Charleston businessmen roll out retirement tool that should hasten ‘self-directed’ investments in real estate

Jeff Beall (left) is managing director and Kip Bowman president of Hold Fast Asset Protection, the parent company of Charleston-based IRACheckbook (Photo provided).

By JIM PARKER The Post and Courier

It’s a common refrain: The housing slump has left a lot of homes in bad shape, but they can’t be repaired because traditional lenders are tight with credit.

Charleston entrepreneurs Kip Bowman and Jeff Beall are among the people who believe that scenario is already playing out. Rather than just talking about it, though, they decided to act.

The pair tweaked a 37-year-old provision in the tax code dealing with retirement plans, developing an investment strategy that, along other things, makes it easier for participants to invest in real estate.

The venture is Charleston-based IRACheckbook. Formed by Beall and Bowman a year ago, the venture helps along the process of setting up self-directed retirement investment plans. More specifically, it streamlines investors’ ability to buy real estate and other non-traditional assets that are potential money-makers.

“We think the timing is appropriate for this business,” Beall says.

This spring, the business went nationwide with its online services, which work via investors’ Individual Retirement Accounts or employer-sponsored 401(k) plans.

Their IRACheckbook and 401kCheckbook plans act as “your retirement funds in a business checking account,” it says. According to the entity, it offers investors freedom to “liberate capital” previously thought to be reserved for traditional Wall Street-type investments.

“It’s really a lemons to lemonade-type concept,” says Bowman, president of Hold Fast Asset Protection, a financial support company that owns IRACheckbook.

Bowman is a commercial real estate broker and former military pilot. Beall, who is managing director, has also been involved in a software company but is focusing on IRACheckbook full time.

“It’s not a new concept,” Beall says. The provision that permits such self-directed plans dates to 1974 but remains not very well known. “We brought it to the Southeast,” Bowman says.

Here’s how it works. The venture meets with interested investors and agrees to set up a self-directed retirement plan that acts like a business account. It accomplishes this by establishing a limited liability corporation (LLC) or a trust that’s owned by the IRA or 401(k) plan.

As a business entity of sorts, the LLC or trust can buy property or invest in other less traditional products such as precious metals, tax liens and “crowdfunding” which involves holding tiny stakes in businesses. Investors can still buy and sell stocks, bonds and mutual funds. Since the LLC or trust is part of an IRA or 401(k), the money it earns is tax deferred or, potentially with a Roth IRA, tax free. Participants don’t pay periodic brokerage fees as they might with an investment firm.

Once IRACheckbook establishes the plan, it steps away.

“We are non-fiduciary; we don’t advise anyone,” Beall says. “We are the keys to the capital but they (participants) select what they want to invest in.”

The investor pays IRACheckbook a $275 upfront fee to establish the plan. When the venture has completed setting up the LLC or trust in a custodial account, it gets a $1,275 fee. The custodian pays that expense.

The whole process typically takes two to four weeks. “It’s an easy way to escape Wall Street,” Beall says.

Along with promoting passive investing, either “checkbook” plan permits participants to take part in private money lending. For instance, they can make a loan to a developer or real estate agent on a house, lot or other piece of property.

“We are busy now doing educational presentations with Realtor offices, showing both the power and ease of IRACheckbook plans as a good source of real estate funding,” according to the company.

The partners say that private lending can be a prudent move because real estate is starting to rebound from a lengthy downturn, and banks remain reluctant to lend. Private investors can loan money via the self-directed strategy and reap gains via the IRA or 401(k) tax deferred benefits. At the same time, neglected housing is saved.

“We are finding a great demand for private lending,” Beall says. Self-directed plans offer “easy ways to be a passive investor in real estate.”

Another advantage of IRACheckbook, according to Bowman, is that funds can be plowed back into the local community, for instance to renovate properties for sale.

The plans have restrictions, although Beall says it’s “a short list.” For instance, investors can’t buy vacation properties and stay there.

“This type of investing isn’t for everyone,” Beall acknowledges. “We quickly determine risk tolerance and customer needs which may lead to a referral to one of our many affiliates (including real estate agents, certified public accountants and certified financial planners). It is our aim to be a good steward of other people’s money.”

But for people who are focused on what they want to do, the self-directed plan has advantages, the partners agree.

For one thing, the investments can pay a high rate of return, up to 10-15 percent interest, because of the tax deferred nature of the plan. In the case of real estate, the investment is “fully collateralized,” Bowman says.

Beall says, “IRA and 401(k) holders find our plans to be a quick and powerful method of improving their retirement earnings potential. We simply empower people.”

For more information, call 800-530-8522 or 843-410-0187 or visit www.IRAcheckbook.com.

Reach Jim Parker at 937-5542 or jparker@postandcourier.com.