Scott: I’m excited to be here with you. I’ve got Tom Boren to join us from Aspen Funds. I’ve known Tom several years now. Tom is Cali-Texan as I like to say. He is somebody who’s moved from California here to South Austin, joined the reduced property prices and the bigger bang for the buck. You’re getting the fewer crazies, but you live in South Austin where it’s Keep Austin Weird everywhere.
Tom: Mine probably starts as many people and a lot of people don’t plan on getting into this. They fall into it from somewhere else. Going way back, I was with corporate, Marriott. It was great until 2007, 2008 hit the hotels hard especially in wine country where I was managing some hotels for them out in California. I decided to leave that and came back down to LA and plan on getting into a nice another big paying hotel job. Unfortunately, everybody else was out at the same time I was. I had to reevaluate that. I always wanted to get into real estate. I started working for a guy down in Redondo Beach and started doing short sale negotiations for him.
I was on the phone with banks and getting that done. We started doing settlements directly for borrowers, which was a cool program. I heard him in the back doing this note buying thing. I’m like, “What is this guy doing?” He’s back here buying notes. He finally led me into that and realized that my strengths were probably better suited to the other side of that rather than negotiating short sales. I started doing that. That’s where I met you on Noteworthy was the first time when you still have your megaphone back then or you had a buzzer or something you were walking around with. It was great. I got into that. On my second week of getting immersed into note buying, I was at Noteworthy for the first time. It was huge and big in Vegas and I was blown away with what was going on. I’ve gotten to that.
Fast forward a couple of years later that was going well and it wasn’t with that company. I decided to go elsewhere. I took my family’s personal capital and moved it into another company called Aspen Funds, which I did because I was selling all the loans I was selling out of the old company into Aspen. I was selling to a guy named Jim Maffuccio, who was one of our principals. I’ve called them up and said, “What are you doing with these loans? I know what I’m selling to you before. What can we do?” He told me about the funds. It was a good fit. I was an investor there. I got a call probably a year after that and said, “We want to start scaling this thing. Would you be interested in coming on board?” I did that and came on first initially completing up some cleanup projects for them and doing that. It’s moved into now I’m the director of all the acquisitions and trade desk. I’d been doing that for a few years with these guys. I was employee number four or five may be up to twenty now. It’s been a journey.
Scott: Jim is doing a tremendous job over there. We had some time to sit down at the Quest Expo and pick each other’s brains for a little bit. It’s amazing to see some things and seeing you do a rock star job as well. Let’s talk a little bit about the junior lien, the second lien market. I know you are buying stuff, but you are a little bit different type of buyer than your traditional note investor out there who are getting the game. You’ve been on both sides of that aspect. We were talking a little about where the market is going for, where you guys are seeing, but it’d be some of the hurdles that second lien investors are seeing out there right now.
Tom: There are a few things. One, the market has definitely shifted. There are a lot more people out there, the internet has expanded this along as some of the conferences. It’s brought some new buyers on, which is great because it’s always good to see new people in there. It also creates a little bit of a challenge with pricing. We’ve had a shorter supply over these last couple of years up until quarter one and two. 2018 was a difficult year for second lien buyers. We closed a couple of decent trades, but nothing substantial that allows us to grow. When you have a bunch of new people coming in at the same time is that it affects pricing. We had that issue. Plus, some of the stuff was getting older too. We saw a lot of statute of limitations issues, collateral issues always run rampant in this space. Some of those things come into ahead was made a little bit difficult towards the end of 2018.