NIME 47 | Build Strategic Partnerships

 

Being in the real estate business is daunting enough, doing it alone is even more so. Fuquan Bilal, the Founder and CEO of NNG Capital Fund, talks about making connections and building strategic partnerships so you don’t have to do everything by yourself. Fuquan has had eighteen years of residential and commercial real estate success. He addresses the value of joining masterminds in furthering your education and connections, and also touches on the role of social media in creating your credibility as an investor. If you’re looking for a turning point in your investing career, don’t miss this episode.

Listen to the podcast here:

Fuquan Bilal on Building Strategic Partnerships For Real Estate Success

Without further ado, we have on Fuquan Bilal. Welcome to the program, Fuquan.

Thank you. I appreciate it.

As you and I have talked about, you have all these services. You’re doing these webinars and they’re great for me to grow. They’re great for the people that are participating to grow, but at the end of the day we’re doing deals and we’re making money outside this for a living. We’re balancing this whole thing.

Having fun and add value is something that you do all the time and I like to do as well. This platform is pretty good. I wanted to thank you for having me on because I appreciate the community that you cultivate and the content that I see on the page. It’s definitely a great resource. Keep doing what you’re doing. It’s great. I think it’s one of the best forums that are out there from what I’ve seen as far as the interaction and the knowledge that’s being shared on it.

Thank you. That’s much appreciated. I know that you and I have talked about doing something too jointly from a training perspective. I think that’s going to be pretty exciting to see what we can put together between the two of us.

I’m collaborating with a few other people who have been in this space for a while and trying to do different things to add value to new people getting into space or mastermind with other people who are in the note business or real estate business. I’m looking forward to it.

You and I first met a few years ago. It was interesting because there was one point when I first started note investing and you had been doing it a few years. I drove up to Jersey and we had a sit down meeting in your office. I remember shortly after that you’re like, “I can’t believe you drove up here to have a sit down meeting with me here on notes.” I was like, “Let’s figure something out.” I got to say now, given how you’ve been progressing and blowing up in every which way, I would say now if I drove up to Jersey to see you, you’d be like, “Yeah, this guy’s going to drive up to Jersey to see me. Who wouldn’t drive up to go see me? I’m Fuquan Bilal.”

The marketing promotion you did for this, I was like, “I feel like that was the most respected guy in the country.” I was like, “Is this guy drinking early?” Constantly, what I’ve done is sharing with people organically stuff I learned, the challenges that I’ve been doing the business working out for assets or whatever and then sharing that experience with people genuinely. It goes a long way. I meet a lot of people at events and I’m glad to see that they progressed to the next level. A lot of people left their jobs. They were working and doing notes full-time. They start a business out of it. As our friend Sandor would say, “My heart is still on fire for the business.” I have a passion for real estate in general. Notes are something that really helped me take my investment strategy to the next level and understanding that whole concept. The relationships that I’ve built in the business with servicers, brokers, asset managers and all of the above has really helped a lot of us in the business.

Our vendors, we help each other. They teach us the business organically, keep us in compliance with the regulation. If you meet great sellers, you have the opportunity to still run a profitable note business. I think that where we are now is great because there are fewer people that weren’t doing things efficiently in the right way or not in the business. There’s more room for the people who really want to get into profit from it and help homeowners do that. Trays are much larger. Paperstac is a good resource out there. I like what those guys are doing. They are adding value as well and putting out inventory. People saying, “I can’t find inventory.” That’s a great place to start. There are other sources also, going to events. Pricing is up. It’s a seller’s market now and these are things that I’m seeing and I’m paying more for assets than I was paying when I first got started late 2011 or early 2012, but it’s still room for profit. If that was the case, people still wouldn’t be looking at tapes, trying to analyze them, especially seconds. Are you seeing those 300 million UPB tapes that are coming down from seconds?

It’s been a lot of activity on higher level pools that have been coming down. I know pricing’s really going up with those pools too, but you have to play at that level. Let me back up for a moment and we’ll talk about where things are at now as an industry. When most note investors start, they start with, “Let me buy a few notes. Let me learn and grow and let me see where it goes.” They don’t have that sense of direction. You wrote in your book, Passion for Real Estate Investments, you were driving around without a steering wheel. That’s how the analogy you put. A lot of people that come into space do it that way, but when you started, when I met you and you were only in the game a couple of years. The business model that you had set up, you had a group of asset managers that were pounding the phones. You were buying midsized deal flow and all that. I was like, “This guy is several years into it. I see a very mature business at this point.” It’s interesting to see that you came out of the gate differently. What do you attribute that to?

I think it’s cool property. I always joke with you and I said, “Notes made me soft.” Sitting on a computer, still in sales because I love sales. I’ve always been in sales. The real estate, coming from that structure, getting into notes, it was more of an admin process and creating those relationships. Once that was done, the rest was history. We’ve always learned we need three things to be successful in business. That’s the capital, buy notes, the source, where to find them and scalability. Scalability was the biggest challenge for me to the beginning when I was able to take down larger trees to be able to process all those assets in a timely and efficient amount to learn assets recapitalizing the percentage of the pool that you purchase.

It was a lot into that. What helped was having a mentor, having people that you can reach out to, to give you the things that you needed to move forward and then taking the actions to do it. There’s so much knowledge. Everybody go to these events, they take notes and they don’t put everything that they receive from these events or from people into action. Staying with having a discipline I would say also helped me build a foundation to be able to get it done quicker than average.

What’s interesting to that point is that I went to Steve Lloyd’s mastermind session. It was amazing. I cried about three separate times during that event. It was so emotional, but the one thing that he said that stood out was he’s like, “Who wants $1 million real estate deal? Who wants $10 million real estate deal?” Hands go up. He’s like, “Who has the bandwidth to handle that? Access to capital, vetting capabilities, etc.?” Very few people out of that group had those resources in place. It’s about that scalability to what you’re saying.

It’s funny because all your videos you do when you’re going through the real estate properties and doing the rehabbing and everything, that’s cool beyond belief. With the note space, it’s hard to have a coolness to it because it’s so admin-intensive. A couple of years ago, we had Distressed Mortgage Expo in Newark and you came to speak to my protégé group. I really appreciated that. You didn’t have to do that, but you do a lot of things that are well outside working on the actual flips or working on note purchases and everything else. Why do you do all this extracurricular activity?

It’s real estate. You see here I’m representing a passion for real estate investments. I’ve been in the real estate for many years and I came from a sales background. I really love what I do. I’m passionate about it. I like looking at deals, especially local to me in neighborhoods that I’ve been invested in it for the last many years. I like the note business. When you build a good team and you have the vendors and you’re able to leverage that. You’re following out with that stuff and staying on top, everything works out. Tax lien investing is something that I’m attracted to now. When I first got into the note business, it was my new love. I still love notes, but these tax liens, especially in areas that I’m investing, is being able to take advantage of the market by getting a discount and still buying real estate at a discount. It’s able to deploy the capital where it makes sense and if they have the skill and the systems in place to do it, then all is good.

When I was making notes, I was focused strictly on notes and I was saying, “No tenants, no talls, no trash return.” At that time, I didn’t understand having hybrid flexibility or having had diversified strategy can help you and create a hedge of buffer against whatever’s coming to market. Everybody keeps saying, “What’s going to happen? What’d you think about the market? When is it going to collapse?” I’m constantly trying to do things to create a buffer against that. Whether it’s a lesson in notes or real estate or having cashflow for rentals, I’m all for it. It is a great opportunity. If you have the skillset to do that. A lot of us go to difference. I know you’re doing some real estate also and you pick up different skillsets that you can apply to your note business. This is an everyday real estate. I’m a real estate investor. I’m not a note investor. I’m not a flipper, rehabber. I’m a real estate investor, all things real estate. That’s how I look at it, as a note investor, a property person.

NIME 47 | Build Strategic Partnerships

Build Strategic Partnerships: Most note investors start with buying a few notes without a sense of direction. They learn and grow as they go.

 

When you hear that question and it’s thrown out there a lot, “When’s the market going to tank?” It’s a matter of the more you control your market, the more you control the income coming into you, the less you’re concerned about what the macroeconomic state is going to be. That’s where I’ve seen you progress and you always seem to be evolving where you are further insulating yourself from any recession blows.

You never knew how it was going to go or how bad the bodies are going to dip. I’m always in the now. Planning for the future is important and the now is what matters. I try to do things every day to move the needle and go from there. I’m excited about what I do, so that makes it easier for me. Now, I’m having fun with it. If you see me on Instagram or whatever, I’m out working or I’m just having fun while I’m out working.

Sandor was on the show and he is like, “I go to the gym first thing in the morning. I know you are at the gym in the morning. I’ve over here. I wake up and I make excuses. I’m like, “I got fours kids. I’m in a struggle with the kids and all this and that.” I got to rise above.

You got to get my book, The Tire Kicker, it’s on Amazon. Passion for Real Estate Investments is on Amazon too.

In your book, you write about a real estate event you went to where there were high-level players that were buying rehab properties or buying investment properties, portfolios in the thousands. What event was that?

That was Ironman. We went and climbed a mountain at that event. I believe it was in 2015. I was there to host a panel. It was a real estate event, but they had a panel on notes before they started doing the first note inauguration event, now they have them all the time. This was before that one. I was honored to be there and host a panel. Before that, I was there for a couple of days watching these guys, these fund managers get up and talk about the process and the vendors they use and the whole thing.

My goal that year was to buy ten properties. One fund was managing 10,000 single-families. Everybody else had already 40,000, 50,000, 100,000. They were publicly-traded companies and they had a lot of capital to be able to do that, but this put the systems in place to manage that. I was really intrigued to find out more so I started to associate with the vendors. I started networking and doing my thing. When I came back from that event, I had a burst of energy and I was like, “It’s possible to make it happen.” That started from there. I would say last quarter of 2015, while everybody was celebrating Thanksgiving and Christmas, I was out pounding the pavement, putting bills under contract and everything else happened from there. I was grateful for being at that event and making those connections that I am in.

I know you wrote about in your book and that was a turning point. You’ve had multiple turning points, but that was a definite turning point. Let’s talk about the average Joe. Most people fall into this category. They want to start note investing. They buy a few notes. They want to start flipping, they buy a few properties and then take it from there. How do you not be that average Joe? How do you say, “I’m going to do this on a large scale. I’m going to create a fund that’s going to support this venture and I’m going to grow this thing to $10 million or whatever the case is.”

The attorneys are the ones that make the most money in the note business. Click To Tweet

I would say that that’s through strategic partnerships. You’re going to grow by creating strategic alliances with other people and you guys are bringing the skillsets to the table and making it happen. It’s like people who have access to notes and then they structure the bill and put it together whether you’re leading a trade, you’re doing a joint venture note purchase with someone or if you’re doing a real estate play. Strategic partner really has helped me grow and constantly learning from each other. That’s what I would say to someone who’s new. You can’t do everything by yourself. You can’t be the sole practitioner. You won’t get far. You also need to have an accountability partner where you guys can take each other to the next level.

Being a part of mastermind groups as well. I’m a part of two mastermind groups and that helped me a lot not only from a business standpoint but from personal development. Those things I would definitely say to people who are new, getting involved and want to scale. It does take time. It’s not going to happen overnight. I’ve been doing this for many years. If you get involved and in a few years you’re trying to say, “I want to do this tomorrow.” I made a joke on a post. I posted, people looking for a certain type of assets and I would say people want the crème de la crème and they want to make a higher price. It doesn’t work like that in reality. It’s a lot of ups and downs, daily management and everything else that goes along with it. It takes time and it happens.

I’m going to put this out there because this was something that you said when you spoke to me and my group and it has stuck with me in a major way. You said when you started buying your pools of notes, you went and sold off the most favorable notes for the best pricing and you kept all the hairy deals for yourself. You self-trained yourself and your team to work out the hairy deals. Tell me about that.

I’m here to tell you about that. I would say if you want love, you have to give love. People who got into the business who really were risk averse, they were looking for assets where they can almost not lose their money. At the time, they didn’t want to understand the business but they wanted to get involved like most people. They want to buy the safest note possible. When people lean to that position, they are willing to pay more. I knew that was an open space in the market because most of the sellers were keeping all of that stuff and doing the reverse. Sell the pool and everything else and selling it for higher prices and taking advantage of the people.

I was like, “Let me try a different play where I can recapitalize on my spent and people towards a bidding war or whatever.” I would get top dollar and still make a profit. It was great. Then I can take the losses from the stuff that was a little hairy against the gains on that. It was a big learning experience because it helped me understand the different buckets in the note business. It’s not only current senior speaking of seconds with higher equity. It’s more than that. It’s learning how to get through the bankruptcy stuff. It’s learning how to collect the unsecured to really know a lot about the space. When you do get one of those other deals, it’s pretty much a slam dunk.

You and I were talking about a loan modification. It’s a note that you sold and it was BK7 discharge in Minnesota and underwater. There was no equity back in the second and a loan modification was received in with check in hand. Everybody wants the pretty deals, but sometimes there’s a lot that can be had from the ones that don’t look pretty.

I did a webinar and I talked about that. It’s really based on the borrower. It depends. Some of the investors want the property. I know a lot of the guys in the space, they want stuff they can. If there’s a senior lien or help ticket vacant, they going to do a real estate play all day long. They are going to foreclose on it and then finance it to someone who’s on the ground or whatever and play that space, seller financing. Being behind the doors, it’s occupied and there’s some type of payment history and you can look at the credit report and make some type of determination. You won’t be 100%, but you can see probability if they can pay and they have the ability and willingness to pay once you go through the process.

You can’t be afraid of those deals. I wouldn’t say just go out and buy that because it’s low cost. That would be very risky but being able to buy a couple of loans to leverage that risk against. You’ll see and some of you reading this now worked out several notes, you know that sometimes the ones that you think won’t work out will and you’ll get more from that. You’ve spent a lot of money on it and it’s taken longer and more legal costs and everything else and the borrower was battling you. That’s been my experience. I’m pretty sure with some people reading this have experienced that also or they didn’t expect it to get paid on.

NIME 47 | Build Strategic Partnerships

Build Strategic Partnerships: Take action on what you learn. Have the discipline to build a foundation to be able to succeed quicker than the average investor.

 

As you’re saying that story after story, one that pops into my mind is one I had in Virginia. All the fair market values checked out and the person filed bankruptcy, but the house was in such a condition that when they filed bankruptcy, they put a value in that stripped out my second. The appraisal came in and supported that. I’m out the money on that, getting paid as an unsecured. Bad things happen to good notes and good things happen to bad notes. We have a question, “What specific productivity tools, tips, tricks, apps and other resources would you recommend for note investors and real estate investors?”

I use AppFolio for my rental properties. I think that’s a really good tool. It was painful in the beginning, but I think that’s a really good tool because it makes the process seamless. You can manage more notes than properties because there’s a lot of moving parts with property, but having the right apps and systems in places important. That product, as some of you may use it already, it makes it so seamless with dealing with the tenant, screening the tenant. Everything is online. If they are on Facebook, which everybody is, they can do everything from the app on the phone. We’ve been using that and that has helped us be able to make things a little bit more efficient on a rental portfolio side. As far as the note business, there are great tools out there that you can use.

I liked when Alberto Sanchez is still around. He was in business. Note Dashboard is still up and active. I see why people are going more custom mill. People are doing different custom systems that have work processes in place. It’s almost structured like a process mapping list that guides you along the way. People are doing that custom or they’re building all these different custom platforms that you have out there, Podio or whatever is out there. I see a lot more people doing that to make it tailored to what they want. There are plenty of systems that are out there that you can use. You can use Excel. It depends on how many notes you’re managing. You can have a VA that creates something in Excel that makes sense. It’s tracking data. Whatever you could create that makes it more efficient for you, that’s it. When you’re ready to scale to a system, if Excel is not working for you anymore, then you can pretty much go from there.

They don’t have it as an app yet but doing due diligence all in one and putting everything in a dashboard from tag researches, credit reports, bankruptcy. It’s easy to analyze stuff if everything is there and then you’re just verifying the data through document or research or whatever. Make it more fast and efficient. You’ve got your scrapers values, Zillow scrapers and all that stuff. Most of you are probably aware how to do that, but for you new people that help you analyze stuff fast. You still have to put the human touch to it because that’s what it really boils down to before you give your firm numbers. Some people do it manually. Some people go through the process of doing it manually. I know Matt is a big proponent of that, going through it, dotting every I, crossing every T, which is good because you would catch things that you may not catch if you are using data to scrape and everything else. There are a lot of good systems out there. I’ve seen some of your show also.

Alira Morstadt tricked out Podio. Tell me about the hybrid approach a little. How does that assemble because I know it’s all-encompassing with real estate? How did you put that strategy together?

Do you have a real estate? Do you have note investing? For me it came about in 2015 when I started to buy more of those things. I was always doing real estate, but it’s not at a level I’m doing it now. It was really meshing a tune together. If I can look at it from this standpoint at the beginning, speaking to accountants. I’m not giving accounting advice, legal advice and all the other good stuff. Finding out if I have a vehicle that I’m able to purchase notes and on those days whenever you can come in. Also, I have another type of asset there was some depreciation from rentals and everything else. How would that mix look? Consult with the accountant’s finding stuff like that out, seeing what tax advantages they were in a vehicle and then understand that this is something I’m going to be doing. Most investors that they invest in are something they want to know where the asset behind it was. You have mortgage notes, you have the real property, there’s a first or second and then you have the real property in there.

I felt that for me, creating a new fund that had the hybrid model will really be beneficial to investors, especially with the market shifting and changing. The change that I made was almost an upmarket before it leveled off. Pricing for notes was getting a higher price. I saw that and was like, “I want to be able to invest in both and as one of their vehicle, so I need to start now so I can deploy the capital to wherever is that.” That’s pretty much having hybrid flexibility because most funds are only invested in one asset, whether it’s all first and second. Nobody that I know pretty sure is out there has that model where they have these different types of assets in there. That’s what the hybrid model is for. Pretty much people that I know are doing it. People who are investing in real estate notes. They’re doing short sales and they have some type of diversity. That’s the bottom line in their everyday real estate transaction business. They’re not just in one asset class.

I self-managed a portfolio of residential and commercial properties in my area outside DC. My business model is pretty simple. I train a few people through a workshop and if there’s synergy between us and if they have some level of capital, some level of competency and some level of hustle. We then connect in a mentorship program that doubles as a buyer’s group whereby we’re all putting in our money, putting in our sweat to go and take down larger tapes. That’s it at the end of the day. I only look for a few people to do this with and it’s to create strategic partners. That’s what my intention is to use it to create strategic partners that we’re aligned in terms of integrity, capital, ability, hustle and all that.

The more you control your market, the more you control the income coming into you. Click To Tweet

Those relationships definitely help you and you have access to more resources than what you would have on your own.

That’s what I’ve learned. The mistake I made was doing things as a lone ranger for a long time, but no more. Let’s switch gears, social media, what are some of the do’s and don’t do’s?

I’m still trying to figure that out. I don’t have all the answers for me. I was at an event. I was at an event in PA and I think Tony Robbins, Les Brown and Gary Vaynerchuk went down there. It’s my first time seeing Gary. I wasn’t on Facebook. I just got on Facebook in June of 2018. It’s been almost a year since I’ve been on Facebook. I’ve been promoting my companies on social media, on Facebook, on Twitter and all that. I’m putting educational stuff out. I wanted to create that Facebook page and be able to market my books and stuff like that. One of my goals was and it still is to be able to educate 1,000 people, like what we’re doing now. Is it going to be a couple of hundred people that are going to see this and getting something from it? I’m going to constantly continue to do that and for me, it was something fun, putting that digital footprint out there. We were talking about this, it’s able to globally connect with people. I have people from other countries hit me on my Instagram, communicate and ask me for direction. How can I get started? Me being able to add value in that way so much. I’ve been promoting my books on there. My book sells in the first two weeks just from social media because I’ve been building up that presence and awareness and bringing value and staying constant with it. It’s starting to show a little bit reciprocity.

What have you done that didn’t work where you’re like, “I thought that was going to work?”

When it comes to heart, I turn it on and start talking. If I’m going to a property, I was like, “I’m going to get this footage and pretty much go here and talk about what I’m doing.” I can’t say it was something that I posted that I regret. I do what comes to me. It’s not thought like, “How can I structure this?” I barely have time. I’m not going to create a treatment for social media. I turn on the camera and make it happen. Before we got started, I was doing my thing on Instagram trying to bring people to the channel. I’m trying different experiments with things, but I like it. It’s cool. It gives me a way to share to people what you don’t see behind the scenes a little bit what’s going on. It humanizes you a little bit more. When I go out to events, people feel like they know me already. It’s good doing what I set out to do to humanize myself, add value.

You referenced that leadership conference. I went to the same one here in DC. I saw Gary Vee, Tony Robbins and everyone else. That was a great event. To that point, you’re always growing and you’re always looking for mentors and guidance from people that are beyond where you’re at. A lot of times, those people will tell you, “Who’s in your circle of influence? They should be ahead of you.” They’re pulling you towards them versus people that are pulling you backward. Do you feel all that with social media that you’re connecting with so many people but a lot of the people may not take any action at the end of the day? They might be negatively pulling you back in some way.

Not at all. There are tons of people who reach out to me in Messenger asking for advice, compliment and things that I’m doing. I’m giving value to them. It’s not a flesh-to-flesh type of situation. A lot of times I do audios. I’m fine making the time to help people and that’s the way for me to do that. That was the whole purpose of going on social media. I don’t feel like it’s pulling me back from doing it because I have time blocked, the time that I’m on it. I’m not on social media all day. I have the stuff to do. I’m an early person as you know. I do my thing and if I find downtime after I’ve finished them with my kids and get them home and get them situated, then I’ll come on and do something else.

A lot of times I’m just in the car pressing record, recording short videos that I can then later take and post to my story or to my page or whatever. I do that a lot too in the car and talking or may come up with a concept or something that I want to talk about and I’ll just press play and record myself whether I’m traveling to the airport or in the house. That has helped me be able to consistently put out content and stuff as well. Sometimes I play around. I had a Mother’s Day post or I had flowers and a whole bunch of promotions, just experiment.

NIME 47 | Build Strategic Partnerships

Build Strategic Partnerships: You can’t do everything by yourself. Learn from others and foster alliances, or you won’t get far.

 

The Passion for Real Estate Investment book is a very warm read. You talk about your mom on there.

Did you leave that comment on Amazon?

No, because I’m only halfway through the book. You have to finish the book before you post on Amazon. I’m not going to arbitrarily just give you five stars.

Good or bad, I don’t care. Leave a review. Let me know if you like it, you didn’t like it. If you didn’t like it, I’ve got tough skin. It’s all good.

It’s Jersey in you, the Brick City. Growing up in Westfield, New Jersey, I was told never to go to Brick City.

That’s one of the things I talk about in my book also. I talked about I grew up in candlelight dinners and it wasn’t a romantic type. I remember those things are things that make me more passionate and motivated to do what I want to do because I remember that side. It’s an honor for me to be on this platform, to be able to share my knowledge and my journey with everybody. I talk about it a lot in my book. Those adversities really helped put me in a place where I’m at now and I’m forever grateful for it. I talked about even something that I mentioned at NoteExpo. A lot of people wouldn’t know that I was shocked five times when I first got involved in real estate. I talk about that in the book as well. I share a lot of my back story. For those of you who haven’t gotten the book yet, make sure you go to Amazon and get it, check it out, leave a comment, appreciate it.

I did a short video before and one of the things I mentioned is there’s a common theme with a majority of the folks that I have on to the program here. There are people like yourself, they’ve come in with very little in their pockets, a lot of hustle, a lot of determination and they did whatever it took to get to a better place. You’re definitely the epitome of what that represents. I definitely commend you. I think people need to hear inspirational messages like that. Let me ask you. This is a question that I think needs to be asked at this point. Are too much or too many resources a way down for one person? In other words, you come in and you have a cushy trust fund. You have a lot of money in the bank. Your parents are wealthy. Are those people tend to be too comfortable? Whereas you come in and you only have a few bucks in your pocket and you’ve got to make that work. There’s no option. What’s your thought on that?

It all comes down to the grit. If the person is natural born, they’re going to do what they have to do and they got to stay hungry. I think coming from the diverse situation makes you more hungry, makes you appreciate more when you get to a certain level and you give back. Also, that stays for the kids now, the next generation. I’m pretty sure our kids weren’t great with the labor-intense things that we’ve done. We can try to implement that as parents. Sometimes, that can be a challenge as well. I do that with my kids. I take them out and I have them shovel snow in the wintertime and have them do stuff like that just so they won’t get that soft and build a sense of hunger to start earning at a young age, plant that seed early.

Attend relevant events to make connections. It could be the turning point you are looking for. Click To Tweet

I’ve had relationships with people who are from a trust fund and they’re hungry. They still have that hunger, that eagerness and that determination in them. I have friends who live off the interest and don’t do much. That’s what the predecessors really worked hard for was to make it the next generation for that legacy to continue. As long as they’re doing things to keep that living off that interest and they don’t have to be out in the grit. It depends on the individual when it comes down to it. That’s my opinion. If you’re a go-giver or go-getter, you’re definitely going to be able to make something happen. If you’re not, you’re going to be spinning around wondering why me and everything else and blaming the world.

I live every day like I’m in complete hunger mode. I need to bring in money. I need to eat. In some cases, I drive myself nuts with it. I want to say, “I like to relax every now and then.”

You have to reward yourself. Hunger for knowledge, hunger to get the freedom that you’re looking for, but you have to reward yourself. I came from Massage Emmy before this session. I’m not trying to brag or anything, but I reward myself. I love myself. I take care of myself and that’s some of the things that I do every week. I may go to a Korean spa house for six hours and disconnect, rethink, re-strategize, exercise and all that stuff is important. You have to reward yourself. It’s very important.

I did a nice a walk around the lake that we have down the street and my wife and I spent the day going to three different restaurants, restaurant hopping in Fredericksburg where I live now. It’s very interesting because I was thinking, “Most people are working now while I’m doing this. It’s a neat thing.” We have a question, “Are you investing in property and notes in the same legal entity you get to apply the tax treatment? Will that flow to you from two entities as well?”

First of all, I’m not an accountant. I’m not an attorney. I’m not giving legal advice, but when you speak with your accountant, the way you will structure it, some people set up a holding company, some people set up a Delaware Corp with a foreign entity in a state. It depends on what percentage of real estate you’re going to buy versus a lower percentage of notes you’re going to buy. When you do speak to that legal professional, they can advise you which way to structure and what’s best for you that will fit your model. I’m not going to give the legal structure advice and everything else. Whatever your business model is, instead of we have is 60% of the capital that we raised as invested in real estate, the other 40% is notes and there’s a percentage of that.

We also do fix and flips and buy and hold. It depends on how you’re set-up, what your business model is. They will tell you to set it up this way, whether you want to have a holding company separate for real estate stuff, some of the setups for notes. I’ve seen people do the series LLCs and everything else, which state you’re in. A lot of that has a lot to do with this. Definitely, a CPA and attorney would be able to tell you what your business model or the best way to set up to take advantage of saving those taxes.

Set it up right in the beginning as anything else.

When they get into notes, some people, you should set up in a company in a state like Delaware or one of the other states where you have protection and set up a foreign entity in the state where you are operating from. A lot of people do it in different ways because a series LLC is a trust. A lot of people do stuff from a trust depending on a business model and what you’re trying to accomplish.

NIME 47 | Build Strategic Partnerships

Build Strategic Partnerships: Social media gives you a way to share with people what they don’t see behind the scenes. It humanizes you a little bit more.

 

Fred Moskowitz, our friend, he writes social media, “Being very mindful that anything you post note-related could be found later by an opposing attorney in foreclosure.”

The tough part about it is that if you’re working the notes and you have your name associated with this stuff and you don’t have any anonymity and protection where your legal structure is set up. You can run into some troubles but if you’re posting stuff that is specific to the asset you’re working and you’re just speaking in general. I saw Fred do the blog, he talked about three things, what attracts them to the note business and while he’s still into it. That was something in general. I don’t think of a foreclosure attorney that would be in trouble because he’s expressing what can be done to note business and what return it would make. If you keep it clean like that, you should be good. It’s so many things. I do webinars all the time and I talk about partials and I talk about collateral assignments. I talk about different workouts and sometimes there may be borrowers reading. Is this up to you? What would you want to do if some people stay on the radar and work their assets and pretty much go from there? I have asset managers, servicers, I’m not on the front line. The attorneys work at these assets and everything is good.

Is it still your philosophy to exit through the borrower as the first option?

It’s the best way and it’s the most profitable way. Anybody can call me up, shoot me an email, I’d love to chat with you about it because that means you did a lot of REOs. Speaking from a second point, a lot of discounted pales, a lot of short sales, a lot of workouts, more than REOs, from my experience.

40 property take-backs in 40 states don’t sound appealing to you?

There are too many states of being working simultaneously at one time anyway. You really have to narrow it down and build good relationships with attorneys. Attorneys make the most money in the business. You really want to create those relationships with attorneys and try to get flat-rate pricing. If you get into a situation, if you’re working a lot of assets simultaneously, you’re going to get some legal kickback from some borrowers and then it turns into hourly, then you start losing at that point. Treating those relationships with the attorney, get flat-rate pricing is really good. That’s one of the reasons I created PFREI Podcast, that what I’m doing now as well is trying to bring these attorneys to the forefront and let them tell note investors how they can help them. Paul Vincent and his brother were talking about the services that they have and how they can help add value, which I thought was pretty unique in the space. Those relations with an attorney would definitely help.

Are you going to be at an IMN Dana Point?

I’m not going to make it to that. I’m narrowed down to four to six events a year. I’m attending more masterminds now and try to work on self-development. You’ve talked businesses can’t grow. It has only grown to the extent. I have to keep going to events where I can create strategic relationships and work on self-development and really structure my business to go to the next level. Those are more of the events that I’m focused on now. I still come out to the main events. I’ll get the list. I’m tapped into those guys that just log and get the list from all my email blast list when I’m researching for notes, reach out to a couple of people. Those events every other year I attend just to press the flesh. Most of it, what I’ve found when you meet those guys, there’s no voicemail afterward and you’re trying to create relationships.

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It takes time to go. You have to have the capital to be able to make those trades, $5 million, $10 million quarterly these guys want. It’s good too. That’s good to go the compliance and regulation information from the top-down. I’ve always attended those events for that and learn stuff about servicing. There’s a lot of value you add there for that. I’m tapping into the list and when I do make it, sometimes I go and hang it at the bar and network there and find value there as well. One of the attorneys, this is what you guys can do. I’ll give you a little trick. One of the attorneys you’re spending a lot of money with for your legal and if you them on that list, they get about five tickets. Tell him that you get one of those. I need that.

There is some value being dropped here.

They usually get like five tickets and it’s only two attorneys. They usually have extra tickets.

I’m going to be on a panel discussion. The title of the panel discussion, the topic is How to Find Distressed Product.

There’s the resource also. We were talking about apps and tools and system. They do a great job with providing data for due diligence. I use those guys all the time. They are really good. Turnaround time is good. They are efficient. I’m really happy with their services.

Do you still cringe when you get a letter and it’s from a law firm like, “I know what that is.”

It happens all the time. If you do a lot of foreclosures, you’re going to get letters from regulators. You’re going to get letters from attorneys, attorney general. It’s going to happen. The borrowers are going to go and try to create whatever defense they can and try to stall the process. Some of them are very crafty. You got to hold it out. I’ve release liens from the situation because the legal started getting too expensive. You’re going to have some backlash. If you have a portfolio of ten, maybe twenty loans, we may or may not run into some stuff. Start imagining a couple of hundred loans and a thousand loans, you’re going to have legal all the time.

You’re going to get served too. I remember the first time I got served at my house and my wife was there and she’s like, “The sheriff’s here. He wants to serve you.” I’m like, “What? I did not do anything.” The sheriff went to meet me where I was and it was a first mortgage company serving everybody.

NIME 47 | Build Strategic Partnerships

Build Strategic Partnerships: Getting legal kickback from some borrowers all boils down to good connections.

 

I had three or four struggles in one week and my staff was looking like, “What is going on?” That’s the process but you do the same thing also when you foreclose. Your attorneys serve everybody in the process, all of it. It was the third mortgage, they’ll do the same thing. It’s the same process.

I called Bill McCafferty that day and I said, “This happened. This freaked me out.” He’s like, “That’s part of the business.” There’s very little excitement unless you’re getting served or getting pay-off for a loan mod.

It’s always a fun day. I like to lower my payments better. I like the electronic deposit email better from Madison.

Are you fully onboard with Madison?

Yeah, for sure. They have this private payment thing. It was the deal-sealer. That was really good. I gave them my money right away. Sign me up.

I’m curious if they’re credit reporting now. I know Land Home does that. That’s a big service.

They report to credit. They do all of that stuff, it’s great. In the space if you leverage vendors is good. I would say don’t use one vendor. Leverage them. Create those relationships. You never know how it’s going to go, both FCI, Madison, Land Home, they’re all good. Allied is good. There are a lot of good services, note servicing company. Servicing companies you don’t even know of that are under the radar that’s doing a lot of good stuff, mainly for first. It’s tough really to find a good second servicer. I know maybe three or four. They heard them more on a collection side. Anybody can serve as I’m talking about collection ratio.

Fuquan, do you have any final thoughts? I’m enjoying your book so far and I’ll leave five stars for you afterward.

Leave a comment from the heart. If you didn’t like it, just say it.

I like it. What was the first term?

It’s Turning Distress Into Success. I’m really excited about being in a space or notes in the beginning and learn all different types of notes, auto loans, credit card debt and all that. I was like, “I’m going to write a book about this as people need to know more about debt investing.” That was the first book. I appreciate you having me on. Leave a comment and check me out on Instagram @FuquanBilal.

Take care.

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About Fuquan Bilal

NIME 47 | Build Strategic PartnershipsFuquan Bilal The company’s CEO, founded NNG in 2012 with the principal mission of capitalizing on the growing supply of mortgage notes in the interbank marketplace. Mr. Bilal utilizes his 18 years of residential and commercial real estate success to identify real estate opportunities and capitalize on them. To date, he has successfully managed three private mortgage note funds that primarily invest in single-family performing and non-performing mortgage notes.

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.