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Should You Use Debt or Equity on a Private Money Deal?

Whether you’ve never raised private money before or do it regularly, you can structure that money as a loan (debt) or by giving the investor ownership in your deal (equity). Today, we are going to talk about when to use debt versus equity when you’re raising private money to fund your real estate deal. Self-Directed IRAs Let’s talk about my favorite investment vehicle, self-directed individual retirement accounts (SDIRA). Once that employee leaves the company, it can be rolled into an IRA account and then moved to a company that allows them to operate it as a self-directed account. When considering how to structure the deal, the first thing to think about is the source of the money. Let’s start with debt and when to use it. Debt is better for short-term deals, especially if sourced from a self-directed IRA. If the money is cash, then equity might be a better play. This can provide them great tax advantages that are only available to investors who invested with their own cash into the deal, not an SDIRA. In the video attached, I get into other factors like investment timeline to determine which to use, debt or equity.

RIP A/B Testing