If you’re a real estate investor or private lender with a Self-Directed IRA (SDIRA), you have a powerful opportunity sitting in your account. You can use your retirement funds to make loans secured by real property — typically through a promissory note and deed of trust.
This strategy can generate consistent, tax-advantaged interest income while giving you the safety of a real-estate-backed investment. In this guide, we’ll break down how it works, which custodians handle it best, and what to know if you’re lending in California.
Why a Self-Directed IRA Works for Trust Deed Investing
A Self-Directed IRA (SDIRA) gives you freedom. Instead of being limited to stocks and mutual funds, you can use your IRA to:
- Fund loans secured by real property (via deed of trust)
- Earn interest income that grows tax-deferred (Traditional) or tax-free (Roth)
- Diversify into tangible, asset-backed investments
Your IRA custodian handles the paperwork, titles the asset properly “FBO [Your Name] IRA,” holds the recorded deed and note, and manages payoff and reconveyance when the loan ends.
The 5 Best Custodians for Trust-Deed Lending
These five companies explicitly support deeds of trust inside Self-Directed IRAs and have investor-friendly education and workflows.
1. Equity Trust Company
One of the biggest names in the space. Their “private lending” program covers promissory notes, mortgages, and deeds of trust, with clear forms and step-by-step guidance.
2. Directed IRA
A favorite among investors who like education and transparency. They offer frequent webinars on trust deed lending and charge flat fees (no asset-value fee).
3. New Direction Trust Company (NDTCO)
They provide clear guidance on secured vs. unsecured notes, explicitly referencing deeds of trust. Their fee structure is simple and public.
4. Madison Trust Company
Known for its predictable flat-fee structure and great documentation on promissory notes. Their 2025 fee schedule is already live.
5. Forge Trust (formerly IRA Services Trust Co.)
Forge has a dedicated Promissory Notes & Trust Deeds IRA program, complete with investment forms and checklists for funding.
Bonus mentions:
- Advanta IRA – deep educational content for private lending investors
- Horizon Trust – specifically lists deeds of trust as allowable assets
What to Compare When Choosing a Custodian
- Fee model: Flat vs. percentage-of-assets (flat is usually better for lenders)
- Transaction fees: Charges for funding, modifying, or paying off notes
- Deed of Trust support: Make sure the custodian explicitly handles deeds of trust, not just generic “notes”
- Workflow: Look for easy document uploads, e-signature capability, and escrow coordination
Lending in California? Read This First
If you’re lending in California and charging over 10% interest, there are a few critical compliance rules to know:
- Use a Licensed Broker:
California’s broker exemption allows rates over 10% if the loan is made or arranged by a DRE-licensed real estate broker for compensation and secured by a lien on real property (Cal. Civ. Code §1916.1, Cal. Const. Art XV §1). - Keep It Business-Purpose:
The loan must be for business or investment use, not for personal, family, or household purposes. Under Reg Z (12 CFR 1026.3(a)), business loans are exempt from consumer lending laws. Document the loan’s business purpose clearly — e.g., a fix-and-flip project, investment property purchase, or working capital for an LLC. - Work with Professionals:
Have a broker or attorney review your note and deed of trust, and make sure escrow and title record it correctly.
How to Lend from Your IRA (Step-by-Step)
- Open & fund your Self-Directed IRA at one of the custodians above.
- Underwrite the loan like a pro — verify LTV, title, insurance, borrower experience, and exit plan.
- If charging >10% in California, partner with a licensed DRE broker to arrange or make the loan.
- Submit investment paperwork to your custodian: promissory note, deed of trust titled FBO Your IRA, escrow instructions, and servicing details.
- Close and service the loan. Payments go back into your IRA. The custodian holds the recorded documents and handles payoff and reconveyance.
Smart Risk Controls
- Always use non-owner-occupied, business-purpose collateral.
- Require title insurance showing your IRA in the correct lien position.
- Use professional loan servicing to collect payments and manage defaults.
- Never lend to disqualified persons (yourself, spouse, children, parents, etc.).
- Keep all records titled correctly — “FBO Your IRA” — to stay compliant.
Quick Comparison
| Custodian | Best For | Fee Model |
|---|---|---|
| Equity Trust | Full-service, high volume | Tiered |
| Directed IRA | Education + flat fees | Flat |
| NDTCO | Clear secured-note process | Flat |
| Madison Trust | Predictable pricing | Flat |
| Forge Trust | Detailed DOT program | Tiered |
Let’s Put Your IRA to Work
If you want to earn secured, tax-advantaged returns through your IRA, backed by California real estate, we’d love to help.
At Mayacamas Lending, we specialize in first-position, business-purpose trust deeds — professionally underwritten, serviced, and compliant with DRE.
Disclaimer
This article is for educational purposes only and does not constitute tax, legal, or investment advice.
Always consult with your own CPA, attorney, and licensed professionals before making or arranging loans secured by real property or using retirement funds for private lending.
Sources
- California Constitution Article XV §1 (usury & broker exemption)
- California Civil Code § 1916.1 (made or arranged by a licensed broker exemption)
- 12 CFR 1026.3(a) (business-purpose loan exemption under TILA)
- Equity Trust Company – Private Lending & Deed of Trust documentation
- Directed IRA – Private Money Lending Webinars & Fee Schedule
- New Direction Trust Company – Secured Note/Deed of Trust resources
- Madison Trust Company – 2025 Fee Schedule & Promissory Note guidance
- Forge Trust – Promissory Notes & Trust Deeds IRA program
- Advanta IRA and Horizon Trust – SDIRA trust-deed education pages
