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While the company has previously originated loans in California – RCN lends in 45 states – the decision to open a bricks-and-mortar office was based on a need to have a firm foothold on the West Coast, Shaw said. “RCN realized that to push loans out here, it would be helpful to have boots on the ground, have people in this time zone who understand the market and speak the language, those kinds of things. So that’s really what’s been the impetus.”
Go West, young firm
Shaw acknowledged the current challenges in the market but disabused the notion of it being counterintuitive to open a physical presence amid such market uncertainty. “Obviously, there are challenges,” he said. “Rates were very, very low for a very long period of time – probably too long. The Fed is obviously responding, and we’re feeling it along with everyone else. It’s been interesting to see how opportunistic investors are and how quick to take advantage of opportunities as they come,” he said. “We’ve certainly seen some pivoting from the fix-and-flip world where, during COVID, you could buy property and do nothing to it and then three months later sell it for X percent more and make money on it.
“That of course is slowing down a bit. But on the debt service side of things, on these long-term rental loans where a lot of investors couldn’t turn around and make a capital gains kind of profit, they’re now looking at the buy-and-hold scenarios where they can earn income over time. And so we’re seeing a lot of people build their portfolios now. RCN has been in a position where we’re well-capitalized, and we’re able to step in and offer as low rates as possible so that people can actually make the numbers work.”
Shaw’s career further hints at challenges overcome. Prior to joining RCN Capital, he worked in bonds at Lehman Brothers and IndyMac Bank – “two blasts from the past that are no longer around,” he joked. “I’ve been in the bond trading and bond portfolio management side, but always in mortgages. I decided to kind of move up the assembly line as they say and get into the originations side. I’ve been originating and managing this office, and now we have four loan officers that work on my team. And we’ve got some open recs to expand that and create a pod out here to get a processor and closer to really make it a fully functional team.”
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