave will continue to receive the 2% until the principal is paid in full. Clearly, the borrower has a strong incentive to repay the loan as soon as possible.

But even if the restaurant fails, Dave is protected. If for some reason the restaurant didn't open or stay in business long enough to repay the loan, his friend has personally guaranteed the loan and will pay Dave 10% interest on any balance.

Self directed IRA investing can be very flexible. As Dave demonstrated, the IRA's owner can set the terms and make sure he has plenty of security. Of course, self-directed IRA investing is also full of potential problems, including prohibited transactions and disqualified persons, but Dave's self directed IRA administrator -- Security Trust Company -- was available to help Dave navigate through any problem areas.

The restaurant opened; Dave got a great return on his investment; and Security Trust Company took care of the back-office details. Self directed IRA investing doesn't get any better than this.

Self-directed IRA investing allows investors to participate in the myriad of businesses and franchises that are starting and growing around the world. Gone are the days when IRA's were only associated with stocks, bonds and mutual funds. Today's savvy investor is looking to private businesses and cashing in on the great growth opportunity private equity investing offers their retirement portfolios.

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