In part two of this exclusive online interview, agent M. D. Anderson, below right, of Chandler, Ariz., talks in more detail about the intersection of real estate and insurance products. 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.
Daniel Williams: What are your thoughts on letting consumers continue to invest in real estate via mutual funds, and variable accounts in insurance products?
M.D. Anderson: I sold them all at one time and some of the REITs I sold made some very nice returns some years for my former investment securities clients. But, a REIT or shares in a real estate project or partnership do not allow direct management or choice of locality. To me, it’s more like leasing then actual buying. I prefer real ownership of real property so I can be 100 percent real and ready to choose all the details.
That is because I am a runner. I want to run things. And, with billions leaving those traditional three holders of most IRA money today, I am not alone. They don’t all buy land or rentals with a self-directed IRA, but most do. And, most advisors at most firms ignore the real and present fact that in the long term, only real estate produces the most millionaires in this country.
Of course, that isn’t even touching the passive advantage of owning real estate directly. You don’t have to watch it every day or be on meds and counseling when the stock market takes a big adjustment downward.
Williams: So real estate, long term, will produce better yields then the more traditional IRA-type accounts?
Anderson: All I am saying is that you will have less wear and tear along the way and history to date proves real estate adjusts, too. But it is deemed a long-term holding investment and thus, held for long periods of time, it will increase in many cases by simply letting father time do his job.
Williams: What’s the risk in putting one of those inherited IRA clients you get for consulting, or their heirs, into a self-directed IRA funded with real estate?