I recently had the opportunity to interview M.D. Anderson, below right, of Chandler, Ariz. Anderson is a longtime multi-licensed insurance agent as well as an accountant, certified legal document preparer and an active Realtor® with RE/MAX Diamond in Mesa, Ariz.
Below are highlights from our conversation.
Daniel Williams: M.D., it seems you are stating in your online videos and printed materials that insurance agents, bankers and stock brokers are doing something wrong by not telling each of their clients that “owned” real estate belongs in every portfolio.
M.D. Anderson: Daniel, that is exactly what I am saying. But, let me explain myself. I first openly admit in my videos and written documents on self-directed IRAs in real estate that I, too, ignored telling my clients for 36 years about this option. I believe in it to the point that I traded my brokerage license for a real estate license here in Arizona in 2002. Yet there was no mention in real estate school about funding an IRA with real estate. There was no broker I worked for who mentioned it as an option and even if one did, I most likely tuned it out or ignored it.
Williams: So you didn’t know you could buy actual real estate in a self-directed type account until last year?
Anderson: Unfortunately, I did know. I had the license to sell real estate to an IRA owner. I consulted on millions of dollars of IRAs nationwide for the past 10 years and never mentioned the option until my great awakening last summer.
Williams: What did it take to make you open up your own eyes to this alternative?
Anderson: Well, there were a couple of factors but it began with the death of my father. First, seeing my father die with Iowa farmland worth a whole lot more than what his average cost per acre was, and getting a stepped-up tax basis for my mother was pretty alarming in a good way. Second, an article where I was quoted in the Wall Street Journal resulted in 99 responses. I was also quoted a week prior to that on bankrate.com. For the first time, I realized that these large IRA owners were a whole new market I had never tried to reach before in any real way. Most of my content on the website was directed at the heirs, not the actual estate owners.
Williams: What caused you to dig into that research on self-directed IRAs?
Anderson: I took my friend and client, Joe Martin, to breakfast. And I told him I was shocked at the response and didn’t really know how to react to this assemblage of mostly rich people who contacted me after the article. One had a $6 million Roth IRA. The largest account was an $8 million traditional IRA. Of course, I would take the $6 million Roth any day over a taxable $8 million account. To finish, Joe told me at breakfast that he had been studying self-directed IRAs in his RE/MAX franchise real estate firm–and that I would be a perfect partner to help him bring it to market. We went in to have omelets and coffee and catch up on the past few years and walked out after a hand shake as partners.”
Look for part 2 of this interview next week.
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