Welcome to a captivating episode of Unstoppable REI Wealth! In this power-packed installment, I, your host Billy Alvaro, have a riveting conversation with the brilliant real estate investor Fuquan Bilal from North Jersey. With an impressive 24 years of industry experience, Fuquan specializes in high-end fix and flips, ground-up construction, and commercial real estate investment. Prepare to be amazed as Fuquan shares his invaluable insights and secrets of success. From his down-to-earth persona to his profound impact on the real estate world, Fuquan's wisdom is truly awe-inspiring. Together, we delve into the importance of authenticity and vulnerability in business, drawing from my personal journey of being true and raw when I joined 12 years ago, which garnered immense respect and admiration. We also explore Fuquan's exceptional business model, which combines fix and flip properties with multifamily rentals, creating a robust buffer against market fluctuations. Discover the challenges we faced in generating leads and how we overcame them by focusing on our core business and delving deep instead of spreading ourselves thin. Furthermore, Fuquan reveals his remarkable strategies for acquiring properties, utilizing an array of resources such as wholesalers, Realtors, and direct-to-seller campaigns. He emphasizes the significance of building relationships and establishing a presence in the market through targeted announcements and press releases. And don't miss out on his ingenious trick to get on brokers' radar when starting out! Join us as we unravel the fascinating world of seller financing in real estate deals. Learn how structuring a deal with the seller acting as the bank can secure financing at a potentially lower interest rate. We delve into the art of negotiation and the use of deal analysts and due diligence processes to assess multifamily investments' viability. Efficient team management is another crucial aspect we explore, as we reveal time-saving strategies, incentive-based payment structures, and proper project timeline management. Witness how operational efficiency can propel your business to new heights and reduce chaos. And that's not all! We discuss the analysis and formula for purchasing land for new construction projects, emphasizing the importance of profitability and economies of scale. Fuquan also unveils his implementation of the EOS model, creating a long-term plan and achieving operational efficiency. Intrigued? Tune in as Fuquan shares his fascinating journey of starting a fund and implementing a debt fund structure. Discover how this unique approach has enabled him to scale his business, engage in various investments, and navigate the ever-changing real estate market. Speaking of the market, we delve into Fuquan's expert predictions and insights. Brace yourself for an enlightening discussion on market dynamics, buffers, hedging, and the future of the real estate industry. But wait, there's more! I invite you to visit billyssecrets.com, your go-to resource for tools, tips, tricks, strategies, and secrets for real estate business success. Implement what you learn, and I can't wait to connect with you on the next thrilling episode of Unstoppable REI Wealth! Remember, success in real estate is within your reach. Don't miss out on this transformative episode. Stay unstoppable! - Interview with real estate investor Fuquan Bilal - Importance of being authentic and vulnerable in business - Fuquan's business model: fix and flips, multifamily rentals - Challenges of generating leads in the changing market - Importance of gaining real-world experience in real estate - How Fuquan's organization acquires properties - Building relationships and creating opportunities in real estate - Strategy of seller financing in real estate deals - Due diligence process in commercial real estate deals - Efficient team management in the real estate industry - Analysis and formula for purchasing land for new construction - Achieving operational efficiency in scaling a business - Fuquan Fuquan's journey of starting a fund - Structure and benefits of a debt fund in Fuquan's business - Views on the current real estate market and predictions for the future - Strategies for success in real estate investing Connect with Fuquan LinkedIn: https://www.linkedin.com/in/fuquanbilal/ Instagram: https://www.instagram.com/fuquanbilal/ Website: https://nngcapitalfund.com/ And after that head on over to... https://easysell411.com https://billyalvaro.com
Welcome to a captivating episode of Unstoppable REI Wealth! In this power-packed installment, I, your host Billy Alvaro, have a riveting conversation with the brilliant real estate investor Fuquan Bilal from North Jersey. With an impressive 24 years of industry experience, Fuquan specializes in high-end fix and flips, ground-up construction, and commercial real estate investment.
Prepare to be amazed as Fuquan shares his invaluable insights and secrets of success. From his down-to-earth persona to his profound impact on the real estate world, Fuquan's wisdom is truly awe-inspiring. Together, we delve into the importance of authenticity and vulnerability in business, drawing from my personal journey of being true and raw when I joined 12 years ago, which garnered immense respect and admiration.
We also explore Fuquan's exceptional business model, which combines fix and flip properties with multifamily rentals, creating a robust buffer against market fluctuations. Discover the challenges we faced in generating leads and how we overcame them by focusing on our core business and delving deep instead of spreading ourselves thin.
Furthermore, Fuquan reveals his remarkable strategies for acquiring properties, utilizing an array of resources such as wholesalers, Realtors, and direct-to-seller campaigns. He emphasizes the significance of building relationships and establishing a presence in the market through targeted announcements and press releases. And don't miss out on his ingenious trick to get on brokers' radar when starting out!
Join us as we unravel the fascinating world of seller financing in real estate deals. Learn how structuring a deal with the seller acting as the bank can secure financing at a potentially lower interest rate. We delve into the art of negotiation and the use of deal analysts and due diligence processes to assess multifamily investments' viability.
Efficient team management is another crucial aspect we explore, as we reveal time-saving strategies, incentive-based payment structures, and proper project timeline management. Witness how operational efficiency can propel your business to new heights and reduce chaos.
And that's not all! We discuss the analysis and formula for purchasing land for new construction projects, emphasizing the importance of profitability and economies of scale. Fuquan also unveils his implementation of the EOS model, creating a long-term plan and achieving operational efficiency.
Intrigued? Tune in as Fuquan shares his fascinating journey of starting a fund and implementing a debt fund structure. Discover how this unique approach has enabled him to scale his business, engage in various investments, and navigate the ever-changing real estate market.
Speaking of the market, we delve into Fuquan's expert predictions and insights. Brace yourself for an enlightening discussion on market dynamics, buffers, hedging, and the future of the real estate industry.
But wait, there's more! I invite you to visit billyssecrets.com, your go-to resource for tools, tips, tricks, strategies, and secrets for real estate business success. Implement what you learn, and I can't wait to connect with you on the next thrilling episode of Unstoppable REI Wealth!
Remember, success in real estate is within your reach. Don't miss out on this transformative episode. Stay unstoppable!
- Interview with real estate investor Fuquan Bilal
- Importance of being authentic and vulnerable in business
- Fuquan's business model: fix and flips, multifamily rentals
- Challenges of generating leads in the changing market
- Importance of gaining real-world experience in real estate
- How Fuquan's organization acquires properties
- Building relationships and creating opportunities in real estate
- Strategy of seller financing in real estate deals
- Due diligence process in commercial real estate deals
- Efficient team management in the real estate industry
- Analysis and formula for purchasing land for new construction
- Achieving operational efficiency in scaling a business
- Fuquan Fuquan's journey of starting a fund
- Structure and benefits of a debt fund in Fuquan's business
- Views on the current real estate market and predictions for the future
- Strategies for success in real estate investing
Connect with Fuquan
LinkedIn: https://www.linkedin.com/in/fuquanbilal/
Instagram: https://www.instagram.com/fuquanbilal/
Website: https://nngcapitalfund.com/
And after that head on over to...
Who knows maybe you will be our next partner?
To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
Billy Alvaro 00:00:00 What's going on, everybody? Welcome back to another episode of Unstoppable Rei Wealth. I'm, your host, Billy Alvaro, and this is episode 110, and I'm loving it. Today, I kind of interviewed people all from the Northeast. Today I'm interviewing Fuquan Bilal from North Jersey. And I gotta tell you, the guy's been doing this for 24 years. Wealth of information. And he has a really unique business because he's doing higher end fix and flips and new ground up construction. And he also does commercial real estate investing on the apartment side. And he's able to do all this with 20 people in his organization. Highly operationally, efficient, and he runs a fund that enables him to go out, buy these properties for cash. And he does a lot of other things that I think you guys are going to enjoy. I pulled out four or five really cool nuggets from the conversation. There's probably another handful or more. I hope you guys enjoy it. He is a down the earth giver who is really making a change in the world and making things happen. Welcome to Unstoppable real estate investing wealth. My name is Billy Alvaro. Aka the Unstoppable BA. Former billion dollar mortgage banker gone bankrupt, turned professional real estate investor. where each week you'll learn the tools, strategies, systems, and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow and scale their businesses, creating massive profits and how you can, too. And we'll teach you how to put those profits to work so you no longer have to get ready to finally experience financial freedom and generational wealth. Now, let's get started. What is going on, everybody? Welcome back to another episode unstoppable Rei Wealth. I'm your host, Billy Alvaro the unstoppable. You know, I always open up the show. I'm like, I'm super excited because it's my energy. I just love to be excited about, you know, honestly, I'm interviewing somebody today in my backyard, New Jersey. Moved out here three years ago. Fuquan Bilall. I've been listening and hearing your freaking name come up in more circles over the last three years since I moved here. and people think I'm not like, how do you not know Fuquan? How do you not know this guy? Finally, I met you face to face, what, about a month and a half ago?
Fuquan Bilal 00:02:15 Yeah. And it's crazy. We've been in the same mastermind, I think, for, like, years. I've been in almost four and a half years. And I told you the first time I saw you, I saw you cry on stage.
Billy Alvaro 00:02:28 Oh, it came out, bro. That's so funny.
Fuquan Bilal 00:02:32 That vulnerability was authentic, though. I really appreciated that.
Billy Alvaro 00:02:35 Yeah. You know what? When I joined 1312 years ago, eleven years ago, I had to make a decision. Am I going to go in and am I going to be true and authentic, or am I going to try to be opposed? Like, things are great and I went in there, bro raw. And I got to tell you, it really connected with a bunch of different people, because they're like, that's real, bro. You just exposed yourself and opened up and let it out in front of this whole crowd. A lot of respect I got from that, and it was, like, turning point for me, because for years, I was holding it in on how I lost that big business I had, and I was having a struggle and $14 million in debt. And I got to a point where it's like, when I opened it, up, it was kind of a release, and it felt great just to actually talk about it, get it off my chest. But enough about me. This podcast is about you, Faquan. So, listen, give us a background. Like, you have 24 years. I mean, you look like you're 30 years old, so I don't know how to tell you 24 years in here, but you have 24 years in the industry. Give us just a brief overview of what you've done. And now I want to really get into what you're doing today, because you're doing some really amazing things.
Fuquan Bilal 00:03:41 Yes. So what we do today, because we different iterations of how we got to where we are. So I started in 99, just doing fix and Flips. Then it went over to the note business after the market crash. And today we do a hybrid of fix and flip still here in New Jersey. More of, mid to high end stuff. And we do a lot of multifamily rentals, anywhere from 40 units to maybe 150 units. So it's a hybrid model we have, and we derive income from those two business, models. So that helps us create a buffer, a hedge against market uncertainty. Like, right now, people are saying the Flips are slow because they can't find inventory. We still are targeting, multifamily that are 90% plus occupied and just using that strategy to kind of offset inflation by just building a rental income.
Billy Alvaro 00:04:37 So I love the model. I love having two forks in a row. Do you do any type of wholesaling or you kind of stay away from that?
Fuquan Bilal 00:04:42 No, I learned my lesson, with wholesaling. It's not my speed, as they say. when I joined the Mastermind, I saw guys were making grossing a million dollars off of wholesale keyword gross, and it was a shiny object. And I got involved with it and spent two years going down that road and just figured I was the wrong market timing. So the market was changing. it was becoming a seller's market, and I wasn't getting as much traction as the investment I was making. and I realized that you have to spend a massive amount of money if you want to get results. 30, $50,000 a month in marketing. And I wasn't willing to spend that much because it was new to me, and I was like, I've getting enough lead generation from my years in business, from the resources that, it just didn't work out. So I made the pivot to focusing on what's our core focus and going deep instead of wide.
Billy Alvaro 00:05:43 That's right there, that's education, that's knowledge. Right. Like, you're just spitting out deep, not wide. A lot of guys try to go out and they try to take over. They want to conquer the world. They want to go all over the place and spread themselves out. But with real world experience, you realized doing that model, sometimes it's good for some, but it's not good for all.
Fuquan Bilal 00:06:05 I think that model is good for guys who came from short sales to transition into wholesale, and then eventually they'll transition to, okay, I need to build some rentals while I'm wholesaling, and then they'll get into other stuff. But, yeah, for me, I did some short sales also, but it really wasn't something, it was just a way to get to the property. Right. Like tax liens or whatever other strategy to get to the property.
Billy Alvaro 00:06:29 Just another strategy to acquire the deal. No doubt. We did a ton of short sales back in the day. We still have a pipeline right now of, like, 12, 13 deals, 14 deals that we work on once every, like, six to eight weeks. Something pops. Most of them die because they just don't give the value that we need in order to make it happen. So it's a numbers game. What does your organization look like today, structure wise? Tell me about the amount of people, and that includes VAS, W, two, 1099, just the whole mix of what your team looks like.
Fuquan Bilal 00:06:56 Yeah, we have a small shop. We have about 20 employees. on average, we keep about 20. The most I would ever want to get up to would be 25. I like to keep a small boutique shop. I don't want to have 100 employees. I don't blame you. We do, project management in house for our Fix and Flips, and basically they manage the GCs. So we do everything in house from design, implementation with the architects, and then negotiate all those contracts for our Fix and Flips. And we also have an asset management team that manages the property managers. So we have property managers, which is our boots on the ground at the multifamily than the Southeast. Asset managers spend time making sure that they execute the plan that we put together on a performance. So we also have investor relations team. We have some admin people, construction office admins. We have a business relationship management team that take care of transaction coordination and lending some operations people, and that's pretty much it.
Billy Alvaro 00:07:59 What is your organization? How does it go about acquiring property? Start on the Fix and Flip side, and then I want you to roll over to the multifamily.
Fuquan Bilal 00:08:08 Yeah. So through an abundance of different resources, from wholesalers, from Realtors. We get leads from our direct to seller campaign that we have still just different ways. You've been in the business so long, you have leads come to you here and there. We don't have any mail campaigns. We're not doing any texting, we're not doing any ringless voicemails, we're not doing any of that. I kind of shut all that down when I stopped doing wholesaling. We had the cold calling, we had all of that stuff. And then once we get the lead, our business relation management team procures the lending and handles the transaction coordination piece. And then it goes to our project managers, and they kind of manage, the process of construction from there. So that's it. And then on the multifamily side, we have a bunch of brokers that we deal with, and basically, the brokers are the ones that help us generate the leads. We also have property management companies in the Southeast that help us generate leads also for off market multifamily deals. And that's kind of how we find a lot of deals that we have on that.
Billy Alvaro 00:09:13 I've been interviewing quite a few people in the multifamily space, and very, like, real estate is real estate, but it's different with their nuances acquisition side. To multifamily is a complete 180 reversal from how it is on the single family side. Like a lot of the single family guys, if it's referral marketing, it's one thing, but when they're marketing TV, direct mail, texting, phone calls, all this other crap, I find that in the commercial side is exactly what you said. It's relationships with a big period after it. Absolutely.
Fuquan Bilal 00:09:47 So, one trick that I did, and I'll share this with you, how I was able to get on a radar, right? So three years ago, maybe a little bit more than three years ago, maybe three and a half years ago, we started to plan our flag in the Southeast, looking at multifamily deals. And one of the things when I was calling around brokers, we had no track record. They were like, who are you? What have you purchased? Why should I send you exclusive deals? Establishing those new relationships was tough. So what I did was, when I closed my first deal, I did a PR, a press release, right? And I targeted the Southeast announcing the acquisition of a specific property, what we paid for the lender we used, and basically it was something for potential investors to see what we did. And also, it put us on the radar, with those brokers who read the news of what's happening, who's just purchased what lenders are lending, we would close, we would do a press release, and we would get a bunch of emails from those guys. Hey, I just saw you close this in Macon. Hey, I just saw you close this in Columbus. That's a nugget, bro. Yeah. So we created a situation where, we started getting inbound, calls from the brokers and basically they started sending us stuff. Now more than ever, we're getting a bunch of calls because of where the market is at.
Billy Alvaro 00:11:06 The, ah, market is definitely shifting.
Fuquan Bilal 00:11:08 Yeah.
Billy Alvaro 00:11:09 Especially on the commercial side, it's definitely moving.
Fuquan Bilal 00:11:12 Yeah. But you got so many different types of deals out there. I mean, in this marketplace, we can only look for deals that are 90% more occupied, or we can get permanent financing. A year ago, the deal was okay, we'll get it less than 90%, we'll get some short term financing, we'll stabilize it, we'll increase the Occupancy rate, and we'll refinance into permanent financing. Today is not that model. Today we're only looking for great deals, deals that are 90% or more occupied that we can get permanent financing from out the gate. So we don't have to worry about.
Billy Alvaro 00:11:45 The cost of capital that changed that and the underwriting guidelines. Or is it a combination of both?
Fuquan Bilal 00:11:51 No, it's our, model shifted. So because of interest rates have increased, it our model has shifted to not buying stuff because of the cost of capital. That needs a longer timeline to do capital expense, capex repairs. So it doesn't make sense to buy something that's not going to cash flow. Right. So we're buying stuff and it's really hard to find these deals. You have to find them off market sometimes all the time. Actually, what I'm finding now is you have to create, um, um, seller financing with the seller. Right. Create a deal. Hey, if you've owned this property for 10, 15, 20 years, you don't want to sell it and get this big, tax, burden. So why don't you create some type of financing? How much money do you really need? Right now? You can be the bank. I can make monthly payments. If you are going to buy something that's not 90% occupied, that would definitely be the strategy you can use because the seller will become the bank. You can get like, maybe a 6%. You put down, um, 25% or whatever you have to do, and they will finance the deal for maybe three to five years. You have it stabilized, and then you can go into permanent financing. And that's the only way I'm seeing that you can structure a deal, that doesn't have the high Occupancy you need for permanent financing.
Billy Alvaro 00:13:06 That's a smart way to do it.
Fuquan Bilal 00:13:07 Yeah.
Billy Alvaro 00:13:08 Are you finding a lot of the investors that have the multifamily, they're more open to doing some sort of sell financing?
Fuquan Bilal 00:13:14 They are. It just depends on what their plans are. Right. So, if they don't want to deal with it, or they're not familiar with, uh, how it works, you'll see, a lot of the old timers are familiar with seller financing. So it's the younger generation where the parents pass and they don't want to deal with the headaches. They want to sell a property and continue to be on a beach. They just want the cash. Some of them are savvy enough to know owner financing will set them up for success. And if it hiccups, they can always come back and take the property back again. It's just really you have to get in your bag and be a good salesman to kind of structure the deal the right way.
Billy Alvaro 00:13:49 Yeah, it all comes down with personality and connecting. That gets me to the next question on your multifamily side, do you have deal analysts that are running through these deals? How's it structured?
Fuquan Bilal 00:14:00 100%. Yeah, we have an acquisition team in house that kind of run through the analysis of it. We use certain softwares where we kind of do our due diligence and check comps and crime rate is a whole due diligence process that we go through. We really don't go off of just a pro former because it's all lies. I mean, they're going to paint a beautiful picture to sell a project. I mean, it sells, right? So we kind of dig through it. We go through lease audits. We go through a bunch of different things that we do in the diligence process. But, yeah, we underwrite it. And if it pans out, then we'll go take a trip, kick the tires and see what the Capex expenses are. We try to structure an LOI with an early access agreement, which basically tells the seller, hey, we're going to save both ourselves time and trouble before we go into contract. If you let me get in and do some preliminary inspections at my cost, right. I'm showing you I'm willing to invest. I'll probably spend three, four, $5,000, do some preliminary due diligence on it. Let my team come in and check out the roof and everything else, sewer scope and some other stuff. we're not asking to get into all the units, but maybe a handful of units. And basically we do, sewer scope, roof, we check the grounds and all that and then I can get some data to give me an assessment of Capex, and let me know if I want to move forward with the deal, if the seller is willing to renegotiate or whatever it is. We don't like to trade deals, so we like to know when we go into contract that it's official unless we find something, that happens down the line with environmental or phase one or whatever it is. So that's the only time that we would go back to the seller and go, hey, we need to sharpen the pence a little more because we found this additional cost that you didn't disclose. Maybe there's some foundation issues or whatever that we may find in the early access agreement. So we try to structure that way and then we go into contract and we still have that due diligence period to kind of, get out if we need it.
Billy Alvaro 00:16:00 I'm sure you probably notice off the top of your head, but how many deals on the commercial side do you have to look at before you actually make an LOI? And then how many LOI's you have to go to to actually spend the money before you get a deal?
Fuquan Bilal 00:16:14 Yeah, we got to kiss a lot of frogs in his business, 100%. But you know what? It actually helps you increase your due diligence skills. I mean, nobody wants to waste time, right? But it's the nature of the beast. You got to go through the process. So I would say let's do one to ten, and we go through ten deals that we evaluate. We'll say maybe in this marketplace, around, three to four will pan out and then we would take those three to four, do the early access agreement. Maybe one will go through that process. So it's like with 10%?
Billy Alvaro 00:16:47 Yeah, 10%, which is actually not bad.
Fuquan Bilal 00:16:50 10%, but you got to kiss a lot of frog. But, I mean, we're just being more selective on our deals and more upfront with, like, for example, a broker will send me a deal, and he'll say, this is what they want. Um, it's 65% occupied. And my first question is, are they willing to sell a financing? No, they're not. Okay, good. Next? Yeah, I'm not interested.
Billy Alvaro 00:17:11 Right. You're right out the door. You're whacking them out before I'm not.
Fuquan Bilal 00:17:14 Interested because I know I'm not interested in getting short term financing from a lender where it's 9%, 8%, 10%, two points. I'm not going to do that. So I'm not going to waste my time even looking at the deal and starting to analyze it. So ask a few questions. If it passed that, then we move to the next phase.
Billy Alvaro 00:17:32 I love it.
Fuquan Bilal 00:17:32 It saves my team time. It saves me time.
Billy Alvaro 00:17:34 And Aggravation, if you don't mind me asking, your acquisitions team, the deal analysts, are they on salary plus commission?
Fuquan Bilal 00:17:41 yes, absolutely.
Billy Alvaro 00:17:43 And they're in house? They're not overseas?
Fuquan Bilal 00:17:45 In house, yes.
Billy Alvaro 00:17:46 Good move. And your PM's on the residential side, how do you go about paying them? Do you pay them salary plus bonus?
Fuquan Bilal 00:17:53 Absolutely. Yeah.
Billy Alvaro 00:17:54 Smart way to do it.
Fuquan Bilal 00:17:55 Projects finish on time and on budget.
Billy Alvaro 00:17:57 That's the same way we do it on time, on budget. We give a piece of the piece, and then we have a little bit of leeway. How do you handle the on time piece when you have permitted projects? Like, there's a lot of them that are permitted out here in Jersey, New York.
Fuquan Bilal 00:18:10 Well, it start after the permits are given. That's when the timelines start, because we really can't start working until we have you know, it's not from when they first get the project. It starts from the date we have the full and you're ready to go. So there's a whole process that we go through. Once we get the architecture drawings and we start to get pricing back from the RFPs, from, the contractors we then give them an Loi, a letter of intent to do business with them. And basically, we start with the first phase. If it's a ground up, we start with foundation, whatever it is, demolition. If it's fix and flip, and then it's timeline. We use, build a trend that we use and we can map out from beginning to end. Bring our team of contractors in that system so they can see what's happening if something is delayed. And we have weekly accountability calls to see if we're on track, off track. some of this stuff is on the rocks. You know, the drill the rocks and deliverables EOS. We run that model and we IDs things where we have trouble. So that kind of keeps us on track. And if it's something that is out of budget, not due to the project manager, then we have a little Leniency.
Billy Alvaro 00:19:24 We run a very similar model that way. On, your construction fix and flip development side, what kind of volume are you guys doing over there? Annually?
Fuquan Bilal 00:19:35 Yeah, we have about 25 deals right now. We do about 25 a year. I hear guys who do 200, 300 deals a year, those are like $60,000 houses. Our properties sell a million, 2,000,005, 800,000. Those are average ARVs.
Billy Alvaro 00:19:56 Let me pick your brain on this. On the new construction side, what is your analysis to pick up the land versus what it's going to sell for ARV wise? Do you have a formula for that?
Fuquan Bilal 00:20:10 It breaks down to the same, right? So it's what I pay for is what the construction cost is. Let's just say if I want to make 10% profit, I would back at all those expenses if it's 10% ARV. So if the ARV is a million two, okay, I want to make 120,000 profit minimum. So we just back out with the land cost. What's the holding cost? We stress test the model, doing a holding cost 18 months instead of a year we calculate all that in there and then basically we take the ARV, we take 15% off of that. And whatever that number is, if we back it out and it's 10%, okay, it's green light to move forward with it. That's the simplest way I can tell.
Billy Alvaro 00:20:49 You yes, because we have a real quick down and dirty. It's generally like between 20 and 30%. Land value is what we're willing to spend for the land, knowing that we're going to be making our ten to 15% to 14% on the back end when we sell it.
Fuquan Bilal 00:21:04 Yeah, we just throw it all in there. So a lot of times, it's not raw land. It's a property we have to tear down. So majority of the time, I'm looking for something. So if somebody see this podcast and you got this deal for me, you can send it to me. I want to do a cul de sac piece. So I want to find a piece of land, maybe three acres, and I can build, like, six properties on it and just have all my problems in one place.
Billy Alvaro 00:21:30 Makes it a lot easier.
Fuquan Bilal 00:21:31 Yeah, I'm looking for deals like that now. Instead of doing a deal over here in this town, that town over here, I want to start doing more of those type of developments. You can do economies of scale with the, materials. You can do so much more, when you're dealing with it on that level. So that's kind of what we're looking for, more land deals where we can parcel up the land and make it happen. It takes longer, though, because you got to get variances and stuff. But it's so worth it.
Billy Alvaro 00:21:58 100% worth it. Let's flip over now. I want to talk about how you started to scale your business, right on the fix and flip side, new development side, and on the construction side, you're doing things a little bit unique, right? In order for you to scale, you and I had a brief conversation. You don't go out and do onesie, twosies with these notes and mortgages and try to fund your business that way. What's your business model? What did you do over the last couple of years? And what are you doing now in order to scale your business to support the growth that you're having on both the fix and flip and the commercial side?
Fuquan Bilal 00:22:28 Operational efficiency. So some people want to get bigger, we want to scale to be better. So operational efficiency helped us. Implementing an EOS model was definitely a game changer. Creating, the long term ten year plan, backing into the three year to one year, then the quarterlies, that really helped us stay on track and visiting that Vision Traction organizer every quarter with the team, hey, are we on track with the annual goal? And once we started breaking it down to the weekly L Ten s and creating some type of structure and getting more efficiency, we started to get a lot more traction. So that kind of helped us with a lot of different things. Buying in bulk with the fix and flip stuff, buying a lot of stuff in bulk, storing stuff, helped us as well.
Billy Alvaro 00:23:18 Can you talk about materials?
Fuquan Bilal 00:23:19 Materials, like, for example, even with Home Depot, we have an account with Home Depot we can buy, let's say 10,000 flooring, and they will actually keep it in their store on the shelves for us. When we need it, we can pull it. So we just have to figure out through our rep, okay, which store has the storage space that we pay for now. You guys will hold it for us, and then when we need it, you just ship it. So creating those type of relationships with your vendors, going direct with the supplier versus dealing with the middleman, like on Windows and all that other stuff. So we've spent a lot of time developing those resources and building it out. efficiency also helped us developing a PowerPoint that has every detail of the property. What the exterior is, what the interior is, where the project managers can create scope of work. So we could change those scope of works to QR codes, or we can put those QR codes in a window all over the property so they're not calling us and saying, what are we doing? They could just scan it and see exactly what it is. It comes up in the QR code, the scope of work. So, creating an operational efficiency has helped us scale, and get rid of the chaos. And it's still a deli process to continue to make it better. Right.
Billy Alvaro 00:24:33 Good nuggets right there, dude. The QR code. Great nugget. And buying in bulk from Home Depot or these other suppliers and having them store for you. Fantastic. Two really good nuggets. Talk to me about your fund.
Fuquan Bilal 00:24:47 Oh, yeah. So, a fund is a whole separate business. This is something that I learned in 2011, how a fund works. And it's funny, actually. My son, we were driving in the car and I was doing short sells at the time, and he heard me, not having a not so pleasant conversation with a negotiator, I guess what they called him, right? What do they call the short sell? Negotiator. Right.
Billy Alvaro 00:25:13 Yeah.
Fuquan Bilal 00:25:14 It's been so long. And, he said, Why don't you just become the bank? Because I was like, These banks don't want to give anybody a break, they so hard. He said, Why don't you just become the bank? And I was like, that's impossible. He was like, that you said, Anything is possible. And I'm like, oh, I did say that. So, I started to talk to a few people, and, I learned about a fund. And in 2013, after many years of speaking to different consulting with different SEC attorneys, I decided to go with an SEC attorney instead of the companies that set up the paperwork for you and help you raise, I didn't want to do that because they have, like, a boiler template, and it's not the same as you want. So set up the first fund in 2013. And at the time, I was heavily into notes and started to raise the capital for that. And, had the opportunity to cycle through four funds doing that successfully paying off investors. And around 2017, I saw the market started to shift a little bit, so I started to get more back into fix and flips. And in 2019, I created the hybrid model, where I can essentially it's written in my Ppm that I can buy notes, I can buy fix and flip. So I can do multifamily. So not firing off on all cylinders at all times. Right. Like, right now, there's a shift in the market where. It's tough to find inventory for fix and flip. So that channel is not as robust.
Billy Alvaro 00:26:35 As it used to be.
Fuquan Bilal 00:26:36 And we're focusing more the efforts on the multifamily stuff that have cash flow to kind of offset SGNA, make sure we have profit coming to the door to make our distributions to our investors. So that's pretty much those are the assets that are in a fund today. And that's the model that we have with the fund. And basically, we have about four different classes. We have short term classes, long term classes in a fund, that will go from anywhere from a 90 day call option to a five year term. We have a fund with carve out, so the carve outs are four classes. and, it's for accredited investors only. We pay anywhere from 9% to 12%, just depending on which class that they're in.
Billy Alvaro 00:27:18 And is there a pref with that?
Fuquan Bilal 00:27:21 It's only pref. There's no profit participation.
Billy Alvaro 00:27:24 So nine to twelve only pref?
Fuquan Bilal 00:27:25 Yeah, only prep. There's no profit participation.
Billy Alvaro 00:27:27 It's like a death fund. Paid out quarterly. Yeah, it's a death fund. Paid out quarterly.
Fuquan Bilal 00:27:31 Correct. Paid out quarterly.
Billy Alvaro 00:27:33 And what has that fund I know the answer to the question. What has that fund allowed you to do with your business as far as scaling it?
Fuquan Bilal 00:27:40 Yeah, well, it helped me, be able to execute on note acquisitions today. If we are executing a trade on notes, it'd just be to flip it. It won't be to do the long strategy where we're taking down some notes, getting our asset managers in place to start doing collections with the servicers. We're not doing that model right now because the attorneys make a whole bunch of money. And it usually takes anywhere from eight to twelve to sometimes two years to turn the note around to get a borrower to make a payment and start making payments. So, right now, with the notes that we have, basically we even execute and selling a trade desk. Any new notes that we buy would be just to buy and sell. We can kind of flip the paper. It also allows to just do the fix and flips and also multifamily. And it's written to allow us to do fix and flips in specific areas, which is New Jersey, five counties, and only to buy multifamily in a southeastern region. So we just can't raise money and go, oh, we want to try a deal out in Texas. Got it. Or we want to go do a flip in Ohio. We can't.
Billy Alvaro 00:28:52 With, with the fund that you have, because I know you said it's a debt fund. Are you able to marry that debt fund with debt on the front end, or are you buying all cash through your fund?
Fuquan Bilal 00:29:01 No, so we buy all cash and then we actually can have the ability to take leverage like some of the lenders are in a mastermind, Renovo, Lima, DLP, those guys. I have $10 million line of credit with each of those lenders. So what we'll do is we'll buy cash, and then we'll go to them for the leverage piece, and they'll give us maybe a, uh, percentage of what we purchase for that will come back into the fund as liquidity, and they'll give us the construction draw. We'll do the first phase, and then 48 hours they'll pay us back. So we use a mixture of both. It just depends where the market is at. If the capital markets are the cost of capital is more than we're paying our investors. We don't use it.
Billy Alvaro 00:29:44 Smart.
Fuquan Bilal 00:29:45 Yeah.
Billy Alvaro 00:29:45 It doesn't make sense. Where are you seeing what's, I guess, your pulse on the market now? And what are you thinking? I know you don't have a crystal ball, but I just want to get your ideas, like, what are you thinking is going to happen over the next 12, 24, 36 months? If you could think out that far with the market?
Fuquan Bilal 00:30:01 Yeah, I mean, it's really a lag in the market, so you can't really time it. nor should you want to. You just have to kind of create buffers and try to hedge as much as you can. I think that things will start to turn around the end of 2024. I think we have a long way to go. I see Office is taking a big hit. I think another year or two, office probably be forty cents and a dollar. So that's going to be a great opportunity for those people who are there. And I don't think that market is going to come back. Probably is going to take ten years for that to rebound. But that affects the banks who lent on that stuff, who has to do the fire sales, and then that affects the banks who lent money on multifamily deals, and then that affects on and on is a lag effect. So I think that 2024, going into 2025, when elections and everything is happening, we'll start to see some change. I don't think interest rates are going to go back down. I mean, when I came into the market, it was 9% for conventional and 7% for FHA.
Billy Alvaro 00:31:09 They're still relatively low compared to what they've been historically. We just were spoiled for a couple of years with that two, two and a half, 3% rate.
Fuquan Bilal 00:31:17 Yeah. You just have to learn how to move in this market. Right. So you have to adapt. If you're still doing the same strategy you was doing a year ago, then you're dog food. So for me, you just have to learn how to adapt with the market and navigate the narrows.
Billy Alvaro 00:31:33 Bro, this was 30 minutes. I usually go 30, 40, 25. This was a lot of knowledge, man. people who are listening to this podcast, listen to it again. There was a lot of goal that you threw out there I don't even think you realize it because it's just Second Nation to you. You do this for so many years, you just kind of spitball and put things out. But wealth of information. You're a solid individual Fuquan. If people want to follow you, get in touch with you, how do they look you up?
Fuquan Bilal 00:31:59 Oh, I mean, I'm on all the social media channel. I'm even on threads, so you can go to is that At, Fuquan, Bilal for everything. Facebook, Instagram, TikTok Threads, you name it.
Billy Alvaro 00:32:11 YouTube.
Fuquan Bilal 00:32:12 You want to see some of the renovation stuff we do? You go to YouTube. But I'm on all the social media sites. You could check out our website too. Nngcapitalfund.com as well.
Billy Alvaro 00:32:22 Perfect. And if you guys have a deal that he can subdivide, put in a cul de sac, hit him up and make that deal happen.
Fuquan Bilal 00:32:29 Ah, only in North Jersey. If you got it in North Jersey. That's what I'm looking for. Yeah.
Billy Alvaro 00:32:33 No Indiana, no Ohio crap like North Jersey.
Fuquan Bilal 00:32:36 That's it. Yeah, that's it, man. I appreciate you having me on the platform, man.
Billy Alvaro 00:32:39 Appreciate you coming on, brother. Really good getting to know you.
Fuquan Bilal 00:32:42 Absolutely.
Billy Alvaro 00:32:43 Take care, man. Thank you so much for listening to today's episode of Unstoppable real estate investing wealth. My mission is to give you, my listeners, the blueprint for success. The insider secrets for starting, growing, and scaling your real estate investing business so you can experience and live the unstoppable lifestyle. I've made it simple for you to catapult yourself to success. Go to Billyssecrets.com. That's Billys Secrets.com. There you will find every single tool, tip, trick, strategy, system, and secret used to make millions of dollars as a real estate business. Everything my team uses and my guests use all in one place for you to tap into so you can start, grow, and scale your real estate investment business. I really hope you implement what you're learning. I hope you utilize these tools, tips.
Fuquan Bilal 00:33:38 Tricks, strategies, and secrets.
Billy Alvaro 00:33:40 And I hope to see you on the next episode. God bless.
Fuquan Bilal 00:33:43 Bye bye. On Close.