EP 351 – Second Lien & Real Estate Investments with Fuquan Bilal

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NCS 351 | Second Lien

NCS 351 | Second Lien


Scott talks with Fuquan Bilal from the NNG about the second lien market and other real estate opportunities. Fuquan is the company’s CEO, which stands with the principal mission of capitalizing on the growing supply of mortgage notes in the interbank marketplace. Showing his expertise, he talks about how there are so many ways you can earn money, delving more into trading, foreclosures, and more. He dives deep into the second lien space by sharing the market change while offering some advices on where best and how to do it. Noticing how people sit on the sidelines waiting, he shows the importance of figuring out how to play in that space.

Listen to the podcast here:

Second Lien & Real Estate Investments with Fuquan Bilal

We’ve got a great friend of mine joining us. I’ve known this guy for almost ten years. This guy has a huge heart. He wants to see people succeed. He’s doing an amazing job out there. Who am I talking about? I’m talking about the man, the myth, the note buying legend, Fuquan Bilal. Where is home again for you Fuquan? Are you up in the New Jersey area?

Yes, I’m about twenty minutes away from where the office is based.

For those who don’t know who the man, the myth, the legend is, Fuquan take a few minutes to share your story.

I started real estate in about 2000 doing some fix and flips all the way until the market tanked in about ’08. I made the shift and discovered the note business in 2012. That’s when NNG was birthed, in late 2012 and the beginning of 2013. It was around the time when I started my first note fund. I thought I’d use my own capital and experiment in this space, build some processes and understand it. I started the business like yourself, started showing other people know how to make money in this space also. I’m a single parent at the time. This is something I always share when I speak. My mom moved then with me about 2012 and I went through a divorce in 2010. When I first learned about notes, I had learned a partial strategy. I was so excited I was like, “This was my new love.” When I came home, my mom saw this glow in my face and she’s like, “You found her.” I was like, “Yes, notes.” I was possessed. I’m trying to learn everything I can get my hands on. I met Dave one day and we spoke for two hours and went to lunch. He shared a lot of strategies with me and that definitely got me connected with trying to learn and do everything I can to find out about the space. It’s like a hidden jewel.

A lot of real estate investors don’t know the strategy. I took the opportunity to take advantage of it. Back then, it wasn’t that much information. Any podcast or any information of back office that they set up, I would download it into an iPod and listen to it when I was at the gym or in the car. They have no strategies with some of the stuff I listened to. It morphed over time into that. We started with the seconds. I felt more value play there because the business was new to me. The diversification strategy for me was very important, especially when I was putting my own money out. I want to make sure it’s diversified and then build processes. For me, it was a great opportunity because I can give more for less, build case studies and do business stuff. Since then, we’ve morphed into buying firsts also because the banks understand firsts more. If you’re trying to leverage stuff with investors, it’s an easier process to raise capital for firsts. It’s good for seconds also, but it becomes an educational process to explain it. They take out all the risk factors of being a second position before the capital started pouring. Anything once you go over the hill and get in the arrows in the back first, you were able to show case studies and some type of history and traction. The rest is easy.

Everybody from 2008 to 2011 was pivoting and trying to figure out what was going on because the market was so crazy. In 2000, I jumped in. I’m not dipping my toes. I dove headfirst in the notes, trying to get as much as I could. It was a bit of a Wild West back then. It has changed quite a bit.

NCS 351 | Second Lien

Second Lien: If you get some love, there’s more already from people who are out there.


If there are rules, you adapt to the rules and you keep going, especially if you know that this is something that can build a freedom for you. I fell in love with this space because of the laptop and cellphone. You can do business, you can get homeowners a reprieve, you can help them out. The first book that I wrote, Turning Distress into Success, I talked about my entry into this space and how my eight-year-old son at the time gave me the idea of becoming a bank. He said, “Why don’t you just become a bank?” I was like, “That’s impossible.” “I thought you said you can do anything you want to do?” I said, “I’ve got to figure this out.” Then I did the research on how to fund is established, how to raise capital. It was a big barrier. Raising capital is a whole another business, but it’s something you want to be in the space that you should learn how to master in different ways of doing it because that’s when it will allow you to move in a lot of assets and get better pricing with more capital.

There are three things you need in a business whether you want firsts or seconds is the source to buy from the capital to make the purchases and then the scalability factor. One thing my mentor always say to me, “If I give you 1,000 notes, can you handle it?” You want to make sure you have processes and systems in place to be able to manage that. Then we started to process that, which is mind mapping. It’s a very important part of the business because it helps with the hit-by-a-bus syndrome. You want to set your business up as a franchise, so it can be sold and/or training is easier. If someone comes in and you have to train people to do stuff, you have a process. You take down the best questions and you refine that process over time. It helps you take the scalability factor. A lot of were challenging because there was a lot of notes at one time and trying to get it into a custodian and trying to give it to the servicer. If you don’t have step one, step two, step three, fifth-grader processes in, it makes it more difficult. You want to make it as if a fifth grader can do it.

They’re not giving you great marketing tips, they can actually follow the process. Let’s talk about a little bit before the things you’re working on. Where do you see the second space? I got a phone call with an investor at Colorado. I say, “I am looking at getting some seconds.” I’m like, “You need to call Fuquan. He’ll shoot you straight where the markets at and you can go from there.” We’ve seen a price increase on the firsts side. You’ve seen it in the seconds side as well, correct?

Absolutely. From what I’m seeing, more people are playing in this space. The pricing is more competitive. You have to figure out a way to continue to add value to what you’re doing. What I mean by that is by doing structured partnerships with other people and helping to be able to take down bigger trades to be able to get the better pricing. When I first came into the space, it was selling for $0.10 to $0.15. It’s now trading between $0.18 and $0.22. There are a lot of people who are sitting on the sidelines waiting for that day to come back instead of trying to figure out how to play in that space. The yields are insane. I always make a joke you can get drunk off the yields. Those people that were making 26% from taking a non-performer re-performing and the annuity that was 26%, they are not playing the space because that goes down to 18% which is to me, still amazing. Based on the sideline complain, there’s no product I can’t find stuff. A lot of it has to do also with the amount of capital expended. Those $50,000, $100,000, $200,000 on a buys that you see you’ve got the right price for, they’re not out there anymore. You almost have to spend $2 million or $3 million in order to get decent pricing. The guys that are in the space, they’re holding onto paper and working it out. It’s the real estate market where there are fewer trades that are out there, the pricing increased. It’s a seller’s market.

There is still a lot of room to make money because the discount is still there. There’s still a lot of room to add value to the homeowner by sharing the discount with them. There’s still a lot of room to get a decent yield that makes sense to raise capital at 68% or whatever it is. You can arbitrage some performers in seconds at a 16% yield if you’re raising capital eight and nine, there’s a nice spread there. There’s a lot of different ways that you still could make money. A lot of people are sitting on the sideline because they’re not willing to understand the different levels of assets. For example, when I’m speaking seconds, stuff that I know in the firsts, stuff that’s delinquent and stuff that is bankruptcy, they’re not willing to challenge to buy those assets because they think the risk was the firsts. There’s a price for every note. There are no bad notes, it’s just about pricing. There’s value in pretty much everything. That’s one of the reasons we started doing those mastermind sessions. We are educating people on how to work with the different asset classes within the space to get the value out of it. There are plenty of papers out there.

Just because the market changes, it doesn’t mean they’re not new. With paper being originated, people getting refinanced out of stuff, getting new loans, people get laid off, people moving and having health issues, there are still non-performing papers out there. You just got to know where to look. I couldn’t agree with you more on that. There are a lot of people that got drunk on returns. The thing is that some people they talk about one day. I talk to people everywhere, “I want to get this.” That was then, this is now. You’ve got to focus on where the market is at. There’s a lot of money out there to market that makes money the cheaper aspect of things where money used to be a little bit more expensive. There’s so much capital out there in retirement accounts. People got money sitting on the sidelines making zero. Money’s pretty cheap. Your yield may have gone down from the high twenty’s to the high ten’s but if you can get money at 4% to 6% or 8%, that’s still cheap money.

People can mitigate those risks by joining forces with other people so it’s not all you care for the win here. Even buying different types of firsts as well on that space. The reason we stayed away from firsts in the beginning was because of the added expense that comes with it. From my experience, I’m not sure what your portfolio looks like, we were seeing more REOs than workouts. On the second space, we see that the borrowers paying the first, there is some type of emotional equity especially if they’ve been in the house. There’s more probability to working out, especially if you look at the trade lines and see everything else as current. We look at the market rent and we subtract the first mortgage payment from that. Most of the time it’s in line with what we’re trying to capture from the borrower. That’s a great indication they’re not compliant. For us, it was a better play. First, it was expense-driven. It’s still a great investment strategy. As a matter of fact, I have a tape out for firsts for sale. I’ll be sending some stuff and I put a couple of them out. We don’t sell first. We work them because they’re so expensive. By the time we paid for it, you get them onboard with the servicers. You start the legal process for what we want to sell them for. People still only want to pay $0.02 more than we pay for it. We just hold onto them and work them and try to hit whatever rock.

I don’t like vacant properties. You still end up with some anyway in the first or second space. We always try to target owner-occupied assets. Somebody who has lived in a house, paying taxes or paying the utilities, the utilities are still on. I’m going that route. I agree they are expense-driven if you end up taking stuff back. That’s one of the mistakes I made early on in the notes space, buying everything to take the property back versus trying to modify and cashflow it. We still end up foreclosing 45% to 50% of the time. It depends on the portfolio. It depends on the asset, but cashflow is nice. That’s what we’re ultimately all after.

That’s definitely a main part of this business, which is very special. What you can do with that cashflow. I’ll be in Austin at the Trillion Dollar Investment Mixer at Quest. One of the things that I’m going to be speaking is hypothecation of notes. If you know how to hypothecate it, how to expand on that performing asset, that’s the tool that I don’t see a lot of people using in this space. People are hicked to the partial, but a collateral assignment is definitely a tool that you can use to hypothecate that cashflow stream and also keep ownership of the note. Whereas the partial you’re selling off for months gets fuzzy and the borrower’s stop making payment. The person with the partial have the rights to remedy it. The collateral assignment instrument is, to me, a better strategy because if this is an asset that I’m borrowing against and whether the borrower pay or not, I’m using this as collateral. I’m responsible for the payment. I can shift into something that’s performing if something else goes wrong. I can take it internally. It’s not based on what the borrower’s saying to me, who wants to borrow $20,000 and I’m going to use this asset with 50% LTB or whatever the type calculation used. We will hypothecate that asset and do the same thing over and over again. Buy something else and go from there. It’s the strategy that we use, whether you have firsts or seconds.

It’s a great strategy. Not too many people understand that. They understand the individual, the joint venture deal for the most part. A lot of times, you’ve got some great deals there that you want to raise some bigger capital. As the market changed, you pivoted a little bit. Are you still training people in the second space?

NCS 351 | Second Lien

Second Lien: Hypothecation is the key.


I stopped in 2017. I have enough content out there to do it. I went to an IRM event. For those of you who don’t know, IRM is an event where you host different note or real estate-related high-level institutions stuff. I attended those events. I got invited to be a guest speaker. I’m a panelist talking about notes at a real estate event. When I went into the event, the big dogs are there. The guys that run $100-million funds, these guys and managing 10,000, 20,000, 50,000 single premium units. My goal that year from my first portfolio is to get ten properties. I’m like, “This guys’ managing 10,000. What’s going on?” This is what scalability looks like. I got the chance to pick their brain. I came back pumped. I was doing a couple of deals a year from my personal portfolio. I was leveraging IRA money and doing joint ventures. I was like, “Imagine if I can create a vehicle to raise capital for real estate and notes. What does that look like?” I reached out to the accountants to see what tax strategies I can use. I can use depreciation from the rents or offset the ordinary income to notes.

There’s a lot of different things. I was like, “They have all this note in one year, it’s very beneficial.” We created the note fund, which is a hybrid model and it’s trademarked through us by hybrid real estate investing, which means that once I raise that capital, I can go out and buy fix and flips. I can run fix and flips that you can target at 30% in five counties that I have been investing for the last eighteen years. These are luxury flips. Some would sell from $400,000 to $750,000 in that range. We’re scaling down to a lower market because we’ve seen days on the market it’s a little higher for our higher-end product. That’s one piece and here. We have another piece where we do rentals where we targeted double-digit cap rates of rentals in C-class areas, substitute tenets. Then we have notes which are first and second performing and non-performing. We try to focus on getting performing assets first with a yield of 16% minimum so we can create an arbitrage from an average cost of capital. The money we get from selling notes, the money that you get from selling flips, the cashflow you get from re-performing, and the cashflow you get from the rentals, that keeps the liquidity in the fund. I don’t have to wait for somebody with an IRA account to approve a mortgage for first lien position. If I have the money to fund, I would execute funds once we pass and right on the second phase, but that is what we do now. It’s little bit of both real estate and notes together.

You’re taking advantage of what the market offered in your area there.

Wherever the opportunity is, we’re going to deploy the capital in every opportunity. We’re not going to sit on the sideline and say, “There are no seconds. There are no firsts.” When you raise capital, you have a cost, which is the interest and you have to put that money to work. Where the opportunities are, we chose to do real estate local in New Jersey where we’re from. In five counties that myself, my business partner, Joe, have been invested in. I’m also bringing on someone else who had the same level of experience in the real estate world that I had, to push and be in accountability and help elevate us to the next level. That’s been a good addition to the company as well. We’re focusing on the opportunities in the real estate section. New Jersey still the number one foreclosure state. There’s a lot of opportunities here. The note space, the relationships that are created over the years, we’ll try to continue to leverage the relationships with the vendors, sellers, and aggregated brokers.

The question I have for you, Fuquan, are you buying notes in Jersey or are you just like, “I’m buying my seconds in other markets because of the foreclosure process?” New Jersey is a great foreclosure market if you’re buying there like you’re talking about doing because once it’s foreclosed, you don’t have to worry about the two-year foreclosure timeframe because it’s already done for you.

We’re not cherry-picking, we’re buying pools. Wherever states that fall in that pool, we will buy. If it’s profitable, we’ll work the asset. We have the timeline. The judicial states take longer, but it’s still profitable. Interest is still accruing. That’s not stopping. If the foreclosure is increasing, interest is increasing, we mitigate that cost by arrears down payment to offset the foreclosure costs. This is a long-term business. People who want to get into this business, “I just want judicial states, so I can get my money back in two months.” In Texas, they foreclose by lethal injection. People want money fast, but this is a long-term strategy. If I have a New York assets and New Jersey assets and judicial assets, that’s going to take two years. There’s still going to be a profit at the end of those two years. I still get the opportunity with the next two years to help them, to stay in the house and to build cashflow for the portfolio. It’s going to take longer.

We know those certain assets have different exit strategies and different timelines. When you build that in the process, you put timelines on. I have sheets, we bring in data from how long does it take in this state to foreclose. That’s when we can expect to work it out. That’s when we can start to get the payment. If we don’t meet that timeline, we’ll sell off the asset in some pools or whatever. One other thing I want to mention, when note sellers sell assets, people think that they’re putting an arbitrage and getting rid of stuff they don’t want. Certain people have different timelines set up in their portfolio. If you have a three-year term and you have to pay investors, then you have to liquidate those assets no matter where they are in the pipeline that worked out. There is a lot of value I find when I buy from other funds that spin in space. It got repossessed because maybe at the time the borrower wasn’t ready to modify, then I may take over the asset and get it to perform. A lot of the real estate and note events that I go to, I was also trying to see people who got in the second space or first space who’s not doing well with their portfolio and buy those assets from them, a one-off. That gets me the opportunity to cherry-pick or buy into my IRA account because it’s from another entity and take advantage of that as well.

Those are good tips you’re definitely talking about, knowing what’s going on and things. True note investors are always constantly buying. We’re also selling too, depending on what our focus is on our portfolio. Some people, “We just moved. I’m closing to fund it.” It doesn’t mean it’s a bad asset. It means that our in-house constraints or it’s time to get things rock and rolling again in a different route. Going out and recycling or moving those funds from assets tied up into an entity cash and then move that cash into a new fund with a different focus. Let’s talk about your fund a little bit. People always love to hear how you are raising capital? What are you targeting to raise that capital at?

It’s through leveraging the relationship that we established over the years. Raising capital is a whole another business. We’re seeking out broker-dealers, registered investment advisors and we’re putting ourselves in a place where the ultra-wealthy is and the credit investors are. Whether it’s fundraising events, yacht clubs, whatever those events are, we’re putting ourselves in that place. Most of the time when we attend note events, it’s to add value by sharing the knowledge that we know, helping to increase our brand. You’re not going to raise capital much at those events because there’s a lot of active people. You may find joint ventures. We have a fund and we’re not looking for that. We go to those events just for adding value and pretty much establishing our footprint more in the marketplace. We attend different events where those people are and try to see where we fit in there and establish those relationships. This stuff is taught at a lot of note events. I’ve seen you do stuff on raising capital, Rotary clubs, yacht clubs, different places where you need to put yourself and establish those relationships.

If you live in a good area, it could be a PTA meeting with other parents. It could be a football game and establishing relationships with other parents or creditors. It depends on where you live at and where you’re around like a country club, different things like that. Attending social events, you’re connecting with those people. Then showing your track record of course. People are going to invest in you because they don’t know a company. If you connect with them and they see that you have integrity and all those other attributes that you connect and people can resonate to, they’re going to do business with you. It’s all another business. It’s something that I’m still figuring out and learn as I go along. I have a mentor and people who teach me certain things. We actually have together a pitch deck or whatever to be able to present it better. I go listen to people who raise capital, family office events and see how they’re pitching from the stage, how the family offices looking at them, and what underwriting process they’re looking at in order to qualify you to be on that level. Most of these guys are $100 million, $200 million. Even at the IRM events, it’s a whole different level. At least I’m the ones who understand what it looks like from the top down. As I’m working my way up, I can have those processes and everything in place.

I’m so glad you brought that up. It’s taking it from a different view. So many times, real estate investors get so inundated and bogged down of where they’re at. They have a hard time seeing that next level or seeing something if they take it to a whole different level. Instead of doing ten deals in a year, they’re doing 100 deals in a year. It’s a whole different animal. One of the best bit of advice for the best philosophies I have ever heard is that we’re all right here and we all want to be up here, but sometimes our heads get to that right spot too to get us there first before our business can get up there. I know you’re a big advocate of self-improvement, reading blogs listening to tapes. What would you say is the most impactful thing? I’ve been talking to these guys, the bigger funds out there to help you see from a different angle. Is it somebody that you listen to as a mentor? I know you talked about Dave Ahern before. Dave’s a great guy. He is a giant in the note space and a friend as well. I learned a lot from him over the years too. What do you think has been the biggest mind shift for you in the last few years?

NCS 351 | Second Lien

Second Lien: No investors are always buying; they’re also selling.


Definitely attending more institutional events, the Servicing Conference that they have every year. Finding out regulation from the top down, what does it look like before you hit the smaller players. I’m staying abreast all that information and put yourself in a room with higher level people. If you want to fly with the eagles, don’t swim with the ducks. Always staying around and the environment is everything. The environment definitely helps you go to the next level. I need to see what mindset these people are in. That’s the reason we’re doing mastermind groups and everything else, so we can grow fast, by leveraging that experience and that knowledge. I always try to put myself around key people so that I can be able to move to the next level. Internally for me, I do listen every day to things that will keep my mindset right. Whether it’s Les Brown, Jim Rohn, Tony Robbins, or whoever, those guys are in my playlists. It’s part of our rituals to get my mind right and then journal and work on my goals. All that stuff is important because you can’t build a business until you’ve built yourself first.

Those guys definitely have a great programming. I’m a big believer, and I’ve seen this happen, that we’re in the average of the five people that we spent most of my time. If you’re not happy where you’re at, I look at the five people you spend most of your time with. It’s time to get new friends or go hang out in different places. I love what you said when I asked about raising capital. It’s not hanging out the normal spots that you’re hanging out now. You’re going to the country club, you’re going out to different things and you’re expanding your mind. You’re going and hanging out where the money’s at and being there and talking with people.

As they say, if you have more friends on Facebook than you have in your bank account, then you need to change your friends.

I love that you talked about going out to the family office events and seeing how the big guys are raising $100 to $200 million and how they’re doing it. We had Sal Buscemi from Dandrew talking about what he sees on the commercial side spaces. People screw up, they don’t know their deals, and they don’t know the timeframes. They don’t have their pitch book down to be able to share what’s going on with the asset class, or what they are pitching their investors. Let’s face it, investors most the time they don’t want to be in the day-in-day-out activities of the rental. They don’t want to be the ones collecting rent or collecting mortgage payments. They want to know that their stuff can be secure. They can trust you and then they’re going to see what type of returns they can get.

That’s one of the reasons why we created that diversified real estate investment model. It’s to put us in a different space. When I go to events, they say, “This person does that too. They’re raising capital. How are you different? How do you compare yourself?” We don’t compare ourselves to anybody because our model is completely different. We’re doing real estate and notes in the same vehicle. There are not too many other people that are doing that. Some people are doing maybe even personal portfolio, rehab and stuff, but I haven’t seen it. In the circle that I’m in, people have that mixture of asset classes in the same vehicle. That’s what differentiates us from those other models that are out there that sell seconds, that sell firsts. For us to pivot in the market and for me to foresee, “I’m doing this is in my own personal portfolio,” I can have the investor also benefit from this, getting returns and create more equity in this real estate cashflow, fix and flips sales, selling notes from my downline and also re-performing assets altogether.

What would you say is the biggest mistake you’ve made that you’ve learned from?

I definitely look at them as lessons, I don’t look at them as mistakes. For me early on, it was due diligence on assets. It’s getting comfortable with the seller. When you start buying bigger pools, your due diligence change. It’s not one level. Diligence is the weighted average, the health of the percentage that’s current. When you’re talking about seconds, you know what bankruptcy looks like. It’s a total different due diligence. Not process mapping, in the beginning, was a big lesson. Training was consistent versus the scalability factor that we had challenges with. We took down a trade one time. It was 1,005 notes. It was a Banco Popular trade in 2015. A bunch of stuff in there was auto loans. It was credit cards. It was checking accounts that went delinquent. It’s a mixture of a whole bunch of stuff which gave us the opportunity to experiment on unsecured stuff, but it knocks me off the track. That trade was the biggest lesson for me. You get that data in to go for the long level of due diligence, understand the asset, not having a system in place. You have developed scrapers back then to be able to analyze stuff quick and fast. We went through an eight to ten-month bottleneck period where there was a lot of frustration. From that, we grew because we built those processes to help us look at notes faster and easier. That was the biggest lesson in the space. It’s the scalability factor. That’s important.

That’s a big thing, being scalable. I talked to a lot of people. I always update on weekly basis. People want to take their business at the next level. I’m like, “What you’re doing with your twenty notes is different when you get to 100 notes.” It’s definitely different when you get to 1,000 notes. I remember the Banco Popular trade as well. We bought a lot from Banco Popular from 2008 through 2013 to 2014. The thing is to take the time, outline your systems and outline what you’re doing on an asset by asset, due diligence basic level. Not every asset is going to be a homerun hit out of the park. You want to get a lot of base hits. A lot of base hits singles, doubles, triples and some home runs. Some you’re going to strike out on, but the fact that you take down that asset and it adds to the overall portfolio. It makes it that much more attractive for the seller to sell it to you because you’re taking some of their headaches off their plate.

I would say for those of you who are out there buying, try to buy in the pool format, whether it’s a joint venture. If you have the capital or you’re doing it on your own, start looking at it as the performance of the pool instead of the single asset. If you’re looking at one asset by one asset, you’re going to move straight. There are pools that we purchased to give us that more diverse play and give us tax advantages also. We take losses that go against the gains when we sell assets. The pool purchase gives you that ability to be able to maneuver more. If you’re buying a one, one, one and you look at it as one note, the expense for one note, if I lose, I lost money. When you buy a pool, it’s how the pool performs overall. Start looking at it from that view and it’ll be more profitable for you and easier for you to mitigate more risk when you buy unknown stuff that you’re not familiar with.

NCS 351 | Second Lien

Second Lien: You’re making what you’re doing.


I know you don’t have a crystal ball. You’re not going to be held accountable to everything you say on here. That’s a question people are always asking, “Should I hang around and wait for six months? Should I be buying now? Should I wait twelve months, 24 months?” I’m like, “Don’t wait 24 months to put money in the market. You can be in and out in 24 markets in some things. In other things, you can be into it making a good return for the next five, ten, fifteen years as well too. It all depends on the asset class.” Where do you see the note market going? Let’s start with firsts and the seconds. We’ll jump over on the first side here afterwards. When do you see the second space is going to happen?

Both of them, if you have an abundance mindset. I don’t try to look at what issues or problems are coming in the future. The news is important, but I don’t focus on that. I’m in the NNG world. I’m on Fuquan Bilal’s world. For me, it’s constantly seeking opportunities where I can add value to other people and also continue to get a discount that I’m giving, whether it’s firsts or seconds. Wherever the market ends at, I know I’m putting processes and systems in place to be able to take advantage of what’s next to come. We’re liquidating some of the real estate stuff even our own personal portfolio. We’re liquidating some of the note stuff so we could have that capital ready during that timeline with market shares that we can take advantage, whether it’s going to be more real estate or whether it’s going to be more notes.

That’s the system that we have in place to build a hedge or a buffer against what’s to come. I learned a big lesson in 2008. I was fixing and flipping, I didn’t have any cashflow coming in. I believe in being a landlord is too much of a challenge, but I knew that once that whole thing transpired, that was very important. How I survived was the other business that I set up until I was able to get back and play again in the real estate business. I had a two-year break where I was trying to figure things out and where it was going. At that time, I learned the note space that I used to run around, “No tenants. Throw those thrash and termites. Get away from the property.”  Until I understood doing both and as long as you have systems in place to manage it, it’s good. Where the market went in, I don’t know. We’re keeping abreast to what’s happening in the market and how we’re shifting, how it affects what we’re doing and just trying to build those processes as we go along to mitigate the risks to come.

That’s a great way to look at it. There’s always a bounce in the market and either the bull market or a bear market, there are opportunities no matter what. I have a question. You’ve got your son, it sounds like he’s a scholar and a knowledgeable kid there, listening to what dad is teaching and hearing the vibes that you are putting out with the positive energy and stuff like that too. You’ve got him as a junior note investor yet?

Yes, I have two boys. One is sixteen and one ten. My youngest is more open to understanding the business. He wants to come to meetings. I was going to an Equity Trust event and a Quest event and he was like, “I want to go.” I was like, “I want to bring you because you’ll learn a lot, but it will be over your head and you’ll get too much information at one time.” That happens to me, but there’s a right time for everything. I try to add value where I can get them a little bit. Sometimes he listens on my conference calls and they both go out with me to the properties. We have a property management company that we have in place. We own assets under it since 2016. They have a lot responsibilities. Some of the videos, my oldest son goes out and shoot those videos and edit and that’s how I pay them to put money in their IRA account. They’re actively involved in the business. I’ll take them out to properties so they can earn money through the labor process to understand what the contract is it going through and respect how that business works. I keep them active in the business. Whether they retained just a little bit of it, the foundation, that’s great. Whatever they choose to do at least they have a foundation of understanding on how real estate works. We have all that trust and all that stuff set up and they have IRA accounts. They understand how that works.

It makes my heart glow.

I told my ten-year-old when he goes to school, ask any of his friends if they have an IRA account.

You and I should get together and figure some note training for kids out there.

I spoke on financial literacy once at Essex County College. It’s a college in my hometown from the north. These are young kids who don’t understand how credit work and banking systems and everything else. I go and try to educate them on that. A professor hit me and said, “We should do a summer program on financial literacy and you’ll start it off and invest into it. I’ll get some funding from the city.” I was thinking of doing a note board game, cashflow. I was thinking that it’s funny you say that.

We can call it the note flow. What’s the best way people to get a hold of you, reach out for you?

They can hit me on Instagram and Facebook, @FuquanBilal. They can get me at my site NNGCapitalFund.com. If you want to see some of the rehabs and stuff, you can go to YouTube, put in my name there Fuquan Bilal. You’ll see what I’m doing on here or google me. If anybody needs any help, just let me know. I want to plug this PFREI.co. This is a little premature, but I give it to you first. This is going to be the platform. This is a site, still embryonic. We’re going to launch it about two weeks. We use that NNG Note Academy. That was where we store all the conference calls and all the documents. Everything was for free. You register, you have access to that.

People approach me at events. They’re like, “I built my whole business just by watching your videos. When I first met you, I was like, “You got so many videos, so much information out there.” That was an inspiration for me. I was like, “I have to put that out there also and share the information and learn with the people. That site will allow people to get information on notes, fix and flips, buy and hold. We will be bringing people in and interview them. Adding more value like YouTube to the downline if people who want to learn about the space. The site is up, there’s some podcast there for the notes. We got the Instagram and all that stuff ready to launch.

Fuquan Bilal, it’s great to have you.

Thanks for having me. I appreciate it.

Thanks for sharing some great nuggets with our extended note family and Note Nation.

No problem. Thanks a lot, Scott.

The biggest thing I could tell you is to go out do something. Take action. Don’t just sit on the sidelines. Get in the game, start doing something because that’s the only way you’re going to have any type of success. The only thing you guarantee by not trying is failure. I know that you all want to get in and make changes to your life and make changes to your family and get your way to the top. We do look forward to seeing you all at the top.

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About Fuquan Bilal

NCS 351 | Second LienFuquan 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.

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