EP. 67 // How to Overcome Adversity by Building a Resilient Business w/ Fuquan Bilal
Today we have a Newark native and the CEO of NNG: Real Estate Investor Fuquan Bilal.
Ever wonder how adversity can shape your destiny? Today we have Fuquan Bilal on the show, a successful real estate investor whose story is one of the wildest we've had on the show. From discovering his passion for real estate investing to surviving the 2008 market crash and a violent shooting, Fuquan's journey is a masterclass in resilience. Listen as he takes us through his early days of investing, the valuable life lessons he learned from fatherhood, and how facing significant challenges only fueled his determination to succeed.
Fuquan reveals the harsh realities of experiencing a financial downfall and how this eventually led to the birth of his real estate fund: NNG Capital Fund. He talks about his foray into the note business, the trials he faced while setting up the fund, and how his son served as his inspiration. Fuquan's diverse business model, encompassing fix and flips, multifamily properties, and notes, is a testament to his adaptability and keen understanding of the market, and is the trick to how he's built a resilient business in adverse times.
But there's more to Fuquan than just his business acumen. He's also a community hero, turning his personal experiences of hardship into a catalyst for positive change. He opens up about his experiences in the low-income communities of Philadelphia, and how creating job opportunities for ex-offenders earned him the moniker of a 'hood hero.' The episode wraps up with Fuquan sharing his strategies for building investor trust, managing assets, and his plans for future expansion.
Tune in for a great episode: this guy has an incredible story and even better business advice.
In This Episode:
0:00 Inspirational Real Estate Stories With Fuquan
3:51 Financial Challenges and Building a Real Estate Fund
14:34 Impactful Stories and Personal Growth
22:57 Real Estate Investment and Impact
34:53 Setting Up a Business Plan Mistakes
39:41 Building Investor Trust and Communication Strategies
49:02 Asset Management and Expansion Strategy
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Fuquan Bilal
Host
00:00
Come out the door like, excuse me, what are you looking for? And I got come on, I'm looking for you. Boom boom, boom, boom, boom and shot me like five times. It was crazy what? Yeah, it shot me five times. It's like no big deal. That was the best thing that happened to me, man, because adversity brings growth right. There's things in life that you go through that really make you look deep within Three, two, one go.
David Choi
Host
00:30
Today we have Fakwan by Lau, Correct, by Lau by Lau. Fakwan is probably got one of the craziest work life experiences I've ever heard when it comes to real estate investing. I had the pleasure of spending like two hours waiting at the airport waiting to get back to Newark after one of our mastermind conferences.
Fuquan Bilal
Host
01:00
That wasn't a pleasure.
Eric Panecki
Host
01:02
Sending no waiting for the flight.
David Choi
Host
01:04
It wasn't a pleasure for him because I was asking a lot of the questions and he was just kind of mentoring me. But Fakwan just started telling me some of the just insane stories. So, guys, if you're going to listen to an episode, this one's incredibly inspirational You're going to get a lot out of it. Fakwan, thank you so much for coming on the Deals and Dollar podcast. How are you doing?
Fuquan Bilal
Host
01:27
today I'm doing great man. It's an honor to be here. This is my hometown. I was excited when we were in the airport. He was like hey, I got this podcast, why don't you come check it out? And I was like sure. He was like hey, is that my office? And I'm used to doing podcasts in Zoom, so this is actually the second podcast that I've done in person. The other one was Steve Trink, where I had to fly out to how was that?
01:49
It was great because I staggered it around the mastermind, where we actually set it up, and did that. But actually I didn't get a chance to do that Because we set it all up, we were excited about it and the day I was supposed to do it I had to fly home for emergency Because my 14-year-old just started high school and he was not waking up. While I was at CG, the school kept calling me and I'm sitting at the mastermind. They're like your son is not in school. Oh my god, because summertime eighth grade teenager kids staying up late overnight.
02:21
And then he went to high school I flew out and he wasn't getting out. I mean, the school was a block away from my house.
David Choi
Host
02:27
So I was like dude, you can't get up, it's crazy.
Fuquan Bilal
Host
02:28
So I had to fly out and go back and I missed the podcast.
David Choi
Host
02:31
All right, so rock and roll. This is the first of Whole Foods Radio. Deals and dollars. Baby Fakwan, I don't think I'm going to be able to do a better job explaining who you are and what you do. Can you just kind of tell the audience a little bit about yourself?
Fuquan Bilal
Host
02:48
Sure, I always like to start off with and we was chatting about it before we pressed record that I'm a superhero to my kids. That's really important to me Because when I got into the business, like most people, what we are is a slave of the money instead of a master of it, and what I mean is we're always chasing the next victory to the next thing, right. So when you get to the top of the mountain, you've got to keep going up and up, right. It's never over. And for me, I wasn't the best father to my kids. So until the market crash, as I was telling you, the story was in the airport.
03:20
When the market crashed in Hawaii, I had started real estate in 1999. Jumped out the window, grew wings fallen down, as I always say, had the opportunity to ride that wave and made a lot of money. Young kid started off at 24, made a lot of money, chorus, all the materialistic stuff, the cars and the trips and all the other stuff that we do. I didn't have financial literacy growing up. To me, the fancy car and the Gucci and Louis, that was the self, that was the worth, that was the value, until you have everything and then you're like OK, this is it. But when the market crashed, I learned a very valuable lesson, because I lost $2 million of my personal money. I had a lot of money tied into the deals. I paid all my investors back, had to start all over again and I said that was the best thing that happened to me, because it really showed me truly who my friends were and basically what was the real value in life, and I quickly understood that family was important. So my phone stopped ringing, deals stopped happening, things were bad financially, you wanted to go on through a divorce liquidated and a lot of assets that I had and I basically got custody of my boys and that was the best thing that ever happened to me because, first of all, I didn't want another man to pass their values on to my kids. So me having the opportunity to sit in stillness with my kids because business completely slowed down.
04:38
I had other businesses that was an offspring of what I did with real estate. So I started to wind those businesses down and really focus on my kids right Taking them to school, picking them up, taking them to the park, playing I think at the time the game was four square with my boy it was the second, third grade, whatever, and I had a little smaller kid, so raising those two boys really made me become the man who I am today. So I always like to start off with saying a superhero to my kids. We actually just came back from Sarasota this weekend going through like triumphant, which is like a really crazy parkour type course to go through. But I do a lot of stuff with them. They keep me active, they keep me young, but that's kind of really what really helped me make the transition of my life to becoming a man who I am today. So, yeah, Amazing.
05:21
I mean, that's how I got into the note business my son actually. He was there at the time and when the market crashed in 2008, around 2010, I thought I'd reconciled everything, got back on my feet and I stumbled upon a note business from doing short sales, because that was the thing that was prevalent at the time short sales. So my son hear me talking in the car, talking to a negotiator wouldn't do the deal. And I was like I mean these banks, I want to give them home on a reprieve. And he was like why don't you just become the bank? I was like that's impossible. He's like dad. I thought anything was possible.
Eric Panecki
Host
05:53
I was giving him all the motivational talk and I'm like ah.
Fuquan Bilal
Host
05:56
So I was like, yeah, so I started to look into it and I learned about how to create a fund and I started to call a lot of SEC attorneys. I was calling all the shops. That's like the all in one We'll do the PPM for you, we'll help you raise capital, and we'll take 90% and you do all the work, we'll give you 10%, and they just give you a boiler template and you really don't understand how a fund operate. So I started calling around interviewing SEC attorneys and a friend of mine actually referred me one that he was using, consulted with him a few times and he really educated me in the whole process of how a fund works. And for me I looked at it like that's the bank right there Setting it up and that was a great experience going through that whole process.
Eric Panecki
Host
06:37
But yeah, that's how we got into the new business. So I think it'd be useful if you could just tell everybody kind of where you're at now and we could work it backwards into how you got there.
Fuquan Bilal
Host
06:48
Yeah, right now we manage a $50 million fund. This is our fifth fund. We've cycled through four funds successfully. That's a whole different business. So for those of you who want to go out there and raise capital, don't think it's like, oh, I can flip deals, I can run a fund, I can do it. It's really take a lot of focus and it take time. It take track record right, because, imagine, you're taking somebody's savings. They have to know, like and trust you, in that order. So we're in a podcast now. People are getting to know us. Eventually they'll watch some of our content, they'll like us and eventually we bring value. Then they'll trust us and they'll do a deal. That's the pyramid. So basically, that's a whole other business. It take time. It take time to build the track record whether your historical returns investors look for stuff like that and it take years to get to that level. Even if you've been in real estate for 10 years but you never ran a fund, you're day one in that business.
07:39
So, people don't realize that, right, you have the real estate track record, but you don't have the capital management track record, which is completely different, right? So, yeah, I mean for us that we had to go through the ups and downs and learning that business, and it's like having kids Always running a fund is like having kids, right, you learn as you go. You have pain points. Great, great point. Yeah, that's where we are now and pretty much our business model consists of fix and flips and multifamily. We do have some notes in the fund, some legacy stuff. Our model has changed over the years because the market changed, so you have to be able to pivot with the market right.
08:19
So what I try to do is use the tools in my tool belt from things that I've learned over the years and at the end of the day, it all comes down to real estate, right? So we buy a note and the home owner don't pay, we foreclose, it becomes an REO, it's a fix and flip deal, right, it goes back to that. Or if it's out of state now we can actually find a local investor and do a seller carry back, now it becomes a note. That's another strategy, right? Or we can buy a tax lien, foreclose on it, make it a fix and flip or rent to whatever it is. This is our real estate related at the end of the day. So over my 24 year journey, just utilizing the tools that's in my tool belt to kind of get to the exit point the best way I can.
David Choi
Host
08:57
Beautiful. You know? One thing that really sticks out to me for Quan is what you did when shit hit the fan, when you lost $2 million and you said all your investors got their money back.
Fuquan Bilal
Host
09:15
Yeah, I mean for me, you got, you could. And the funny thing is my account at the time was like hey, dude, just file bankruptcy, you don't have to pay this money back. And that was the vice I was getting from my account file bankruptcy, you walk away, you start all over. And for me it was. It was like okay, if I put myself on the other side and I was an investor and they was losing money like crazy I was hearing the stories. People were just walking away from stuff. That was what happened. What was happening?
09:39
People were strategically defaulting on their loans, you know, to try to get a loan money to rework it out. People was gaming the system and for me it was like, okay, I took these people money, I made them a promise and if I can make it to the other side, you know, these relationships will still be there, right? People don't understand there's a whole. Another part of raising capital is that relational capital that people don't look at. They just look at the money. But having relationships is you guys have relational capital invested, there's equity in your relationship and when people look at it like that, there's more value and just, you know, file a bankruptcy and start no lower again, right? So yeah, for me it was I'll pay them back because I had the fire sale everything. That's how come I took the short, because things were 55 cents and a dollar.
Eric Panecki
Host
10:23
So what were you doing? This is a wait, right. And what were you were flipping houses.
Fuquan Bilal
Host
10:29
That's all I was doing. No rentals, got it. No rentals.
Eric Panecki
Host
10:32
So you had a bunch of properties. Market took a dip. You have, you know, all these investors and now you're, you're underwater, on, on.
Fuquan Bilal
Host
10:41
Correct and I had the fire sale and some of them were downward construction, some of them were middle construction. So the way the deals were structured was investors give me capital, I will put up 20% of my money and then a rehab. So I had skin in the game. Okay, right, so they had low leverage. I had skin again. Hey, I can put up 20% and I can do all the rehab. Right, rehabs back then was $60, $80,000. We had a lot of projects going to have stuff in Philly, a whole portfolio in South Philly. Before people started going to Philly, I was in Philly in 01, 02. And when we get properties for like six, seven grand, it's crazy, it's crazy.
Eric Panecki
Host
11:14
Yeah, yeah, yeah.
Fuquan Bilal
Host
11:14
South Philly like we're Home Depot, is that South Street? All that that whole area was down there. It was like you go home on a whole block for like 50 grand, but you had to deal with what was down it to. It was the streets, you know the hood and everything else.
11:28
But yeah, so it was exciting exiting out of some of that stuff and like 0506. And I would say I pretty much exited out of Philly before the market crash and what happened was because I was in Philly, I didn't have the capacity to do Philly and Jersey, so I was just doing deals right. No structure, no operation, no EOS in place none of that stuff Just like you know, willy nilly and I learned my lesson.
11:57
My ass got handed to me and I got punched in the face, but you know I fight better with blood in my mouth. I like adversity. I grew up through adversity, growing up in Newark and growing up through hardship. That's what make you stronger. Right Going through that adversity.
Eric Panecki
Host
12:11
Oh, and so you know you, you took it on the chin and you pay back every single investor pay back every single investment.
Fuquan Bilal
Host
12:17
In fact, I still have some of those investors that invested with me today. Yeah, absolutely. Yeah, that's amazing. Yeah, so to me I looked at it as a lesson, right. So all most of my money was tied up into the property. Plus, I had to still keep paying interest for some of this stuff. So at the end of the day, when I looked at it, it was like I don't know, 1.93 or something like that. So, yeah, wow, yeah. So $2 million, like wow. And it took me really almost two years to get out of everything you know to liquidate. So, because I didn't want to take a cheap like $0.55 cents or the dollar, like no, it's worth more, but everything's around is like cheap.
12:56
So a good friend of mine said, look, just sell it all and come back in, but still it was really tough. Short sells was really prevalent then up until probably maybe 2012. I mean it's still happening now, but I mean really it was like short sell operations.
13:11
You walk in and an attorney has 300,000 under process, right. So, yeah, that was, those are crazy times. But I'm grateful for those times because the people who was just getting started in real estate or before COVID, right, and then when COVID happened, they're like, holy God, what's going on? Yeah, this is crazy. Those are the people who I saw really struggle and close shop and go out of business really quick, and even now there's people who struggling, who came through that and was like, oh, that was the worst thing happened. You thought they would have learned a lesson, stress tested the model a little bit more. Like we're still buying at the model we built when it was COVID, when we thought the life world was about the end, right, and we were like, okay, we need more holding costs, we need to stress test this with. You know, a high interest rate, longer holding costs, stuff like that, and it's hard to find those when you do that, right, to put it in that buy box. So, yeah, For quant.
David Choi
Host
14:06
I think one thing that you mentioned and what would be crazy if I didn't ask is you've been an operator. You started off in the hood.
Fuquan Bilal
Host
14:15
Yeah, for sure.
David Choi
Host
14:16
You're, you're born and raised break city represent right, let's go. Baby, newark, baby, come on and you, you start. You. You acquired assets throughout. You know some of the toughest parts of New Jersey and In some of the most dangerous areas of Philadelphia. While you were in these areas of Philadelphia, what were some of the most memorable and impactful stories that you encountered? Wow?
Fuquan Bilal
Host
14:44
I'll tell you one quick, funny one. When I, when I first got started, I really didn't understand how the contractor and business work and we had a contractor who finished a job. We went to go do an inspection and we was turning on the water. We flushed the water and hot water came out the toilet. We flushed it all in hot water, came out the toilet like this it's steaming, what I mean. I had literally crack heads doing the work. So it's crazy. I was like why is it hot water?
15:10
And it's all. It's like a. That's a funny story. So I mean for me, what gave me my feeling of importance? David was really Going back into the communities at and value putting the properties on a tax roll, given a residence to play, to play. So there, because I grew up, you know, in the 80s, right when crack at the street you walk outside your house you see dope, crack, vows, needles like syringes and stuff. It was just crazy.
15:36
So, I'm growing up in areas seeing a lot of it was just desolate Seeing a lot of dilapidated properties, burnouts, fire. It was really wasn't really as bad as you see. The visuals from the Bronx back in the 80s like was crazy, right, but Stuff like that. So when I had the opportunity to come in and buy in those areas, that's all I knew was where I grew up at right. So if I go I can buy a house over here, fix it up, right. So you become like the hood of hero. You begin to hire people within your community, people who have records and stuff like that.
16:05
Right guys who get arrested or I can't get a job, was a director. Oh, we have this demo job for you. This is all we can have you do. We can set up a demo crew and have you demo all these houses and clean up and just do small Work in that. So we did that.
16:18
And the most memorable thing I would say was I remember March 30th 2001. I'm sitting in my office. At the time I had a partner which was a cousin of mine and he actually got me into the business and I used to shadow him around when I was working in corporate and Did a deal and, just you know, put my two week notice in. But A year and a half later we were, you know, already in a mix and I was in my office March 30 2001 and it was this setup basically it was a robbery, was paying everybody cash and and basically I guess someone got wind of it and we had already made payroll earlier that day because it was my cousin's birthday. So we made payroll.
16:53
I'm in the office, the door open, we're in Irvington at the time and so somebody walked past my door and I'm like, who is this? Come out the door, like, oh, excuse me, you're looking for. And I got, come on looking for you, boom, boom, boom, boom, boom and Shot me like five times. It was crazy what? Yeah, shot me five times, I still got. I got stitches like All the way up here.
Eric Panecki
Host
17:14
You're not watching. He is like a yeah all the way up stomach stapled and Bullets holes here, here and everything else, oh crap actually played dead for the guy to leave, because he goes yeah, yeah, it was crazy, that was the best thing, that was the best thing that happened to me, man, because the first thing was that happened to me Seriously right.
Fuquan Bilal
Host
17:39
So what happens is, as I mentioned, adversity brings growth, right. So there's things in life that you go through that really make you look deep within, right. The second thing for me was when the market crashed and lost the money. The third thing was my divorce. The first thing was when I got shot five times, because when I happen again, your circle, who you're around, right, you got to pay attention to that. You can't think, because you're going to a community helping people, that people are grateful that they're going to protect you. No, it's, it's. I wasn't Really paying attention to my surroundings and the people I had around me, right. So that really woke me up and go deeper within to myself. So I kind of cut everybody off family members, everybody kind of cut everybody off and went deeper into myself and I was more successful with that year than I was Previously. Right, that year actually sold 34 houses. That happened in March.
18:33
It took me really about six months to heal but I was working from home, you know, working out, trying to get back on my feet, and I learned I'd appreciate those small things that you probably forgot about. You did this morning, you know, tying your shoe. I can even bend that a time I shoe, put my pants on, taking a crack. You know, I mean people. Just, these are simple things that you do every day, that you take for granted. That really helped me learn to appreciate the very small things in life, right? So that was that was really impactful. That's the most member with thing that I can think of, and I'm grateful for that, because it it actually made me stronger.
19:13
Right it made me more as Brazilian.
Eric Panecki
Host
19:15
Was it people in your community? Did you know what?
Fuquan Bilal
Host
19:19
a guy who actually shot me. He actually is. He's probably gone for life now because he had shot a truck driving Pennsylvania. I think the story what I read in the paper. He rolled down Pennsylvania and was stolen motorcycle the. He ran into a tow booth. Stute state trooper chased him. He dipped off, got away, found the truck driver, took the gun truck driver by gunpoint hostage, made him drive him all the way back to North, shout him in the head and left him dead on the side of Valley fear chance lab in on Valley fear over there.
19:51
Yeah shout him in the head, left him dead. There he was with another kid snitch throwing him, and told on him and, yeah, so he got like they were trying to give him a death penalty because it's common law in Pennsylvania, whatever it is, and I guess he copped out to life. So For me is like, again, I'm grateful that that happened, because of the circle that I was in, the people that I was in, it still was like a street element.
20:14
So for me to separate myself, from that and then, you know, I started going deeper into myself, reading books and learning more about life and stuff like that. You know it's great.
Eric Panecki
Host
20:24
So Like, obviously you grew up in these, this environment, right? And you're saying you know there's a street element of your circle. What is it? What is the saying? That you're the average of the five closest people to you. So, and now look at you. Right, you know, successful by all measures, not just money. It seems like you have a great family and great people around you. How did you manage to break out of that?
Fuquan Bilal
Host
20:49
Yeah, for me. Well, let me go back to success. As Larry Yacht says, success is Is an optimized daily experience, sustainable with time, is not much money you have, how much accolade you have, degrees and all that is An optimized daily experience, sustainable with time. For me. I'm grateful that I grew up in this community, because when you have street smart some most of the time it will you will outwork a lot of people, right?
21:13
You can see the snakes coming. You can see Certain people trying to get slick, so that's helped me a lot in the corporate or the environment that I'm in now. I mean, then I walked through a lot of rooms and I look at people like, wow, they have no idea where I come from and you know the way I grew up, and just to be grateful to be in these rooms, that kind of you know, make me feel good. But going back to your second party, a question was or your question actually Was how did that make me feel going through that where I am now? You mentioned it right. So if you want to grow, you got to get around people. Who's smart on you and that's one of the reasons that I joined collective genius right.
21:46
So I knew I would be in a room where there's people hundred times smarter than me, not by just a bigger business or bigger things are doing more Dills, but just doing things different right that I can learn from. So I look forward to going to those masterminds every time to learn more, to make myself Become better. Right, you only, your business will only grow to the extent that you do so. Starting to read and Hang around other people will help me grow to another level and I constantly, you know, want to do that. As Um, let's rise is saying OQP, only quality people.
Eric Panecki
Host
22:19
Hmm.
Fuquan Bilal
Host
22:19
You know, keep those people in your circle and you always grow.
David Choi
Host
22:22
Hey man, I love that. Amen, you know, for quad, you have a. When I first met you, I was like what is it that you do Right? And? And you told me something really powerful the mission of your company and why it is that you do what you do on the multi-family side, right. How did your you know experiences Is working in these neighborhoods, trying to give back but still getting screwed. How did those those experiences shape the way that you approach real estate investing today and Influenced the strategies that you use to to really succeed in these markets?
Fuquan Bilal
Host
22:57
Yeah, so great question. I mean, there's good people in these areas, and low income areas is good people. I grew up in that, so I know there's good people there, right? And and you really got to look at it as, like I mentioned earlier, when I first got into real estate, it was about the money. Yeah right, and then when you get to a certain level you like, okay, you know what value are you bringing.
23:17
So, now it's about the impact. Yeah, so being able to go to these communities where I know I can add value with my skill set, that gives you my flood of importance. So that's really our mission today is to go into Tercerary, secondary markets like we're in Macon instead of Atlanta, right, everybody wants to go to Georgia. I'm investing in Atlanta, I'm doing multi-family Atlanta right. So we're in Macon, which is a secondary market. We know that it's up and coming. We can add value there.
23:43
We in Columbus, which is another tertiary market, where we know military base, you know we can add value there as well. And it's just a such good feeling when you can go into the property, renovate it, bring it up to to standards and give the residents a better place to live, plus providing the low-income people still a place to live, because Most of the people that go to multi-family they play as I'm gonna buy it. There are some cap X, raise rents to the max and we're all gonna make great profit. But there's not a lot of people who say I'm gonna keep a certain percentage of this building unless they're forced you know from the, from the government, to do that right. Most of these new buildings you see come going up and like limits and short hills and stuff.
24:22
They got to keep 25% for low income to mix it, to get them into the school system. So we kind of follow that same model to make sure a percentage of our units are government back. Better women and children. Section 8 If it's a program like we have a river edge program and making where it's like disability people, maybe AIDS patients, you know people, stuff like that. So you know we provide housing for all of the above. So you know.
David Choi
Host
24:46
I love that man for sure. I love that to be able to combine your business acumen, make money and also make an impact. I think that's really admirable man.
Fuquan Bilal
Host
24:55
Really, that's really what say this to cove it. Really, those government back programs, they kept paying, you know so.
David Choi
Host
25:01
God has a funny way to come back right. That's awesome, bacquan. You, you, you and Steve have a very similar Steve yeah, Steve, yeah we call. He used to be Steve Lloyd, but after after he hit big, we started, he bought the yacht. Now he's Steve yacht. Right, that's life. So you and Steve have An unbelievable fun structure.
Fuquan Bilal
Host
25:31
Well, steve actually is not in my fund. He has his own fun. Actually, steve mentored me on how to raise money. Yeah, he, he mentored me. So, carl Fisher camera plan IRA company he actually came to speak at my first note event because when I got into notes and I started to educate people about notes Right. So when I first started buying notes, I started to build up a base of people who would buy them from me, but I had to educate people first Almost like a centenna is doing in South Jersey, right? So he's Educating people on how to get in a real estate and he's wholesaling deals to them right? I've done the same thing where I started buying a lot of notes and educating people how to buy notes and then they become a Downline of buyers.
26:15
So Carl Fisher came to speak at one of my events and his topic was about IRAs and that's when I really first learned about IRAs like this back in 2011, 2012 or whatever and he had a act. When I was thinking about creating a fund because of my first fun was in 2013 he had told me hey, I got a connect you a, steve. So we went to a it's a private money lender that's actually the name of it convention, and he plugged me with Steve. We had dinner, we hit it off and he became our mentor on raising capital. So he would tell me things on what I need to do pay on time, communicate, you know, make sure you do the right thing, make sure you protect your investors. You, you know, make sure it's secured all these good things that you need to know.
27:02
And I'm yeah, he meant to me, but he has his own separate fund. He has his own separate fund that he does, and sometimes he will do, like strategic partnerships. Fun to fund deals, you know. So if I have a deal and, for example, my first million dollar note purchase, you know I was buying some notes. Hey, I got this, these notes in the contract for million dollars and basically we kind of did like a fun, a fun thing where he Help me take down an acquisition, so yeah, it's.
David Choi
Host
27:29
It's an amazing and unique fund structure that you have and it's something that me and Erica actually hope to emulate Going into the future. You know a lot of syndicators, a lot of people raising capital for real estate deals. Go down the. You know the traditional Grant Cardone model, aware, or you know, you know the typical hole. You know the syndication groups, right, they, they do preff, they do they do equity, they charge a bunch of fees along the way and if the asset performs, everyone wins. Right. But your model, from what I find is, is you have to do less deals, you just have to be incredibly selective about it and your investors get a preferred return. Only can you kind of just walk us through a structure.
Fuquan Bilal
Host
28:17
Yeah, so when I first started to learn about how funds work, there's several different ways you can do so. It's a fun. And then syndication syndication if you, if you're doing a one-off deal, you can do it from a single family, a Point of view, or you can do it from a multi-family. I'll start with the multi-family. Usually there is the capital stack, right, so there's a lender in first position and then you have the equity portion. Right, I'm in that equity portion. You can go where the investors are a second position, where you can raise Equity and a syndication and you can give investors a 70, 30 split, 80, 20, 90, 10, whatever it is right. And that's all based off your experience, right, less experience the more the pie you're gonna give up, right? And then you know usually with how that structure is, hey, I'm gonna give you 70, 70% equity, I'm gonna take 30%, I'm the general partner, you're the limited partner and there's gonna be a waterfall structure when you're gonna get a prep of six, seven percent, where you know that's gonna be a monthly payment and anything Above that you know goes to you. So you get your full 70% and then I get my 30% in the end. And then you model it out. It could be a high team or whatever it is. You know IRR. So that's one model. The other model is you can actually have first lender, you have mezzanine funding in the beginning and then the investor equity portion will be third, which is really risky for some investors, I'm. So they should know what position they're in if you raise an equity. If they are third, second or, most more than likely, the institutional, and it will be first, unless it's a really small deal. So that is the syndication model. You can do the same thing with the single family. You can do a single family in short hills, that's. You know you're buying it for 800,000, you put another half a million into it and you selling it for three million. You can set this structure to do the same way. Then there's the fund model and that's the model that I like. We're in the fund model to have an equity portion also, but we run a model where the people who are just debt investors, so they come into the fund.
30:16
We have different classes in the fund and our current model is we have a class BCD&E. So B is the long term five years, I'm see is more like a liquidity class. We use that for short term is a 90-day call option. I mean at any time in the fund they can call it. They get their full principal back in 90 days. Then we have a B class which is a two-year term and a E class which is a one-year term. So those minimums is different minimums like B, and C has a fifty thousand on the minimum, d has a $500,000 minimum and E has a hundred and fifty thousand on the minimum. I mean they all pay the higher. The class D is 12%, class E is 10%, c is 9 and B is 11.
30:58
So basically, investors has the opportunity to put money in the fund for the how long they want to, based off their portfolio. If they need something that short term because what we are in the marketplace, or if they need something that's long term because they have the IRA, they're not gonna pull money out until you know later on, so they can let it ride. We have a compounding feature, so it just depends on the investor right. A year ago or a year and a half ago it was more of an equity play where you saw more investors that were interested in syndications because they could make a higher yield Right, if they went longer term. It got an equity piece. But I just decided and we felt miserably at setting up a syndication, full transparency and I'll tell you that really short. But I Discovered that the model we have is best right because I have a mixture of assets in this vehicle that will produce cash flow. That's a buffer heads against market uncertainty right. So now fix and flips is slow. We still have cash flow for multi families right.
31:56
It's hard to find deals and fix and flip so the multi families bring that cash flow to the generate profit to continue to pay investors To preff that we agreed to pay them right. So if you have a one-off type of deal, if you was just in fix and flips and you had a fund doing that, you probably won't be going to meet preff right.
32:13
Because you're gonna have yield drag because the timeline of the project. Investors need to get paid. It's you know you want to have different assets in a fund where it could be a buffer ahead Against market uncertainty. So I believe that played a lot, not success. The quick story on a syndication we had 120 units, 10 million dollar deal put on the contract and we were getting close to close. We set up the syndication. It was Q2, it's market change and the Q2 Q3 last year. Interest rates started to you know the team year was jumping up and down.
32:46
Unpredictable investors are getting worried in the news you know, things are going bad, news things about the crash and Investors were fearful. So we had to do what I call in this industry is eating, eating dog food like we had to fund it ourselves. That's what. Like that's what you call eating dog food when you got to fun at yourself. So we did that. We try to backfill the syndication and it was going really slow and I made the decision just to wrap up the syndication Because it was really hard to raise cuz coming from Q4 to Q1 of this year. Investors were sitting on the sideline, it was just really tough. So but that was a blessing in disguise because it made me know that the model that I have, I need to stick to it.
33:24
I tried the syndication because investors say I want the tax break and you know I want to get an equity portion. I was like I never did equity. Yeah, I think this work for you. If I can get you a 12%, that's really good. If I get you 9% is really good. Right, and our fund is. You know, I can't tell an investor I can guarantee you this rate, but what I could say is that is cumulative, meaning that if I don't make the preftest quarter and I've run into profit next quarter. It's cumulative. You'll get it right so you know.
33:54
That's how it's set up and that's a successful model. I believe us. I don't know if that works for other people.
Eric Panecki
Host
33:59
I always like to say that I learned from other people's mistakes, but really I just like to make them my own. But I'm gonna, you know, for the people that do learn that way you know what. What mistakes have have you made in setting up a fund that you know? How'd you avoid it? Maybe would have catapulted you or saved you a bunch of?
Fuquan Bilal
Host
34:16
in a setup portion, I think, not having a clear business plan before I started. So usually what I like to do, especially for like a joint venture, so you could do like a sidecar model we're like, say, for example, you say, hey, for one, I got this really great deal and we're less, less partner on it. Right, we have this 30 unit is X-minus partner on it and I say, okay, let's do a term sheet, let's outline our responsibilities right, who's gonna do what? What's the percentage We'll have a term sheet will agree on and that first and then we'll take that to an operating agreement. I think the mistake I made was trying to build the operating agreement at a 550 an hour or at that time you know, 400 bucks an hour rate with an SEC attorney and spend like $25,000 Just to get through all the paperwork, back and forth email. So not having a business plan together up front and trying to figure it out as you go along, I think that's a mistake that I made. My first fund cost me $25,000. A set up the funds after that cost me less than $10,000. Right, because I just said, okay, I already did one. Let me take this and let me put I knew all the steps and questions the attorney had asked me up front. So let me fill in the blanks and let me just send it to him and go here it is. So there's less back and forth, so I think that was a mistake that I may not really Having a concrete business plan in place. When I first set up my first fund. What else? I made tons of mistakes and setting up, let's see, oh, not understanding that I didn't have to actually set up for funds, right? So I said I told you when we first started I cycle through for funds.
35:54
I could have still been on for one, but just added additional classes and had a long, extensive track record and one fun. Right, I could have been from the fun I set up in 2013. I can just sell, can set a start, a new fun. Let me just add another class and a description of what we're doing here. Is this right? So? And now you have a long track record accounting everything. So if he was a hey, what are your historical returns? You could boom here. You go right here, right? Because when you start a new fun, essentially starting all over again, that fun has no track record. Right, you can say I did this and that fun. I know would have this fun done. What have you done with this one? I'm giving you my money for this one. So those are some of the things that I've learned and I still learn. This is a whole new business, I keep telling you is raising capital is a business within itself, right?
David Choi
Host
36:38
Absolutely so you have a. Is it an open-ended fun, close-end.
Fuquan Bilal
Host
36:42
No, it has a cap on. It Is a $50 million fund. We launched this fun in January last year. I was just looking at the numbers yesterday with my best relation team. We raised 30 million, 750 so far. Nice of the 50. So yeah, once we reach the 50, that's it. We have to open up another class, another fun, because when you open, add another class to the fun, you can start all over again with another limit and you disclose to all investors and basically is peri pursue, is not One class is in front of the other, you know it's the same.
David Choi
Host
37:17
So yeah, we tried to raise money for a pref only deal and it was hard it is the reason.
Fuquan Bilal
Host
37:28
I would say it is because when you have investors that has been investing with you for a very long time Ten years they know your track record right and if you tell them, hey, I'm, I'm structuring it this way because I believe it's safety for you, right? I believe if I I'm gonna give you a yield we're in an inflationary market I'm gonna give you something that I feel comfortable with as a sponsor, that I know I can pay you. So do you want me to pay? Do you want me to promise you we're gonna make 18% and you only make 12% of you? Be mad at me. Or do you want me to say, hey, listen, this deal is really good. I think 9% will be great for you, right? We have these short-term classes where, if you find some are something else is paying better, hey, you can go with that right, you pull out and go there so or do you want me to promise you this and then, if I hit 12, you're upset with me?
Eric Panecki
Host
38:18
and that's generally.
Fuquan Bilal
Host
38:19
That's generally what happens. I mean, I'm in some syndications, I invest money passively also, and these guys are like, hey, 22% IRR, and it's like you know, I'm in year three and like this thing is doing a 12%. I'm grateful, right, because 12% is good, but it's not. You know what he got me all excited about in the beginning, right? So that happens all the time, happens all the time over promise and on the delivery, you know yeah.
David Choi
Host
38:43
So what I think you you know when we're sitting down at the airport. You gave me some unbelievable advice For for raising money and how to make sure your investors stay happy. Can you kind of share some of that? What you do to make sure you know you're sure?
Fuquan Bilal
Host
38:57
customer service. So here's what the most people are see do, right, they market, they do webinars, they get the investor in, the investors in the money, and then you know there's no communication after that. I mean it'd be like Quarterly updates. You know an email, a quick 15 minute video, but there's really no relationship that's building right. So you have to make the relationship more than just transactional. It has to be and I think this the right word transformative, think that's the right word, I don't know. So instead of just transactional and what I do actually is I Communicate with investors.
39:41
Like I was this in Atlanta because I went to do some due diligence for another property and making that we're buying, and as I was being driven to because I had to go to Columbus, as I'm being driven to Columbus, I'm in the car texting all my investors hey, how's it going? Just checking in and making sure everything goes right. Are you enjoying yourself? Like I don't want any money, I don't want anything, just checking in, texting, taking that time to personally text you know, couple hundred investors. I'm like okay, this is gonna be like a two hour ride. How can I use the best of my time? Let me tap in and communicate. Oh, thank you for reaching out people schedule call. I want to. I've been meaning to call you right just from that two hour ride. I raised probably 300 grand just for texting and following up with people right because I Would.
40:26
I've been meaning to call you. Here's the link set up a call boom. They set up a call right and I wasn't intentionally doing it for that, just touching in with them. Or referral right hey, I've been paying you on time for two years. You know, if you think this investment is great, can you refer three people and I may not refer three. They may refer one Right and you raise capital from that, also from referral right.
40:49
A lot of people don't tap into that referral network but again, that comes from having a track record paying on time, doing what you say you want to do, having that communication Even when things go wrong. Right, because things don't go right all the time. Let's not kill ourselves. Everybody don't run a perfect business, right? So you have to communicate. Hey, we have an occupancy issue at this unit here. These other units are doing great, but we have problems here. Hey, we had the fire property manager. They wasn't executing on the plan.
41:14
Hey, we had to do is and you're being transparent with them, the good, the bad and ugly. They appreciate that. You know, instead of saying everything is great, we're doing great. And you know, behind the scenes in the office, you're putting out fires constantly. So you have to be transparent and tell them that.
41:29
So those are some of the things that I do really to get the investor to Really trust a little bit more, right, because at the end of the day, that's really what they want to know that they can trust you to be honest with them and telling when you are having problems and what the solution is right. So we've increased our communication. Instead of doing quarterly, we do monthly Right live webinar ask your questions, you know. More transparency to the financials here's the the financial health of the company, right. So you know, doing those things has helped us tremendously with our investors touches right. One of the things I think I told you was Most people have like a generic package that they send out to an investor when they become an investor in a fund a handbag with your Company name on it, or something with your company name.
42:17
You know, you might want to send them a cutting board with their last name on it. So when they had the barbecue, they got the cutting board there with their last name. Oh, sent you that. Oh, my sponsor, you know. Or things with their name on it, like grilling utensils are just unique gifts, right? Maybe if you're speaking to them on a zoom call, you know to send some things in the background, some memorabilia. Are they a favorite football team and you send them something related to that? Or you see on Facebook they hike and maybe you send them a hiking belt, something personal, right? No, you kind of create that personal relationship with them so they can see this. They're just more than a transaction absolutely.
David Choi
Host
42:56
You're paying a current pref, month over month. Nine, ten, eleven, twelve percent it's. I think it's Relatively easy to pay off that. That type of it's a high preff. Your paying current right. It's not like they're waiting for their money when you sell and they get it right. This is a current prep. I think it's a little easier to do that on the debt side of the business hard money lending, your charging your, your borrowers, 1012%. You could consistently have that residual income coming in to pay your investors right. But when it comes to buying, when it's an equity fund, right. When you're buying deal, when you're buying actual real estate when you have to do renovations and there's value add and maybe the rental income isn't paying a 10 to 12% right, I think it's a lot more difficult. I'm just curious like how the heck, even without fix and flips court, you know paying that current prep, how are you meeting such high prefs?
Fuquan Bilal
Host
44:00
What we have enough performing assets and your portfolio to be able to do that number one right. So you, that's a great question, because you can only pay preff from profits, right, when I say again, you can only pay preff from profits, and that's how people get in trouble by using capital, they raise the pay preff and then you got the whole. What do you call that Ponzi? I think that's happening. So you want to make sure, when you're looking at a deal, that there is enough cash flow, right, and your model, like today, our model, is not buying anything that is less than 90% occupied unless we get sell or finance.
44:36
And and I'll sit down on the table and come back to that so deals were looking at like the 120 unit that we took down in October right, the biggest deal we purchased. It was $10 million. That's the biggest multifamily deal we purchased. Right, because you, we purchased smaller 40 units, 60 units, 120 unit and we said, okay, this is this. I think the CapEx was small less than a half a million dollars CapEx but it had a tenant base that was already cash flowing, right, that had an 800,000 dollar. Noi, right, so you have to be able to put assets in a portfolio that's gonna give a great return. I think it was like a 18 IRR Right, so when we bought and that was, we were setting up for a syndication to do that and that was a preff equity model, but we just moved that into the fund because the fund financed the whole thing.
45:24
So we moved that into the fund. So that's spitting out that IRR. You know we have investors all on the different classes. We can afford to pay that because we were just born in a massive amount of cash flow into the fund Performing notes. We have notes in the fund. That's paying, that's bringing cash flow. The rentals are bringing cash. When we have a huge injection from a fix and flip, a cash transaction, that happened. So Having that big liquidity event from a fix and flip, having cash flow for rentals, having cash flow for performing notes, help us generate. You know, we just don't have one Part where we can generate income, right. So having those different entry points of cash so definitely help us be able to pay that prep from the profits, right. So, and Today we're not looking at any deals if it's not 90% occupy, because we can get permanent financing. If we're 90 for 90, right, we can get a stable interest rate, permanent and we can have cash flow. We won't buy a deal that's not cash flowing. That's. That's insanity in this market.
David Choi
Host
46:25
Like why are you?
Fuquan Bilal
Host
46:25
gonna buy something, we're gonna have short-term financing and there's no cash flow and you're telling investors okay, I'm gonna go in and execute my plan. What people don't realize in this business asset management is the hardest part, right? The easy part is just putting together a performer in a marketing piece and going, hey, we're raising capital. We took down a deal. Facebook post like, yeah, we just said it's after, that is with the real, the real business, that yeah right the asset manage.
46:49
The execution of your business plan is the most essential, critical part. Most people are not successful that. People are successful at finding deals, putting together performer marking the hell out of it, raising the capital but executing after that. People are terrible with that. That's a lot of sponsors are in trouble today trying to sell these deals right. So that's the most important part of people need to pay attention to because that consistently help you learn how to get in there, make that management of that asset better, figuring out other ways that you can generate revenue right through rubs, right Passing expenses along with the residents, creating extra pieces of income. I was at one of my properties and I'm like, oh, these residents are just sitting the garbage outside their door. Right, we need to actually start charging an extra $15 a month for service to take the garbage to the dumpster. You can sit it right there, we'll have our maintenance guide do his rounds. He'll take your garbage to the dumpster. $15 a month extra on 120 units.
Eric Panecki
Host
47:42
Wow, you know how much value that.
Fuquan Bilal
Host
47:46
Different things like that you can look at from an asset manager perspective, figure out how you can add more value to the building. But on the on the other side I'm gonna come back to it if the deal is less than 90%, we will buy it. If, and only if, the sellers will do seller financing with a permanent rate For a minimum of three years, we can get fired. We get fired minimum three years, six percent. While we do our capex and our renovation right, because it's a steady rate, we're getting a huge discount. We're gonna go and put up the money. We're gonna do seller financing, give them, you know, some money for down payment and then we're gonna implement our strategy and pretty much go from there. And that's the way you can do something that's not 90% occupied, if you can sell a finance. So using what we learned in no business, you know, we can implement that strategy there really smart.
David Choi
Host
48:33
Yeah, I, josh has given me the, the, the wrap up, but I got.
Fuquan Bilal
Host
48:37
I got a couple more questions.
David Choi
Host
48:38
I'm sorry, josh um, you transition locally Right, you're still doing local and being locals a lot easier to asset manager right, you got your cruise. You have your property managers. Maybe you're vertically integrated. But going over to the southeast East is a whole another ballgame, especially taking out 30, 40, 120 units. Can you kind of elaborate on the asset management, the building, the right team, your expansion strategy to to make sure that your, your new investments went well, absolutely so.
Fuquan Bilal
Host
49:14
I Would say nowadays, like when I was in Philly last time it was Tough because we had no iPhones where you can do FaceTime and you can do zoom and you can do stuff, so I had to literally drive back and forth to manage the asset right. So now our models, we have an asset management team that actually managed the property managers and we're on a phone with them once a week watching KPIs. They fly out to, you know, do the boots on the ground stuff to inspect what we expect. So if you have certain processes of procedures in place, you can be successful, you know, in any state, right, if you have boots in the ground there. So really the whole thing was to plant our flag where we wanted to go. It's like we have the southeast, we can invest and that's what our PPM say. But we're not in North Carolina, we're not in Tennessee, we're not in Florida. We have the ability to do that because our PPM allows us to do that.
50:05
But we said we're gonna go deep in Georgia and Alabama and that's it, and we're gonna stay there for years until we build those relationships. So we planted that flag three and a half years ago and, yes, at first it was tough Building those relationships with brokers, with contractors and stuff like that. But over time you get to leverage those relationships into other relationships, right. So that's kind of how we built our team out down there. We have like a capex team down in now that you know, help us. Our contractor sometimes will go to do spot checks on our properties and you know, get on, zoom with us and let us see the visual. Is the property dirty? Is there grass overgrown? So you know, it's just really establishing good relationships. That's pretty much it Awesome.
David Choi
Host
50:46
Awesome. Yeah, thank you so much. I wish we could go for another, for another hour Questions. I saw Josh like yeah, I know you have so much to give and this is just like the tip of the iceberg. We're gonna have, we're gonna, if you don't mind.
Fuquan Bilal
Host
50:59
We're gonna have to have you come back to say, like I drink champs, so they have the same person like three, four times.
David Choi
Host
51:06
Well for Kwan. If the people want to find you, invest with you, send you deals. What's the best way to reach you?
Fuquan Bilal
Host
51:13
Yeah, I'm on all of the social media. You can find me on Instagram, facebook threads wherever social media.
Eric Panecki
Host
51:19
I think I'm gonna send threads. Yeah, yeah, for sure.
Fuquan Bilal
Host
51:22
Apple Kwan Bilal. If you want to find out more information about how to invest with us, you have to be a credit investor. Nng capital fund, calm, you can go there, learn more about what we do. And yeah, if you hit me on social media, I like to help people who may be a neo fight, new to the business. You have questions? You hit me up on Instagram.
David Choi
Host
51:43
RELEVANT LINKS
ABOUT FUQUAN BILAL
Fuquan Bilal The company's CEO, founded NNG in 2012 with the principal mission of capitalizing on the growing supply of alternative real estate assets in the interbank marketplace. Mr. Bilal utilizes his 24 years of residential and commercial real estate success to identify real estate opportunities and capitalize on them. His financial acumen and proprietary set of investment criteria enable him to purchase under-performing real estate assets at a deep discount of face and market values, thereby increasing the value of the assets. This, coupled with his ability to maximize the use of leverage, enables him to build strong, secured portfolios with solid passive income flows. Fuquan effectively hedges investors' risk by spreading their investment across a portfolio of alternative assets that diversify and stabilize the fund's return and valuation.
“We aim to provide financial solutions and quality housing to distressed environments.
Community mindedness, financial viability, and providing win-win solutions is what drives our success.”
