Self-directed IRAs & real estate, part 1

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.

For more from Daniel Williams, see:

• The thrill of victory, the agony of defeat
• Boomer and senior markets look to safer portfolios
• Coach, teacher…annuity advisor?