Building From the Ground Up: NNG Capital Fund

For Fukuan Blal, CEO of the nerg Capital Fund. He still remembers the two thousand and eight housing market crash like it was yesterday.

I came home and me and my wife actually was in our room and she had the news on, and she was like, oh my god, do you see what's happening to market? This is crazy. Brokers were calling me saying, hey, the deal is going to close. The bank pulled out. I'm like, what is going on? And then overnight, boom, the lights just went out, just like that. I was like, the rug got pulled from under my feet. The banks

You took all the losses two million dollars of your own money out the door.

Absolutely.

Welcome to the Unshakables from Chase for Business and Ruby Studio from iHeartMedia. I'm Ben Walter, CEO of Chase for Business.

And I'm Tanyannie Well, a lawyer and consultant for business owners.

We're sharing the daring stories of small business owners facing their crisis points and telling the stories of how they got through it.

Hey Tanya, Hey Ben.

I think today's episode is really inspirational. There's so much to learn from Fukuan, how he's persevered in life and in business, and how he's using his company to give back to his community.

Can't wait to hear this one.

On today's episode. An MG Capital Fund from Newark, New Jersey. Now here's a little behind the scenes about the show for you. We recorded a lot of this in New York City, but Fuquan is from Newark, which is only about thirty minutes west of here. Now the Newark from when Fuquan was growing up, it looked a lot different than it does today.

If you can remember early eighties, it was a lot of drugs an the area. To walk out your door, it is crack bottles, dope, syringes. But we were sheltered from that from my mom putting us in private schools.

My mom was a single mom of five kids when I grew up.

Remember having candlelight dinners because the powers out having no electricity.

Fukuan's mother had cleared a safe path for her children, and while he didn't fully realize it at the time, she'd also given him the foundations to one day start his own company.

When we were younger, my mom would take us to Chinatown to get the scarves, hats, gloves, and then we would go back to Noork at the bazaar and we would sell them. Me and my younger brother would sit there and sell items from the table, and every one hundred dollars worth of the items we sold, we would get twenty five dollars and pretty good margins. Yay, yeah, yeah, Well she was flit the profits with us fifty percent, and I loved it.

Fuquan knew he liked talking to people, but he didn't think a ton about starting a company someday. For him, it was more about making money.

My first real sales job was in telemarketing, and that's when I learned what they say, you had the gift the gab. So within six months I went from starlin on the phone making minimum wage to having the night shift as a manager, to be in a direct.

That seals for this company.

But he saw a cousin of his in arch Nemesis his words, not mine, making a ton of money working solely for himself.

He was started offrom real estate before me, and I remember him doing a deal and making like forty fifty thousand dollars something like that, and he was like, I make more than you, and you working for the man and everything else. So I started to shadow home around and speak to contractors and I was like, Wow, this is really great.

So Fukwan quit his job and started working at his cousin's business full time. His role was to consult with prospective homeowners and build a network of potential buyers. To get people in the door, he would hand out flyers for free seminars where he'd teach aspiring homeowners about how to qualify for loans and earn passive income for mental properties. It made him feel good to pass along what he had learned about real estate from his cousin to his own community.

We was never taught financial literacy where I grew up at let alone, you know how to qualify for home right, it was only for middle class and upper class people. So being able to do that value add and give that back to the community from education I knew, and nobody was doing that. Nobody was coming to the hood so to speak, and educating people on how they can get a foot in and get a lake up.

So it felt good.

That was what gave me my full of the importance educating the community on what they can do to have financial freedom.

And his seminars they were working. He was helping dozens of people learn how to become first time home buyers and passing along those connections to his network of realtors and loan officers, and timing was on his side. Around this time, banks had made it really easy for folks of all financial backgrounds to qualify for loans.

The banks were literally approven any and everybody, so it made it easier for people to qualify. So you would actually go out to a seminar and educate people, and then people would take the leap forward and take action, and then that would spread like wildfire.

He was also helping his cousin's company fix up and flip properties for profit. He focused on reinvesting in his own community, Newark, New Jersey, where he grew up. How did you make that happen in a way that was sustainable.

There were a lot of dilapidated properties, a lot of burnt out properties, vacant properties, and it was just a war zone pretty much. So being able to start going and repair properties block by block and bringing the community back gave us an opportunity for the town to get properties back on the tax road and give the residents a better place to live.

And it wasn't just properties. Fu Quan also gave formally incarcerated people jobs that they usually couldn't get.

Growing up in NewYork.

These were the people that were in my community, friends and family members of course, who ran the streets and got involved with the wrong thing. And I know these were good people, right, there's good people in bad areas. They just caught up from what's happening in the community. So for me, it was an opportunity to kind of

After a few years, Fuquan and the business were doing great. They had a solid customer base, they were giving back to their community, and they were financially stable. One was riding high until one day something happened that changed the direction of his life forever.

So it was my cousin's birthday and the day before we were actually visiting a lot of construction sites, and we were talking about a celebration party he was going to have the next day. Then the next day came and he came to the office and said, you know what, I'm not going to work the full day. Let's make payroll early. So we did that. He left for the day and I stayed to work and then I saw someone just walk past the office and I'm like, well,

And a guy turned around and looking for you. Boom boom boom boom boom shot me five times.

Oh my god.

And I had to play dead actually for him to actually stop shooting. I like lay it on my back and then he ran off out the door. And it was such a rush I was able to jump up. Adrenaline was going in down nine one one. I just remember being in the back of the ambulance and going to a university hospital.

The surgery was extensive and after he was stitched back up, Fuquan was in the hospital for a week, he went home and that's where he stayed for the next six months while he recovered.

For me, it was at six months of healing, it was a lot of self searching and just went more deeper within, kind of separated myself from a lot of different people and figure out how can I add more value to my life and started to build the journey from there.

For most people it would have been very easy and certainly understandable to slip into why me, why now self pity, But not Fuquan.

I think that was the best thing that happened to me because it really taught me to real value of life. And at the time I didn't have kids, and it really made me appreciate the simple things that people don't even pay attention to every day, like tiny shoes, right, So I started to appreciate the simple things in life.

I'm going to pause for a second because I to hear that story and then say someone say that's the best thing that ever happened to me is pretty astonishing.

Well, it's a life lesson.

Fuquan and his girlfriend decided to get married and start building a family. The aftermath of the shooting also changed how he did business.

That kind of went into a shell.

I couldn't trust anybody around me, so I disconnected from my business partner and started my own venture and started to go off of my own.

The company did exactly what Fuquan was doing before, but this time he owned one hundred percent of it. Though he'd still be flipping homes. He wanted to do things differently from his cousin.

And then started to focus on business from there, and how can I structure a business where it was a lifestyle business? And I really wasn't killing myself, so to speak. And that's when the light bulb went off, Hey, have you build your own construction team.

You can control more.

Costs and that way you've been do less and still make more profit and still have a quality life.

Luckily, he had a large client list from working at his cousin's company and running the seminars for so long, and by the end of his first year he had a portfolio of thirty properties that he had flipped and sold. He reinvested any profit he made right back into the business.

I was hungry. I had something to prove I had life. I knew the meaning and value of life, and I knew that I had a purpose. And in fact, I did more deals that year than I did the year previously.

The real estate market continued to boom.

It started to develop fast because I had a lot of people my network who were looking for houses. I had a lot of people who wanted to sell me houses. I had lenders who wanted to loan me money. So I started to put all those pieces to the puzzle together, and that's where my business really started to accelerate.

He also took the opportunity to diversify the business.

I had a transportation business. I had a here studio with twenty five cheers. So I was using real estate to kind of fund other businesses. I had a car wash, all these business at the same time.

Majority of what he did and his passion was still real estate. By the end of that first year of setting out on his own, he was a millionaire. Things were great, but he wondered if it was all too good to be true.

It was unbelievable. It was mind blowing for me because where I came from and where I was at the time, it was almost like a dream. But it was scary too at the time, because you would see people just getting into business and taking off, and I was like, okay, this is too easy. And when I was speak to the loan offices, they would tell me, hey, they got stated programs out. People just need the state how much

Something is not right.

Unfortunately, Fuquan's instincts were right.

I left the salon and I came home and me and my wife actually was in our room and she had the news on and she was like, Oh my god, do you see what's happened in the market. This is crazy. Brokers were calling me saying, hey, the deal is going to close. The bank pulled out. I'm going to switch it to another bank. I think I could make it happen. Then two days later, this bank pulled out, and I'm like,

The global financial crisis. Now most of you will remember it well, but just in case you don't. For some reason, in two thousand and eight, the entire housing market went under and financial markets were in upheaval.

I was like the rug got pulled from under my feet. The banks stopped lending. I had deals literally at the closing table, lined up the close, and all the funding got pulled. And during that time I was just flipping properties. I had no cash flow.

It was just by fixed cell, by fixed seal, so I had no income coming in from rental properties.

So when they stopped funding the closing, my business was on standstills and I.

Stuck with These properties were sort of mid.

Renovation, absolutely, and then values dropped. Fifty percent.

Of the twelve properties Fuquan's company had in closing, nine of them fell through. Fuquan owed his lenders money for every property he was renovating. He sold off all of his other businesses, the car wash and the transportation company to fund those properties. And still it wasn't enough.

You took all the losses, two million dollars of your own money out the door. Absolutely, His accountant advised him to file for bankruptcy.

I said, I'm not going to do that because I had some investors that is still with me today that believe and said, well, you have our money from our ira, our retirement. You know what's happening while everyone else was not paying. I stood tall fire, sold the properties, paid them back, and I took the loss.

Ben Wow, Fuquan loses two million dollars of his own money and still decides to go against his accountant's advice and not declare bankruptcy. I think that was a really bold decision.

Yeah, I suppose it was bold, but it's easy to say that now. You know. Everything looks good in hindsight, but it must have been terrifying at the time.

I want to make sure that we circle back to this part of the conversation because this is something that so many business owners have to think about. You know, they might disagree with how Lukwan handled it, but I want to make sure we talk about this later. It's way too important to miss.

But taking back to the story.

Like for so many others, Fukuan had to completely change his way of life after the crash. He sold his single family home and moved into one of the apartments his company had been renting out with his two young sons.

So I moved from a five bedroom, four bathroom house to a two bedroom, one bathroom apartment. So I did what I had to do to cut my expenses down to survive through it. You know, for a couple of years.

At any point along this series of woes, did you think about giving up?

No, Because for me, it was I fight better with blood in my mouth. Right, It's I grew up through adversity, So growing up through that was really made me who I am today. So going through that, especially after getting shot, right, you get shot five times and you still live, It's like, Okay, what's next?

What's next? Was well a lot of thinking. You see, the real estate market would be frozen for a few years, and for Kwan was now divorced, his entire life and his business had to pivot.

I remember sitting on my bed watching the silling fan, swinging around like, you know, what am I going to do? Because real estate was my identity and that's all I knew. I didn't know anything else, and that time was really quiet time for me, and it was time for me to go within. During that time, I learned the only way that my business is going to grow is when I.

Grow amazingly enough. Just like getting shot. Fuquan considers the global financial crisis to be one of the best things that ever happened to him.

That was the second pivotal moment in my life that I look at that as something that was a blessing that happened as well, because at the time I worshiped money. I was a slave to it, and I thought that was the value. So until you learn when you don't have it, where the really value is. I learned that the true wealth it was within and it really value was in family. I spent a lot more time with my kids, becoming the best father I can be, and

But the housing market wouldn't be recovering anytime soon, so he had to pivot once again. He learned about short sales, the process of buying foreclosed homes for less than the value remaining on the mortgage. Fuquan found himself a mentor who could teach him the trade. He decided to shift his business completely towards short sales. It became so successful that he started running seminars again to build an investor base.

Before I was teaching people in the front part. Hey, this is how you buy a house. This is how you qualify, it's what you do, It's how you get tenants. Now telling people this is how you buy debt. You guys don't know about the debt business. Let me teach you about the debt business. You don't have to deal with no tenants, tallest trash, turnmites, you have to deal with any of that. You can help home uner stay in the house. You buy debt at a discount, And this is how it works.

And in twenty thirteen, Fukwan decided to start Energy the National Note Group.

And I said, I'm going to create a vehicle where I can raise capital, buy notes direct from the bank, sell some off to people who want to buy them, and work them out myself to make a great return.

Four years into the business, Pukwan decided it was time to diversify again, so Energ started to do fix and flips again.

Beyond that, and then in twenty nineteen, we started to do rentals. So now we have income from rentals, we have income from Fix and Flips, and we have income from the note business. So those three different verticals help us stay afloat, help us navigate the narrows, help us continue to be able to pivot. So, for example, if foreclosure happens again, the note business.

Would be booming because banks would be selling debt.

Right if Fix and Flips slowed down because interest rates are high, we have revenue coming in from multifamilies. Rent is not going down. Rent it's really expensive. Rent keeps increasing, right, So we have those three different verticals, and that keeps us aflow.

In today's mark is.

With Neng up and running, Fuquan could return to doing something that was at the heart of his business all along, giving back.

So we raise capital from accredited investors, and then we take that capital and we invest it into our impact projects. So in the Southeast and Alabama and Georgia, we invest into a lot of the multi family apartment complexes, and we keep thirty percent of those communities with subsidized rants for their Section eight. Bad women and children, seniors who can't afford rent, bumps.

For anyone listening who thinks you have to work all the time to win big take this lesson from Fukuan. His focus on himself and his quality of life has paid back big time for his business, and today he's doing more than ever before. The Energy Capital Fund owns twelve hundred properties, with a goal of getting to five

That is such an inspiring story.

Yeah, that one had a lot of ups and downs. I mean he has really ridden a roller coaster. Yeah, he really has.

And there's so much we can talk about here, and I'm excited about jumping into it. But let's start with Wakwan's decision to not file for bankruptcy. You know, like everything else, there are benefits and drawbacks. But Fukwan took a very long term approach. All right, he was an entrepreneurial guy. It was not going to be a good look for him to fail on the people who invested in his business and invested in him. For him to just simply say, oh, I'm sorry, I need to file

I would go step further, Tanya. He didn't just take a long term approach. He took a principled approach. True. I think they were equally important. Now that doesn't mean it's always wrong to file for bankruptcy. There are situations where it's appropriate, don't get me wrong. But for him, I think it was equally about his long term reputation and his principles, and he put those both to work and he came out exactly where he.

Was meant to.

Yeah, and you make a good point, like, I'm not anti bankruptcy, I'm just thinking throughing it better, really make damn good sense approach, That's what I'm about.

Yeah. The bankruptcy Code exists for a reason, and part of the reason that it exists is to encourage risk taking so that lenders and borrowers have a common framework for when things go wrong, because if they don't, then it will make lenders more hesitant to lend and borrowers more hesitant to borrow.

It.

So it exists for a reason, but it exists as a last resort. Right as long as the bankruptcy is on your record, it's going to be very tough to get credit. You're typically only going to be able to credit, if at all, from alternative lending sources tend to be very expensive and the terms can be onerous. One thing I always remind people is in small business, it's not

I'm so glad you brought that up then, because there are so many business owners and aspiring business owners who come to me and don't realize how integrally tied their personal finances are to their business credit. And they think that just because a certain contract or a certain obligation is put into the business's name, that it is not going to matter as much what their personal situation is.

That's right. I mean that only happens when it is truly a professionally run business where the owner could leave tomorrow and it kind of wouldn't matter because it exists as an entity under itself, and then you can do entity financing, but that typically comes much much later. That said, we've worked with lots of businesses who have used credit in really smart ways, in ways that kept them from having to take equity financing and dilute their ownership in

I like that financing and a small business level, especially because so many people do want to maintain control, and we know that a lot comes with getting other people's money if it's an equity position, right, And so those entrepreneurs who are saying I really would like to maintain control, I encourage them to strongly consider getting just traditional financing because then they can keep the control, but they still get access to the capitol.

But all of that comes after putting your own money in. If you don't have a dollar to put in your business, you don't have a business. You need to be working and saving and have some seed money to start at yourself. Because I can tell you that whether you're raising equity financing, debt financing, or anything else, if you won't put a dollar in, why would I put a dollar in.

Exactly, and circling back to Fuklan, that's what he had to do to get what he was trying to get done done. He needed to show that he had skin in the game, and you know, when things didn't go we well, his two million dollars was on the line, and that's kind of how it goes.

And he stood by it. The other thing that I loved about Fuquon's story is how much his business is tied to his community goals. And what that means from a practical perspective is that the mission of the company is deeply personal and it's driven by his connection to his community and where he comes from. And so this isn't just about making another buck, although he does well financially. This is about delivering meaningful, lasting change to a community that he feels like is a part of him.

He found a way to pour back into his community while building a sustainable business that served not only him his own purposes as a business owner, but also the purposes of the community and goes to show there's so many different ways to do this right because earlier in his story he did it by hiring people who were less likely to be hired by others. So that was how he was pouring back into his community and supporting members of his community. When that kind of went badly,

What I particularly love here, though, and I'm going to share a personal view, is I love purpose driven capitalism as opposed to just philanthropy. Because he wasn't saying I'm going to make a bunch of money and give it away. He was saying, I'm going to do something that will help my community and make me money at the same time. Because when you do that, everybody wants to do more

It truly is, and people can't help but want to support that. And even further, Ben, he's showing people how it can be done, which is inspiring, right, and I love how he went about doing it.

Yeah. Look, and now he's expanding. He's in the southeast, and so I'm looking forward to seeing where he takes it next.

Oh yeah, I have no doubt with the way he operates and just the clarity of vision that he has, I have no doubt that.

He is just going to continue to sore Tanya. Let's go to the advice Caucon wanted to share with our listeners. He thinks every business owner needs to ask themselves two questions when starting a business.

Wish of value, d what is your impact? Always think of business from that point because most people think of it. Okay, I want to make a lot of money for what reason you know you want to travel, you want to do what right?

What impact are you going to do?

Like I explain, my wise is providing quality housing and I wake up out a bit every day and that's mission right. So I would definitely say find out a way where you can add value to others, and the rest of procy definitely will come back to you ten times.

Thanks so much for listening to The Unshakables. If you liked this episode, please rate and review it. It'll help our show find more listeners. On the next episode, we'll be back with a story about a college dropout who started his company the way every great innovator does by selling stuff out of his dorm room. I'm Ben Walter and this is The Unshakables from Chase for Business and iHeart

The Unshakables is a production of Ruby's Studio from iHeartMedia and Wheelhouse DNA.