My IRA funded a note in March and the yield lands in the account by Friday, but I still can't touch it for 22 years

Eleven days is actually fast, mine ran 19 days the first time.

The Carolina market is interesting for this because the rehab-to-rental pipeline there is still producing borrowers who actually know what they're doing, which makes the repeat operator piece matter more than the rate. I did a 10 percent first on a 63 percent LTV in Gaston County inside my Roth, closed October 2022, six-month term same as yours, and the borrower has since come back twice. That repeat business inside a tax-sheltered vehicle is the part people underestimate. You are not just compounding the yield, you are compounding the relationship, and the second and third notes with the same operator are easier to underwrite because you already know how they handled a draw schedule under pressure.

The 22 years piece is where my thinking diverged from the conventional framing though. I used to mentally account for the illiquidity as a cost, same as you did. I stopped doing that when I modeled what 10.5 percent tax-free, reinvested into successive six-month notes, actually produces at year 20 versus the same capital in a taxable brokerage earning the same gross rate but paying ordinary income on interest every year. The gap is not marginal. At a 32 percent bracket the taxable account is compounding roughly 7.14 percent effective versus your full 10.5. On 80 thousand dollars over 20 years that is somewhere around 220 thousand dollars difference in terminal value. The illiquidity stopped feeling like a cost and started feeling like the product.

The math on the compounding is real but I'd push back on framing the illiquidity as just "the price of the wrapper." For note paper specifically, the reinvestment risk is the actual problem people under-think. Six-month term on that note means you're back to deployment mode by September, and if your custodian runs eleven days on the direction letter side, plus the time to source the next deal, you could be sitting on cash drag inside the Roth for 30-45 days between notes. At 10.5 percent annualized that dead cash is costing you real compounding ground, and over a 22-year horizon that friction compounds against you just like the returns compound for you.

What I do instead is structure for 12-month terms minimum, even when borrowers push back, because the custodian friction is a fixed cost per deployment and I want to amortize it across more months of yield. I closed a 12-month first at 10 percent on a 62 percent LTV in middle Tennessee last August, same Roth structure, and the math on fewer deployment cycles over the life of the account actually beats the slightly higher coupon on a 6-month note once you account for realistic cash drag between closings. The 65 percent LTV on yours is solid and I am not arguing the credit quality, just that the duration choice is doing quiet damage to the compounding story that doesn't show up until you model the full cycle including idle periods.