Garrow Blog

Russ Garrow's update on Garrow Inaugural

2010-02-09T07:49:00.001-08:00

2009 was a year of extreme volatility and unexpected turns. As we watched the Dow plummet in March, and then move erratically up and down for the remainder of the year, it appears as if more people have gotten ill watching the ‘roller coaster’ than have made money. Over 140 financial institutions failed, as the ‘watch list’ of vulnerable banks swelled to over 520. The Federal Reserve’s balance sheet is in excess of $2.45 trillion, while we have experienced other history making events in the marketplace.

Although challenging, the year has also been abundant with opportunities. Garrow Inaugural has been cautious and opportunistic in its investments. We are not large enough, yet, to not have to deal with banks, so we have been forced to wade through their bureaucracy and indecisiveness. These dealings have often tested our patience, investment discipline, and stretched our tolerance for overly long decision making periods and placement times for our investments. You, as investors, can take comfort in the fact that we did not waver from our investment discipline or become impatient. Instead, we are leveraging relationships with the FDIC, Federal Reserve Bank, depository financial institutions, developers, builders, real estate professionals and equity partners to preserve assets first, and chase investment result second. Our investments have allowed us to showcase our talent of determining the difference between a ‘deal’ from an opportunity for active and risk-adjusted return.

Garrow Inaugural investors can rely on our fundamentals of seeking a premium on investment dollars, enjoying significant stakes in equity ownership and operating income, as well as our insight into investments that have substantial appreciation probability. These are showcased in our placements to date and will set the standard for what we are known for.

While this year holds an equal amount of volatility along with unexpected twists and turns, we are not disheartened. Rather, we are excited about the opportunities ahead and remain committed to preserving your investment resources and getting you involved prudently.

To our continued success together,

Russ

Self-directed IRA, The Steps to Financial Security

2010-01-18T07:58:00.000-08:00

Last weeks blog was designed to give our readers an introductory look at the concept of a self-directed IRA. As a result, I have received several responses asking for the steps involved in opening an IRA account with Pensco or TD Ameritrade. This weeks blog will focus on Pensco Trust.

Considerations when opening a self-directed IRA with Pensco Trust
 
1. Speak with your current IRA manager. This process will be much smoother if he/she is informed of your intentions.
 
2. Direct your current IRA manager to convert the funds you intend to transfer into cash. A cash transfer is the most expeditious means of funding your new self-directed IRA with Pensco Trust. 

3. 401K funds may be self-directed, however, they must be idle. For example, if you have a 401K plan with a previous employer these funds may be used to open your Pensco Trust IRA.
 
4. Some 401K plans allow for employees to self-direct their IRA while still employed. However, this is rare and you must check the rules of your plan. It is best to speak with the 401K administrator directly. 

5. At this time, we are only able to accept funds for Garrow Inaugural via Pensco Trust. However, Garrow Niblick LLC is in the middle of the approval process. For more information, please consult your Garrow Equity Group representative. 

6. Your friends at Garrow Equity Group will assist you with all the necessary paperwork. However, if you would like to download the forms you may do so at www.penscotrust.com 

7. An account with Pensco Trust must have $100.00 in it at all times. Therefore, in the case of an investment with Garrow Equity Group, you will open your account with at least $100,100.00. 

8. There are fees associated with opening and maintaining a self-directed IRA account with Pensco Trust. A new account fee of $50.00 will be assessed at the time the account is opened. The yearly account maintenance fee is based on the amount in the account. For example, $100,100.00 will cost approximately $450.00 per year. 

9. All fees may be paid either by credit card or taken directly from the account itself. If you elect to pay the fees from the IRA account, you will need to increase the amount of the initial transfer. 

10. The yearly maintenance fee will be divided into quarterly increments and charged accordingly.
 
11. Due to the fact that Pensco Trust will be the custodian of your IRA, all the “Garrow” documents will be written in a manner that signifies this. Your signature will be stating that you have “read and approve” the documents. A Pensco Trust representative will sign as well. 

I hope this provides you with a better understanding of what is involved in opening a self-directed IRA with Pensco Trust. If you have any other questions, please direct them to Alan Ford at alan@garrowequity.com, Russ Garrow at russ@garrowequity.com or Scott Rayburn at scott@garrowequity.com. Garrow Equity Group is a Private Equity Firm located in Clark County, Washington. We are pleased to provide investors with several investment opportunities which includes the ability to assist investors with self-direct IRA’s, via Pensco Trust Company and TD Ameritrade.

In 2010 Take Control of your IRA

2010-01-11T07:18:00.000-08:00

According to the dictionary app I recently downloaded to my iphone, the word “control” (noun) means “power to direct or determine”. At Garrow Equity Group, located in Vancouver, Washington, we recognize the desire most individuals have to control their lives, especially their financial future. We are also keenly aware that the recent financial crisis has eroded confidence in the traditional markets which has heightened this need to take control.

With that in mind, Garrow Equity Group has positioned itself to be a key player in the process of rebuilding. Currently we are investing capital, from our funds, into the communities of Vancouver, Washington and Portland, Oregon. Part of our goal is to act as a significant cog in the wheel of community redevelopment. We also take seriously the notion that good solid investment opportunities provide our investors with a method by which they may regain their sense of financial security. Hence the incorporation of a self-directed IRA investment option.

Utilizing a self-directed IRA, is a means by which an investor can take direct control of retirement funds. Unlike the traditional methods which are market based, and run by managers of managers, a self-directed IRA allows the investor to place funds in a product and a known group of people that they feel passionate about and trust. One of our motto’s is, why not invest in something you believe in, people you trust and something you can see, touch, smell and even taste.(although I don’t recommend tasting)

The most common self-directed IRA investment is real estate. However, IRA’s are also directed to start-up companies, herds of cattle, retired train engines, working ranches and private equity firms such as Garrow Equity Group. Each of these, have stirred individual passion, resulting in a decision to take control and invest. When IRA’s are directed to Garrow Equity Group, they are funneled into a particular fund, of which we currently have two. The first, Garrow Inaugural LLC offers a longer term investment of 36-60 months with a higher projected rate of return. The second, Garrow Niblick LLC, is a shorter term opportunity that currently has a two year window. The with projected rate of return is lower than Inaugural however, this fund has flexible investor egress provisions.

Alan Ford, our resident expert in self-directed IRA’s, has been instrumental in initiating and solidifying a relationship with Pensco Trust Company and TD Ameritrade, our chosen IRA custodians. It is through these relationship that we are able to facilitate investors taking control of their retirement and investing in our funds. If you have any questions, please contact Alan at alan@garrowequity.com , Russ Garrow at russ@garrowequity.com or Scott Rayburn at scott@garrowequity.com

A Gift in 2010 from the Federal Government

2009-12-01T07:34:00.000-08:00

I am almost certain that when you read the title of this weeks blog, you chuckled to yourself because the concept of a gift from the federal government is almost unfathomable. If you are a cynic, like I am, you probably rolled your eyes and huffed under your breath “yea right” and said “what’s the catch?” Maybe the word “gift” is too benevolent and I should change it to “opportunity”. Either way, I want to draw your attention to the financial benefit you may reap by taking advantage of the upcoming opportunity to convert your traditional IRA into a Roth IRA.

As you are probably aware the traditional IRA is built through pre-tax contributions with the tax liability being postponed until retirement and paid upon distribution. Basically, the taxes are paid on the amount of contribution and the amount earned when funds are dispersed during retirement. The Roth IRA, on the other hand, is built using post-tax contributions. The tax liability associated with the contribution to the Roth IRA is paid at the time the money is earned, however, the accrual generated, whether $100 or $1,000,000 is never taxed. One of the downsides to the Roth IRA has been the income restriction which has prohibited many from being able to add this option to their retirement portfolio. Those restrictions have been, $120,000 AGI filing single or $176,000 AGI for married fling joint.

Here’s the gift. In 2010 the federal government is removing the income restriction for a Roth IRA conversion and are allowing two years to pay the associated tax liability. For those who have IRA’s not in the Roth designation this is a tremendous opportunity to accrue investment results and never pay taxes on the accrual. A tax liability is associated with this conversion however, there are two options for payment. Option one, pay 100% of the taxes in 2010 or option two, pay 50% of the taxes in 2011 and 50% in 2012. The only other caveat is you should be able to pay the taxes from a source outside the IRA.

After the taxes are paid on the conversion, you will never pay another dime from that fund to the IRS. We at Garrow Equity Group are excited about the possible returns that our funds are going to generate for our investors. That excitement is amplified as we consider the bonus to our investors if the investment is via a Roth IRA.

As you consider adding this to your retirement portfolio I encourage you to consult your tax professional and or CPA as to your personal situation. If you are a client of Garrow Equity Group via your IRA and wish to make the conversion to a Roth IRA, please contact Alan Ford and he will assist you in that process.

We at Garrow Equity Group, a Private Equity Firm located in Clark County, Washington, are pleased to provide our investors with the opportunity to self-direct IRA’s and Roth IRA’s, via Pensco Trust Company. Alan Ford, our resident expert in this area, has attended several seminars and has developed a strong relationship with Pensco Trust representatives. If you have any questions about Garrow Equity Group, please contact Alan at alan@garrowequity.com

The Truth Teller

2009-11-21T07:36:00.000-08:00

When I started writing this blog, the Dow rang up an amazing day with a 2% or 203.52 point increase. The excitement, however, was almost immediately quenched when it gave the majority of that move back in the subsequent trading session. The volatility has been amazing with the 52 week high along with numerous triple digit market moves. Are you as confused as I am? Especially when I consider these frequent moves are coupled with the discussion of a ‘jobless recovery’. How do we enjoy a sustainable recovery with so many people out of work? The reality is that at some point, there is an end to the creativity that businesses can employ to run expense out of the business to influence the bottom line. Simply stated, without adding to the top line eventually there will be a limit to enhancing bottom line.

In the end, investors desire something that is a reliable ‘truth teller’. Traditionally, cash dividends have always been a ‘truth teller’. In this volatile world, we at Garrow Equity Group encourage investors to add to their portfolio investments that provide dividend income which can and should be one method of evaluating performance. Let’s be clear, I am not talking about the single cent dividend that banks provide to extend their record of always providing a dividend. I’m talking about a meaningful dividend.

Garrow Niblick provides a meaningful dividend or our investors are free to withdrawal without penalty. The cash dividend projections equate to nearly $850 a month for every $100,000 invested. That is a cash dividend of over 10% annually. This isn’t a Nigerian Oil revenue internet scam. Rather, this investment vehicle provides short term construction financing for pre-sold homes in our community. I don’t begrudge someone their investment in the equity market and I am sure there are those that are making a killing. Garrow Equity Group via Garrow Niblick is simply providing a cash dividend generating alternative investment, because banks refuse or are barred from providing this needed financing.

Garrow Niblick pools resources from it investors and passes through 80% of the interest to the investor. Garrow Niblick makes the loan, inspects the progress, disburses the funds and oversees the return of capital typically within 90 days. This is how we are able to provide the flexible egress. Should an investor notify us of the desire to egress out of the investment, in the worse case scenario, they’d be liquidated within 90-120 days while continuing to earn the aforementioned dividend.

Garrow Equity Group is a Private Equity Firm located in Clark County, Washington. We are pleased to provide investors with several investment opportunities which includes the ability to assist investors with self-direct IRA’s, via Pensco Trust Company. If you have any questions, please contact Russ Garrow at russ@garrowequity.com, Alan Ford at alan@garrowequity.com, or Scott Rayburn at scott@garrowequity.com.

Garrow Niblick LLC, A Part of the Solution

2009-11-06T11:42:00.000-08:00

During a recent conversation with a business associate, the topic turned to an interesting metaphor regarding windows. The reference is to the economic troubles we are all experiencing, and how too many people are talking about who broke the window rather than who is working to fix the window. This person then told me how pleased he is to hear that Garrow Equity Group has positioned itself as an innovative fixer of the broken window, rather than just another voice attempting to place blame.

I don’t wish to descend into a political discussion, however, this is exactly why we opened Garrow Niblick LLC. Investors are seeking an investment vehicle that can generate a return and provide a stated amount of liquidity. Recently, the revival of the equity market has included numerous days of 100 point swings in either direction. Although the apparent revival is exciting, this volatility continues to produce investor anxiety, especially if the equity portfolio isn’t managed in a manner to takes advantage of these wild swings. Investors would be happy and less anxious if they could see a return that approximates 10% annually or better and still allows them the liquidity to get out of the investment should another opportunity arise.

It’s common knowledge, that banks are not lending, especially for construction, commercial endeavors, or businesses. In fact, a recent Federal Reserve Bank report annualized this contraction for commercial loans at 19% and for business loans it’s approaching 30%. While the banks and, more importantly, their regulators figure out what to do, how to do it, and seek to shore-up ailing and failing depository financial institutions, Garrow Equity Group sees opportunity. Garrow Niblick LLC provides short-term construction financing for pre-sold residential construction. These notes are typically 90 days in duration and because they turn with such frequency, this provides us the ability to offer egress provisions as an added measure of security and liquidity. The fund passes through to our investors 80% of the coupon of the notes which is an approximate return of 10% or better annually, depending on portfolio performance. Compared to bank deposit rates, or equivalent laddered CD’s, Garrow Niblick LLC provides a return that is 5 to 6 times greater while offering the same liquidity.

Garrow Equity Group will leave the politics to the politicians, bank regulation to the regulators, and remain diligent in producing investments that create active return. Private equity investments like Garrow Niblick LLC put people back to work which has the ability to fix the window and provide a tangible, positive, net societal impact. In the end, if you don’t have a job, do you really care if an employer is required to provide you health care?

I hope this intrigues you enough to reach out to us and inquire about Garrow Niblick LLC or our other investment opportunities. We are a firm committed to demonstrating that creativity and innovation in the marketplace is rewarded and can be a source of active return in an otherwise troubling investment marketplace. Garrow Equity Group is a Private Equity Firm located in Clark County, Washington. We are pleased to provide investors with several investment opportunities which includes the ability to assist investors with self-direct IRA’s, via Pensco Trust Company. If you have any questions about Garrow Equity Group, please contact Russ Garrow at russ@garrowequity.com, Alan Ford at alan@garrowequity.com, or Scott Rayburn at scott@garrowequity.com.

Garrow Niblick LLC, 15 Most Asked Questions

2009-10-26T17:34:00.000-07:00

With the opening of our newest fund, Garrow Niblick LLC, we thought it important to dissect the legal documents into an easily understandable Q&A format. The following 15 questions and answers clarify the purpose of this fund and what it takes to become involved as an Investor.

The 15 most asked questions about Garrow Niblick LLC.

Q. What does Niblick mean?
A. Before golf clubs used the current numerical designation, they had names. The “niblick” was the name for the club that we now know as the 9 iron. It was used for precise shots within 100 yards of the cup.

Q. Why was Garrow Niblick LLC formed?
A. Garrow Niblick was formed to provide short-term construction financing for residential production builders of pre-sold homes. We recognized the need for this type of financing based on the current banking environment and are determined to be a part of the solution while providing a return for our investors.

Q. What type of investment is Garrow Niblick LLC?
A. Garrow Niblick LLC is a Regulation D subscription as an unregistered security.

Q. Who can invest in Garrow Niblick LLC?
A. Garrow Niblick LLC is open to all Accredited Investors.

Q. What is an Accredited Investor?
A. An Accredited Investor must meet at least one of the following requirements.

*Income in excess of $200,000 individually or household income of $300,000
*Net worth in excess of $1,000,000 either individually or jointly with spouse
*Represents a trust in excess of $5,000,000

Q. Does Garrow Niblick LLC have an open and close date?
A. Yes, the fund opened on October 5, 2009 and will close December 31, 2010.

Q. How do I invest in Garrow Niblick LLC?
A. Complete the signature pages of the subscription agreement and the operating agreement and present them to a Garrow Niblick representative along with your check for the number of units you wish to purchase. After acceptance by the manager of the fund, your investment will be engaged.

Q. Is there a minimum amount of units I have to purchase?
A. Yes, you must enter the fund with a minimum of 10 units or $100,000. However there is no high side limit. You may purchase as many units as you are able.

Q. How much money are you hoping to capitalize the fund with?
A. Garrow Niblick LLC will not grant its first loan until the fund has at least $500,000. We have the immediate ability to place up to $3,000,000.

Q. What will my return look like if I invest with Garrow Niblick LLC?
A. The projected return is 80% of the coupon for underlying loan. This translates into an approximate annual return of 10% on your engaged funds.

Q. What do you mean by “engaged funds”?
A. Prudent business practices dictate that we hold a reserve account aside for unforeseen costs. A small percentage of each investment will be held in an escrow type account to meet such needs. However, as the capital accumulates in the fund the lower the percentage that must be held aside from each investor.

Q. How long are the short-term loans to the contractor?
A. Underlying loans will be granted for 90 days with a 90 day renewal option.

Q. What type of protection do you have in place to keep my investment safe?
A. There are many, however, one of the most important is that each loan will be in the first position in lien priority.

Q. If I can’t commit my money for two years can I get out of Garrow Niblick before the sunset date?
A. Yes, the egress provisions allow investors to completely withdraw their investment and accrued return, however, a 120 day wait period will be required if the funds are not immediately available.

Q. Is there a fee associated with investing in Garrow Niblick LLC?
A. Yes, a one-time fee of 2% of the investment subscription will be assessed at time of acceptance.

THIS IS NOT INTENDED TO BE A LEGAL DOCUMENT. PLEASE CONSULT LLC OPERATING AGREEMENT, SUBSCRIPTION AGREEMENT AND PRIVATE PLACEMENT MEMORANDUM FOR COMPLETE DETAILS.

March 3, 2009

2009-03-03T14:38:00.000-08:00

Welcome to the Garrow Equity Group. In the interest of keeping investors and prospective investors informed about our thought processes, we have created this portion of our website to express ourselves on matters of interest from a personal perspective.

Probably first and foremost on investor’s minds is: What can be done to either stave off further losses and what can be done to position an investor to seek some positive yield? No one has been spared from the equity market turmoil. When the market sheds half of its value in a calendar year that has wide spread repercussions. This type of market coupled with a banking industry in wholesale reconstruction, leaves the investing world clamoring for something positive, frankly anything positive.

I regret to disappoint, there isn’t very much good news especially from the banking industry. While I am but a single opinion with several years of banking experience, the nature of the industry’s woes and the folks placed in charge of reconstituting the industry will need several years to put into place the reparations. This is truly unfortunate because the need is immediate and the industry isn’t in a position to fulfill that need.

It isn’t my intention to use this space to continue the long string of negative information readily available from numerous media outlets. Rather, it is to expose an alternative that can accomplish the aforementioned loss reduction and achieve positive yield.

Why private equity in hard assets as an inaugural effort?

While I can be made a liar very easily in predicting where the Dow will be at year’s end, I can state with confidence that acquisition opportunities abound in this environment. It is our solemn intent to preserve first any investment assets that are entrusted to the firm before we chase any return. Placing an investment in something from which we can collect a rent check, something that we acquire at significant discount relative to appraised value, or something we can place a shovel in are prudent value plays that allow us to stay out of the turmoil of the equity markets, retain principal and have significant high side yield potential.

This environment has afforded us acquisition opportunities from bank receivership, capitulated holdings, and long term relationships. Acquiring real estate at low basis is how money is made. It isn’t made when the determination is made to sell. This is where we see our value.

It is with a great deal of pride and effort that we have put this company together. I welcome you to inquire about what we are doing and going to do and appreciate you taking the time to read this.

Sincerely,
Russ Garrow