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RG 195 – Understanding Economic Cycles & Market Volatility w/ Bob Fraser

Property investment

Bob is on a mission to help investors take advantage of one of the most effective and overlooked avenues of real estate investing; residential mortgage notes. Bob is the founder and principal of Aspen Funds which has purchased more than 1000 notes earning the company many annual returns with no risk or volatility. Bob made his first dollar peeling onions in a Japanese restaurant in his mid-teens. Bob went to school and studied computer programming at Berkley and then got a job in a similar field afterwards. This was good but he wanted to work for himself so in 1995 he took the leap and started a tech business with a very bad business plan. Pretty soon he pivoted and raised $44million in venture capital and won the entrepreneur of the year award. The business did very well and grew to 300 employees. During the dot com crash the company failed and Bob lost everything and went to being worth $0 overnight.

Bob says that when you receive a financial blow like this the only way to stay together is to have hope and mental fortitude.  He started a hedge fund in 2008 which was terrible timing in retrospect and it didn’t go well. He then realised that he didn’t want to be involved with public markets and volatility. He learned lots about money and investors during this time and discovered the market he wanted to work in. At this time he met a business partner who was working with mortgage notes. This business partner had also lost everything financially and had realised that the people in real estate who were winning were those in the debt area – the banks don’t lose much usually. Bob was looking for something outside of public markets so this was a match made in heaven and they started up a business together in the note space and never looked back.

They have chosen he residential market over the commercial space. Commercial real estate is driven by CAP rate which is linked to the economy so Bob decided to stick with residential because it’s linked to earnings instead. If the economy goes down then people still have to live somewhere. Although it’s harder to get the big numbers it’s a safer space to work in.

Top tips

  • Most important habit – Morning coffee 
  • Most influential tool – Power BI – Microsoft software for data analytics
  • Most influential person – Two gentlemen who worked for him at the tech company – learned about management from them
  • Failure – The first business – a smart business is not always smart in the long run
  • Contact – aspenfunds.us