EP. 60 // Building a Billion-Dollar Empire by 30 Years Old w/ Allon Avgi
On today’s show we have another repeat guest and dear friend of the hosts: CEO and real estate investor Allon Avgi.
What does it take to build a billion dollar empire? Our guest today, Allon Avgi, isn't just dreaming about it, he's actively working towards it. With his ambitious goal of hitting a billion dollars in holdings before he turns 30, Allon is an inspiring testament to dreaming big and working hard. Allon shares his journey over the last 20 years, his successful real estate business, and the incredible New Year’s eve bash he hosted, you might just find yourself inspired to dream a little bigger.
Allon's success isn't by sheer luck, it's a result of calculated decisions and a knack for finding opportunities where others don't. He has honed his ability to identify distressed assets, turn them into profitable investments, and make a killing in markets like Arkansas and Houston, Texas. But the road to riches hasn’t always been smooth. Listen as Allon opens up about his past chasing shiny objects, and how this journey has shaped him into the successful real estate investor he is today.
Yet, Allon's vision goes beyond just making money. He's using his success to create jobs, opportunities, and transform communities. As we chat about his approach to real estate investing, it's clear that his aversion to taking on too many deals in one market is a key part of his strategy.
So tune in, as Allon gives us a masterclass in real estate investing, shares his strategies for building a billion-dollar empire, and provides invaluable insights on risk-taking, investing in infrastructure, and the importance of staying focused on your goals. Allon's story is proof that with the right mindset, ambition, and a little bit of risk-taking, truly remarkable things can happen.
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David Choi
Host
00:00
Three, two, one go. ["let's Ride"]. Let's ride. Today we have a really special guesty founder of Let's Ride who I stole it from years ago, nolan Borgerson. He's an incredible entrepreneur. He's got two different companies right now. Nolan, i don't wanna speak for you. Can you just tell the audience a little bit about yourself?
Nolan Borgersen
Guest
00:32
Absolutely Well. Thanks for having me on. I appreciate it. It's been a long time coming, but yeah, i am a recent father of two. First of all, i have seven week old twins with my beautiful wife, corinne, who knows David very well. I recently have become the chief strategy officer of a new company, steven Lewis Capital, and I am the senior managing director at Head of Capital Markets for Vitrious Loan Group, which is our second company. But that has all come within the last 18 months, two years. So it's been a crazy ride. But here we are now. It's been awesome, it's been really cool, if it's not what I thought I'd be doing, but I'm very glad I am.
David Choi
Host
01:17
Very glad. I am Amazing, amazing. So why don't you just start off telling people about Steven Lewis Capital or whatever Virtrus Capital, whatever you wanna start with?
Nolan Borgersen
Guest
01:27
Yeah, i can give you a background about how I kinda got into Vitrious and how that led to Steven Lewis Cause that's kind of the progress, how it happened. But out of college I went to Boston College, did my MBA there and I was actually training to try to be an athlete and a professional football player. It wasn't good enough, so I said I'll be the next best thing, i'll be a financial advisor. So out of college I was a financial advisor for a while. I really enjoyed it. It was a good time.
01:58
But the thing with that is if you do it for long enough, you're gonna retire doing it because your book starts paying for itself. And I just couldn't really. I was looking at it. I was like do I wanna be a financial advisor for 35 years? And I didn't. So I started looking around on Indeed just casually and saw the title Loan Trader or Vitrious Loan Group. No idea what it was, never been in the debt side of things, didn't know anything about loans, never been into real estate or any of that. But the potential income was the highest out of all the jobs listed.
02:34
So I was like let's go with that one And I'm very glad I did. I called them up and started working there about 18 months ago And really Vitrious Loan Group is a loan trading desk right. We act as an intermediary in the secondary market, primarily on the commercial real estate side. So we'll help, like middle market banks and credit unions participate out large commercial deals to other banks and credit unions buying institutions. So we do a lot of participations for like two to $20 billion banks and credit unions.
03:06
And recently kind of got into the non-QM space, the bridge space, dsur, in kind of a response to what was going on in the commercial market and banks having liquidity issues and not being able to have money to buy anything. So I kind of started right when Powell decided to start the interest rate hike. So I probably started in capital markets like at the worst possible time you could. But I think it gave myself and the founders of the company who I work with very closely my three partners like the ability to kind of shock and jive and be agile in the market, which we had to be to survive, cause if we were only going to participate out commercial real estate deals we weren't going to make it right. So we did a lot of moving and being agile, which you need to be in a small company, especially because if you're doing the same thing over and over again, expecting a different result definition of insanity, right. So we're like let's try to see what else we can do.
04:11
So the non-QM market has been a big area of focus for us, specifically like whole loans and helping lenders and life insurance companies and pension funds and family offices wherever it is, help buy and sell debt. So, example, we did just a 50 million dollar DSCR deal between a life insurance company and a lender. We're working in the bridge space in the NPN markets getting big. But, all that being said, we still need to focus on our base of clients who are credit unions and how beautiful they are and the commercial stuff which is finally starting to open back up. Liquidity is kind of coming back, but I think we had the foresight of seeing what the Fed was gonna do and how that was all gonna work and started making moves early enough to be able to, you know, get some successful trades done outside of our normal bread and butter And then, all within that happening, create a new company that has nothing to do with it Before you go there, before you go there.
John Libretti
Host
05:17
I gotta stop A little bit about pictures.
David Choi
Host
05:19
It gets really fucking crazy once we get to Stephen Lewis Capital. It is amazing.
Nolan Borgersen
Guest
05:24
Yeah, that's a whole nother conversation.
David Choi
Host
05:26
Let me just dive in a little bit for the audience. No, what's a DSCR loan?
Nolan Borgersen
Guest
05:31
So that? so you're a big investor, right? So you wanna get a rental property and you wanna get a loan. Well, what happens is when you go to a traditional bank for a loan and you're credit and background, you have 30,000 mortgages and they're like what the fuck's going on here? It just gives you it's a special investor purpose loan, specifically for investors, where you don't have to, you know, lift up your skirt completely as far as showing you know lenders, what you got going on.
David Choi
Host
05:59
Tax return instead of doing tax returns.
Nolan Borgersen
Guest
06:02
And all the stuff, all the documents that you need to fill out with a bank.
David Choi
Host
06:08
The DSCR lender is what you call like a, like a. What is it? No, no dock loans if you will yes and not QM is pretty much the same thing. It's not qualified mortgages. You don't have to go crazy feeling that documents alone gets closed Significantly faster and typically rates are just a pip pip higher a little bit higher.
Nolan Borgersen
Guest
06:31
You know a little less stuff to look at, so maybe a little more risk, so a little higher rates. Exactly exactly people like some people, and it's funny.
John Libretti
Host
06:40
You Britain, that's a good you off. But it's funny you bring that up because I know we were talking a little bit prior to this. You know about what I do, what you do and you're you know I'm on one side and you're on the whole other side. So for me, right, obviously, prior to all these interest rate hikes, i was doing a lot of bank deals, and I still am, but I've seen a major uptick in these DSCR loans.
06:59
Yeah and especially the programs you guys are offering It's. you know, you're right when you say It's a slight uptick in some of these rates. right, you're probably looking at, i'd say, the typical bank or credit union now is six, six and a quarter, six and a half, so you're probably somewhere in the sevens. Yeah you know set, maybe eights, but yeah. So I'm just curious, like like I know what I've been seeing on my side, but I'm curious how it's affecting your side on the Securization and the sell side on the secondary.
Nolan Borgersen
Guest
07:24
Yeah.
07:24
So and when you look at, i think outside of like being a commercial real estate with a five to six to a DSCR and Seven or eight, it's more about who's looking to buy those, that type of paper where Banks and credit unions are looking to buy more commercial vanilla 30 or MR, all the Normal stuff we see and that took a big hit because known as liquidity, right, liquidity, yeah.
07:47
So that's why that kind of stopped out, where the buyers of a DSCR type paper might be a lifecoe or an asset manager and They have far more liquidity than the banks and credit unions do for the ultra vanilla creed deal, right. So that's where we kind of made the pivot to, because we're like all right, well, who has the money and a lifecoe has money and an asset manager with 13 billion under it has money And they're looking for this specific type of paper because it has higher returns And it's still a safe play for a lot of their funds to offer to investors. So I think we kind of just said, all right, well, who has liquidity right now And what can we offer them, and kind of made that connection between the two got it Okay.
David Choi
Host
08:28
Yeah, that's really smart. You gotta follow the demand.
Nolan Borgersen
Guest
08:30
You got it. You got a follow demand and I had same thing on like the bridge and the RTL side, which is like you know, you want to fix it, flip, fix and flip a house and you want a hundred thousand dollars into it. You don't have it. You get a twelve month hundred thousand dollars alone And when you look at that as an asset manager, you're like I can offer, i can get 12% in 365 days. That's good for the investors too. So the the asset manager lifecoe side of things are kind of where the market took us, but Still hammering the phones for credit unions and, and you know, making sure we're taking care of them too, because they built our company.
John Libretti
Host
09:07
No, that's. It's super interesting for me to hear being on like the whole other side.
Nolan Borgersen
Guest
09:11
Yeah, the spectrum.
John Libretti
Host
09:12
So this is kind of like a loaded question, but when you're so, like for me, right? when I'm looking for new business, new lenders, right, i'm picking up the phone calling new banks, new credit unions to see who's lend. Are you lending? If so, what are you lending on? where you, at leverage, rise, rate this, that, the other? when I'm looking for clients right, probably the same thing we all do to find new clients for you. When you're looking for new people or new institutions to buy paper, how do you, what's like your, your go-to strategy to kind of find those new buyers?
Nolan Borgersen
Guest
09:39
Yeah, so in the credit union, in a bank space like thankfully 5,300s exist Which are like the call reports, so we can kind of see, beyond, like what they have on the balance sheet, what they're buying. If they're active in Participations, you know what's big on their balance sheet, what they're looking for. So that's one way. But like when I started, like finding a seller of paper was like the hardest thing in the world, the fact that we had a few big banks, credit unions, that were keeping us flush with paper. Like people were lining up the door to buy a 103 commercial. Like paying a premium for like a 4% rate because of where the five-year treasury was right. So they just look at the spread between the five year and the rate. And now, like when I'm reaching out to people, are you active in the market, yes or no? the? I say yes, buyer, seller, everyone's a seller.
10:26
So I think I think everyone has too many loans in their books And no one has liquidity. So the the buyers and sellers kind of flipped, as far as you know, supply and demand. So when we're reaching out to, you know, credit unions and banks, and we do find someone with liquidity Who is still buying, we are Super focused on those guys and making sure we can do everything we can to, you know, supply them with what we need, because that is now the Abnominally. What is that?
10:57
The outlier is the, the bank. Who's like yeah, i'm looking for 20 million dollars of a multi-family deal in these states. So it's Difficult to find buyers, but when you do, you have to, you know, really put your focus to them And kind of, do reverse, increase, right, this is what these guys are buying. Like let's go source that paper. And that way we're always keeping them happy, because sometimes we have to turn away sellers, like we have to. We're like, listen, like We, i would love to help you, but we're not going to be able to move this because there's no market and if you want par or par and quarter, like that's, i'm sorry.
John Libretti
Host
11:31
Like yeah, and we're small companies.
Nolan Borgersen
Guest
11:33
So, like the, the one thing we probably have struggled with at times is taking on every deal that walks into the door Right, like we got another show. We got another show, like it was the yes man. You don't want to turn it, Steve I just got 200 million dollars of paper like this is the best thing ever. And then we look at it and we're like Who's?
John Libretti
Host
11:50
gonna buy this, right so.
Nolan Borgersen
Guest
11:53
And you know the, the C-suite, this this four of us And you know we really have to be selective now as far as our resources and and what we want to do, because we don't want to, you know, do a bad job for someone or not be able to live up to a promise By saying we can do this and when you can't so sometimes you just have to say I'm sorry, like we're, we're not gonna be able to do this.
12:13
Yeah, and they appreciate that more times than not they're like thank you, like that's good market.
David Choi
Host
12:17
Have you ever had to? um, have you ever had to like because I know there's a lot of people that come to me be like, hey, can you, you want a partner in a steel, can you raise the money? And now you know, i got my hands full and I'm like I'm always itching for a new, a great deal, a new deal, but now I'm telling, i'm saying no, i'm saying don't, i can't sometimes you have to.
12:39
I got my hands full. I can't look at deals and my biggest fear is What if I don't close? because because it's my fault, right?
Nolan Borgersen
Guest
12:49
Mm-hmm.
David Choi
Host
12:50
Have you ever had to? have you ever had to like let sell a seller down on?
Nolan Borgersen
Guest
12:54
more times than I care to admit. Because when I first started I was like I mean, i'm a new guy, i'm working with the founders. They're in the offices next door. I'm like one of the only guys in the office. Everyone else was remote. So like for me coming into a new company with the three founders next to me. I was like I need to impress these guys and be able to get everything I possibly can.
13:16
And then everyone I got in the phone before like actually talking to these, the founders, i should have been like, can we do this? I was like, yeah, we can do that. Um, and then you know, three months of phone calls without anyone even sniffing what they were looking for as far as pricing Or even putting a bit out there. I had to go back and be like sorry, like right or like hey, we didn't move this. Like shit, and then when they have paper that you can move, they're probably not coming to you.
13:42
So we had to learn to be like hey, like, if this is like this is what you want to sell, like This is what the market is right now, like this is what you can get, and if you have that, like I want to be transparent. vitreous actually means transparent and I think greeks, latin.
13:57
So we're trying to be as transparent as possible. Listen, like this is going to be really tough to move, i'm sorry. Like this is where the market's going to be and people do appreciate that in the long run. Um, more than saying you can and then you can't it's like that transparency and the expectation setting.
David Choi
Host
14:14
It's so freaking important. I just got off the phone with the seller. That's why I have a. I have Bourbon in my hand.
14:24
I Just caught off the seller, off the phone with my attorney seller and her attorney. She's telling me all the things that my Acquisition manager, my transaction coordinator, did wrong, right, and I'm. I'm just sitting there just like, oh my god, and I can't go. I can't just blame it on people, it's my, it's my fault, right, it's my company. So, had had you know, my acquisition manager set the right expectations, was transparent, right, and And just say no to the deal. If we weren't gonna get it able to get it done, it wouldn't have cost me five thousand dollars just now. Right, you know what I mean. So tough to say no, though.
Nolan Borgersen
Guest
15:12
It's tough to say no, especially when you're a new company like yeah new company and You're, or a new employee at a company like. The only thing you want to do is like bring a ring and bring in Money.
John Libretti
Host
15:23
You want to be the yes man.
Nolan Borgersen
Guest
15:27
Unfortunately, i learned quickly that that's sometimes just not the way to do it, because you'll miss opportunities, that your attention should should have been because you're trying to move this something, something that's not right, not possible or very unrealistic. And then you know I think that's one of the biggest mistakes I made early on in my career with vitreous was spreading my resources to thinner, chasing the, the elephant in the room whale hunting.
David Choi
Host
15:50
Yeah, yeah, shiny object.
Nolan Borgersen
Guest
15:52
My partner still yelling me about, but like doubles and singles win that win.
John Libretti
Host
15:56
Yeah, they're doubles.
Nolan Borgersen
Guest
15:57
And singles win. So like my family the other day was like, listen, like if you can do, you know, three million dollars a week from a banker, credit union, on participations, like there's a hundred grand, like that's it for you, like that, and that's not hard to do if you can do it. So I think, really focusing on like hey, like I do want that hundred million dollar DSCR pool to be sold to a life-in-turn company and make a bunch of money, but when that doesn't happen and you haven't been doing the, the small stuff, or loading your pipeline with stuff that makes sense and Yes, indeed, yeah, being real upset.
David Choi
Host
16:32
Yeah, just close the well though. Yeah, yeah, close the $50 million dollar way.
Nolan Borgersen
Guest
16:36
They work. It works really well when you have other stuff going on and that's just gravy on top.
John Libretti
Host
16:41
Yeah, because you know the small stuff's gonna close right, like I have one, two, three, four million dollar deals that are, you know, not constantly but pretty regularly closing and, like you know, when you get the 20 or 30, 40 million dollar deal, it's great. If it closes, awesome, but if not, you still have stuff.
Nolan Borgersen
Guest
16:56
To anyone who's new in any industry, like that's one of the biggest advice I can give, because I did that and I still do it. To be honest, like sometimes, especially in a market That's hard to get doubles and singles, i'm like, if it's hard, like why don't I go for a home run? but it's just such a smaller, smaller win rate and It's taking me, you know, a while to understand that. But once you do, and then you that home run. The home runs always happen to Hit, hit when you're not really focusing on them Yeah always and I did like the same thing as a Financial advisor.
17:26
I was like, let me get the guy who has 10 million bucks You can put into, put with me and you know, do this premium and then back. I backs out in the last second. And you weren't talking to the 15 people who can give you a 10 grand a month or whatever it is. Yeah, and It always hurts more when those big deals don't close when you're not focused on the small stuff.
John Libretti
Host
17:45
You know what this reminds me of? you ever see the movie margin call, oh?
David Choi
Host
17:48
Dude, i should have watched.
John Libretti
Host
17:49
I should have watched A few times, i never finished when we were just talking about something like the margin call is like great movie for anybody listening Who has not seen it. Margin call awesome movie. Yeah, but I was talking about like selling things on the secondary market. It reminds me exactly of that, because they have like a fire sale like right into the movie and they're selling like 200 300 million dollar Securitized packages of like 30 year fixed mortgages at like 40 50 cents in the dollar. Yeah, like it's crazy. You should watch it. But it reminds me of this non-performing note market is oh.
Nolan Borgersen
Guest
18:19
A lot of people are now selling non-performing notes and said is it you seen a huge uptake on that? Yeah, dude.
David Choi
Host
18:25
No, i got great news for you, my friend, my, i was just that collective genius, i was just mastermind.
18:31
I go to once a quarter. I hate going like the thought of going sucks, but when I go there I leave making hundreds, at minimum hundreds of thousands of dollars in business. So it's it's. It's always just surprising, but I Was with us with a good buddy of mine. We actually own a property together. We're closing a property in July together, 79 unit in in Austin, new York. Great, great guys, young cats, even they. They dropped out of college at 19 and Let me tell you, these guys, i want to call them kids, but they are just monsters.
19:12
They're animals, they're making $2 million in net profit a year on their singles and doubles right. And then what they do is they. They said, you know what I got this business? Jake's running one asset, managing and running the singles and double business. He's like the calm one of the group right Twins, by the way, for you, hopefully your kids, do this one day.
19:37
But they're like, i love these guys. Jake is like the calm one. Austin is a wild car, he's a maverick, he's whoo. He called. he's texting me at 1.30 AM while I'm in collective genius. He's like money, don't sleep. and he's dancing in front of a mirror at the gym, right, i'm like this guy's unbelievable. Then he texted me at 6 AM that morning. I'm like damn, you slept like four hours, bro. And he's texting me the messages he's got from a seller like screenshots, and he's building massive rapport where the seller is sending pictures of bears to him.
Nolan Borgersen
Guest
20:10
I'm like this guy's the best closure I've ever met.
David Choi
Host
20:12
Anyway, i was sitting with those two at dinner and Jake was like listen, i have access to about $50 million right now and I don't know how to spend this money because my investor is looking for an outsized return. I don't wanna make promises I can't keep. Then I said, listen, you gotta probably find those outsized returns and not performing no business, right Loan to own type situations in red states where you're not in a. It doesn't take you two, three years to foreclose, right, Sometimes five to 10, right Like the no package you sent me in New York. That guy there tried to foreclose this like 2018, man, listen don't shoot the messenger.
20:56
Right, I don't mind. No, I read the deal.
Nolan Borgersen
Guest
20:59
I was like, oh Lord, i can't take over this guy's animal.
David Choi
Host
21:03
But for guys that have liquidity which I can make an introduction, by the way, but he's got a lot of liquidity right now he's trying to deploy. Are you seeing large multifamily notes, non-performing notes trading below par?
Nolan Borgersen
Guest
21:22
I would say residential packages are more. I was just gonna say the same thing Residential are more common. but we just got a commercial tape. there was two of them. I mean that was a $52 million commercial tape, but there was probably six loans on it, seven loans on it Where Mostly New York is tough for a closer stay, but there's some in.
21:40
Florida, some Texas. The problem with my company when it comes to the MPN world is that we're an intermediary right. So we're you know they're not our loans and we're not buying the loans, we're just marketing them out for a seller. But there's a definite disconnect between the seller of non-performing notes and people who are looking to buy, because the seller doesn't wanna hear that the bid's 40, but the bid should be 40. So and they're like oh, i'll just balance sheet it and just keep it, but it ends up there's definitely I get pricing expectations from a seller and then I bring it to market and the bids we get back are just nowhere close.
22:20
So, we have to be honest with both sides, be like, listen, the buyers don't care because they're like, all right, we just won't buy it. But the sellers are like, oh really, like that was the best bid, and I'm like that's just what the market's saying. So if for us it's probably more beneficial for someone who owns the note or is actually buying the note than to be the intermediary between MPN trades, there's a lot more notes.
22:41
Yeah, there's a lot more notes. If you're like looking to buy, there's a huge opportunities as a buyer of MPNs or as a seller probably more as a buyer because you're not getting great bids on the properties or you gave a loan that defaulted, so that's not great, but there's definitely opportunity there. I would say more on buying them personally or as a company, rather than being on the secondary and trading them as an intermediary. It's tough.
John Libretti
Host
23:07
It's funny that you say that you're seeing more residential than commercial. Not funny, but I agree because it might just be that the people where they're located that I've seen these opportunities from. Like 30% of my whole pipeline is, weirdly enough, in and around Los Angeles, so a lot of the non-performing notes I've gotten access to recently are all ultra-luxury single-family homes in like Beverly Hills, west Hollywood. One of my clients it's a big nine-digit net worth guy based in LA. He sent me this deal He was gonna buy. I think the existing debt was like 12 and a half million. The house is worth 17. And he's supposed to be buying it for like nine.
23:42
Nine didn't change, which is sick deal if you're this guy, but a lot of that's like right in line with a lot of those types of deals that I've seen, i don't see too many multifamily.
David Choi
Host
23:51
I wanna be a great dancer man. I wanna be Sam Zo.
Nolan Borgersen
Guest
23:55
I mean, this is not 2008, but like when interest rates go up, like defaults go up, like this happens. So people, those become non-performing And then the lender is stuck with them And I mean you've seen history say this is you now have to sell that for four reasons in the dollar. So all your medicine.
John Libretti
Host
24:12
But even if you're that guy that don't right Like you're in default, right? You're trying to sell your note. Say you owe 12, you're gonna get nine. all right, you take a $3 million haircut. That house is worth 17,. the guy buying it Maybe he sells it for 15 next week. You just made six million bucks.
David Choi
Host
24:27
You do that three times Like you know, dude, i know a guy, i bring him on the podcast. I won't even, i won't drop a name, but this guy, oh, he's got a crazy story.
John Libretti
Host
24:36
No, I know who you're talking about.
David Choi
Host
24:39
He, he was, you know, he's an immigrant. He comes to this country trying to make a dollar for his family, Goes to. He does tax fraud and bank fraud. Okay, goes to jail for two years, gets out of jail, recovers me. It's not, it's not when you get hit that determines the man, you know, it's when you get back up, right. So it gets back up. Now, young guy dude, he's not even. He's like in his 40s. Six thousand units with zero investors. It's nuts, right. And I said I said go ex name. I can't say his name, i want to. I want you guys to actually come back and listen. He, i go listen. How the heck did you do that? He goes. They buy non performing notes. Yeah, they buy non performing, but by not performing notes, 70, 80% of par, and for guys that par is like what the with the loan imbalances.
Nolan Borgersen
Guest
25:40
Yeah, one for one.
David Choi
Host
25:41
It's a $10 million note you buy for 10 million bucks quick question for you because I'm like I've been in real estate, for I mean, i did the math, i did like 40,000 hours of real estate. You know, i've been in real estate a long time and par I still don't know. I know every three letter, letter word I kind of know. But par is it? is it loan balance plus, like all default interest plus? Is it is it everything included or is it just the original loan balance?
John Libretti
Host
26:06
It's a good question. I don't even know the answer to that, honestly. It's Because, when I hear par too. Like par, you know, when a bank quotes me a deal They give me a quote for for debt. Par means zero origination fee, no points like right right. So you know.
Nolan Borgersen
Guest
26:21
I think it's. It has a different meaning in like every space in the participation world. If Pick a credit union. Beth page federal credit union wants to sell, has a million dollar multi-family deal or ten million dollars, and they're gonna keep one and participate out the rest other nine. And another credit union comes in and says alright, i want Five million dollars of that. They are going to pay Beth page five million dollars for that. That's it. So that's a par deal. They're offering five million and they pay five million.
David Choi
Host
26:52
Got it.
Nolan Borgersen
Guest
26:53
If they're gonna pay a 101, they pay a hundred and one percent of five million And then the discounts. Obviously, if I've been 98, that's 98 percent of five million. So they would get whatever that math is. I'm not good at math, but Yeah. So par in the participation, secondary world, it's whatever the loan balance is, or unpaid balance, upb on like a DSR. That's par. Like penny for penny. I'm paying one for one.
David Choi
Host
27:17
Got it got 103 is a hundred and three percent, so you gotta pay a premium. Okay, i Completely sidetracked it, but I needed so I um. So he's going buying these 80, 80 cents, 70 cents On par.
John Libretti
Host
27:30
Yeah whatever.
David Choi
Host
27:31
No, whatever would, whatever world that, whatever number it is, it's a percentage of what it would be the back interest or whatever, but anyway he's buying it discounted from the lender slightly, but most people are buying it 40, 50. That's where the buyer market is doing. And instead of for closing right, instead of Doing a loan modification Which is basically working out a deal with the lender where they can pay less interest or they less or less money What? and then taking that know and selling it because you could repackage that in an interactive way to Another no-bar.
Nolan Borgersen
Guest
28:06
Seconders.
David Choi
Host
28:07
Wow, when I heard about the secondary for the first time, i was like this is just like you're making money out of thin air Right like yeah and you're just chopping it up in a different way.
Nolan Borgersen
Guest
28:17
Yeah anyway.
David Choi
Host
28:18
He buys these notes 80% apart. Instead of doing the loan mod or doing whatever and selling it again and packaging up, he goes to sponsor the owner of the property and says, listen, i'm buying this note and I don't want to foreclose on you.
Nolan Borgersen
Guest
28:35
I've done my research.
David Choi
Host
28:36
John, i know you got two kids, twins knowing, and I Don't want to foreclose on you, man, i know it's gonna do a lot of damage to you. So, instead of you potentially do a big group scene, let's go on into this feud. Let's be friends, let's sit on the same side of the table today. Why don't we just team up? I'll give you 10%, you know, take over the note. I'll give you 10% ownership And if it's a great deal, i can negotiate a 60% part. Give you 20, right, you quit claim deed property over me, which means basically, just like, not a sale, you just transferring a deed over to another owner, or, or an owner or another entity, and, and, and. We could just be. We could just get this thing done.
John Libretti
Host
29:18
Who's gonna say no to that?
David Choi
Host
29:19
Yeah, and so, and so it's.
John Libretti
Host
29:23
You like the knight in shining armor?
David Choi
Host
29:25
Do it. when I was doing short sales man, i was batting 100. I'm not gonna say how 95% close rate on my appointments, right, i mean you're hoping to owner that's gonna lose his property. What are you gonna do, bro? Let me let you own some of it, my friend, nobody else is doing that, nobody's coming to help you.
29:45
Yeah, he found his riches, massive riches, in the niches 6,000 doors, bro, and so, and so I'm like I'm tired of buying properties that right to owner. I want to find massive riches, just like this guy can't even say his name, well, yeah.
Nolan Borgersen
Guest
30:03
Massive riches being in niches, as I've never heard that, but I I appreciate it because, like when you talk about Steven Lewis capital.
John Libretti
Host
30:09
Oh yeah, i was just gonna say, we gotta get to that right there, let's talk about that.
David Choi
Host
30:13
Yeah, so give it a try on Steven. It was alright.
Nolan Borgersen
Guest
30:15
So again, we started a vitrious loan group. We we'd like nerd it out on like Predicting what Fed, like what Powell is gonna do, like ran like a ton of analytics and was like, alright, this is what's gonna happen, this is what the rate will go to, like this is like we first saw that Capital markets was gonna be a Bloodbath when it comes to the next 18 months, whatever it was. Like we kind of saw what liquidity was gonna do. So I think in any business or you know Whatever it is like, hedging is very important and At the time our CEO was the portfolio manager on the side for a micro fund that I had not had no idea What, what it was. Like I would walk in his office and he had like expel like Excel spreadsheets up of like things. I'm like that's not.
John Libretti
Host
31:06
What are you?
Nolan Borgersen
Guest
31:07
doing So. Come on working for the micro fund. Funny enough, he had, you know, the genius idea that the the C-suite of the old fund he was working for it was winding down and Looking to get out. So he came to you know The other two founders of myself and was like let's take this thing over. And I obviously said yes Because I was like that sounds great, but I had no idea what it was. And we opened up a new company called Steven Lewis capital And took over the fund. So we have a track record with my CEO and being the portfolio manager who built the algorithm that ran the Fund. But now we own it for the four of ourselves and you know some other partners.
31:44
But What we do at Steven Lewis capital is that we are in the Medical imaging receivable world and medical imaging factoring. So what does that mean? We advance money to Imaging centers specifically doing MRIs that are attached to personal injury lawsuits. So you're an MRI center and you're in Texas and all of your patients a Number of them are tied to personal injury lawsuits and that patient walks in the door. They are not paying for that MRI because it's part of a lawsuit. So as the MRI center, you have to. It's against the law not to give them an MRI, so they give them the MRI for free.
David Choi
Host
32:27
So an MRI center Experiences cash flow when you have enough patients who are part of so you're telling me that, as a MRI center owner, you just got a back injury because you just got ripped, sidelined by a car. Yep, you went to You're. You're now suing the guy who sidelined you and you're getting an MRI. You get. You. Come to my center, i can't say no to you. No, and I give you an MRI and and you're not paying for it.
Nolan Borgersen
Guest
32:56
Correct.
David Choi
Host
32:58
That's crazy.
Nolan Borgersen
Guest
32:59
Because? why am I not paying for it? because I'm part of a lawsuit. So when the lawsuit settles, if I lose all, the either pay the medical bill or the other party who I win Hopefully the lawsuit wins. You know that other side will then pay the receivable, so it's a receivable on the balance sheet.
John Libretti
Host
33:15
This is all in the interim, obviously, while the lawsuit is ongoing. I'm correct right, right.
Nolan Borgersen
Guest
33:20
So I'm go home from here. I'm driving a good hit. I'm suing the other person, my knees busted up. I go to an MRI center. The first thing my lawyer says is like we need to know what's going on. So I go to the MRI center. I get an MRI. I'm like, hey, i'm part of this lawsuit. Here's the lawyers, whatever. Whatever. They have cash flow problems because you're giving MRIs for free. It's a receivable on your balance sheet, so you're hoping it pays off eventually, but for now you're at a luck.
David Choi
Host
33:47
How long does it take usually for one of these settlements to settle?
Nolan Borgersen
Guest
33:50
definitely depends, but I'll get into it as far as how we We figure it out. But so we come in and say, hey, mri center, you're have cash flow problems And they're like yes, we do. So we'll say we'll solve them and advance money to you On these receivables. So we'll actually advance money on the MRI receivables that are part of law, the personal energy laws.
David Choi
Host
34:11
What do you mean by like so?
John Libretti
Host
34:12
given money They're gonna lend against their accounts.
Nolan Borgersen
Guest
34:17
Yeah, you're buying, we're advancing on them.
David Choi
Host
34:18
Yeah, so okay. So I got, i'm an MRI center, david Choi MRI center, All right, people come you, john comes to me and he's buses and he up.
John Libretti
Host
34:29
I said damn, he's not paying for you got to give me the MRI either way, either way.
David Choi
Host
34:34
I find out John's a part of a litigation. I hate me. I hate this guy right.
Nolan Borgersen
Guest
34:38
And you're like.
John Libretti
Host
34:39
I mean money, yeah, but say you got a, say you got a hundred of me.
David Choi
Host
34:43
So I give you, i give you an MRI and I got a hundred of these MRIs and now I got like three thousand three hundred $1000 worth of people that I that owe me money, correct, right? And I'm waiting, and I'm waiting to get you have receivables employees and rent and payroll, Or that sounds like horrible but so that, so that I get a call from you, nolan, and you say David Choi MRI center, i'm gonna go by, i'll advance you on your MRI images.
Nolan Borgersen
Guest
35:16
Receivables on your balance sheet that were tied to these lawsuits.
John Libretti
Host
35:19
Hey, let me ask quick not to jump in, but are you lending on a percentage of that accounts receivable? Are you giving them like a hundred percent or is it 75%? par?
Nolan Borgersen
Guest
35:27
So we advance 20 cents on the dollar of the crap. Average MRI is twenty five hundred dollars. We advance five hundred dollars per scan on average. How much five hundred dollars per scan is our average?
David Choi
Host
35:40
by 25 cents apart, 20% apart correct.
Nolan Borgersen
Guest
35:46
Well, no one pays $2500 for an MRI, right like, the insurance is always a portion of it. Yeah, as David Troy MRI Center. Like okay, great, like you're giving me 500 bucks a scan, i have 20,000 stands on my receipt post page like I need that money.
John Libretti
Host
35:59
Could you have a cashflow problem? You're gonna take it.
Nolan Borgersen
Guest
36:01
Yeah, you don't know if the lawsuit is gonna So you don't know what's gonna happen. You don't know if you're never gonna get paid for that, like this economy.
David Choi
Host
36:06
I'm taking that, you're taking it right.
Nolan Borgersen
Guest
36:07
So we advance on the money and then. So now we own that receivable.
David Choi
Host
36:12
So the lawsuit then settles when you own $2500 worth of payments we own the actual like scan.
Nolan Borgersen
Guest
36:18
We own the scan. So when the lawsuit settles and there's like lean positions on settle on lawsuits that like have to get paid out first by the other side, right medical is like top of the line. Wow and so that gets paid out first. So they're like all right, what do I have to pay? All right, he got an MRI. I was twenty five hundred dollars. You know what? I'll give you nine hundred, but hey, we own that over here, steven.
John Libretti
Host
36:39
They're not paying. David Choi MRI Center No I mean you.
David Choi
Host
36:43
I should have sold it to you for $900.
Nolan Borgersen
Guest
36:47
So our average Purchase per scan is 500 and our average settlement amount is $900.
David Choi
Host
36:53
Wow or 950.
Nolan Borgersen
Guest
36:56
So, as an investor, we take our funds from our investors and we, you know, advance on MRIs scans, the individual scans, and when the lawsuit settles, then we collect the settled amount from the Lawyers or insurance companies that have to pay for the So you're making a.
David Choi
Host
37:13
What is it?
Nolan Borgersen
Guest
37:14
that's pretty close to your money, about double your.
David Choi
Host
37:17
It's like a it's like a one, eight, one, nine multiple. Are you um? How fast are these settle?
Nolan Borgersen
Guest
37:23
Yeah, so great question. So, like as an investor, when I first heard this from Steve I was like, what are you talking about? I was in the, you know, the S&P 500 world where I was Tang. Hey, it's an average 10% a year, like it's Being it for 40 years, you're gonna retire happy. And then he's like yeah, it's like 47% a year and 47% IRR. Yeah, it's insane.
John Libretti
Host
37:47
4740 well, you gotta think right if they're buying out of business, you gotta think, if You gotta think, if they're buying everything at 20 cents on the dollar, right, and you're effectively getting 40, you know, yeah, selling it or get, or getting refunded 40 cent.
David Choi
Host
38:00
You know you're effectively doubling doubling, and how fast, do you do settle on average percent.
Nolan Borgersen
Guest
38:05
So let's say I buy 10 10 million dollars of scans today. Okay, 10 million dollars scans Okay. So now I own 10 million dollars of receivables in year one. About 55% of those scans have settled. So in year one I'm 10 million dollars in.
David Choi
Host
38:20
I almost have a million dollars, back 10 million dollars.
Nolan Borgersen
Guest
38:25
That's only a five million dollars of the receivables Right. So by year two about 75% of the entire pool has settled in the additional 25% And then by year three the entire batch should have settled. So in three years you should have you know it's most bull.
David Choi
Host
38:41
Yeah, completely, completely do it.
John Libretti
Host
38:44
You might not want to air this episode, Well what's the default risk here?
David Choi
Host
38:49
What's?
John Libretti
Host
38:49
today.
Nolan Borgersen
Guest
38:53
Is highs because, like we have tranches, obviously buckets for the hedge fund that you can go in long-term. Short-term, the real moneymaker for investors is if, when that 10 million comes back on the five million year one, we redeploy it into more scans immediately, immediately. So by year end of year two, 50% of that redeployed money is settling along with 25% of the original Scans that you bought. So if you roll the money over, it's, it's evergreen fun You have.
David Choi
Host
39:19
It's ridiculous. So if you're like a perpetual fund or it's an open-ended fund, yeah, it's open-ended, okay, but we have three tranches that you can choose from this clawback provisions.
Nolan Borgersen
Guest
39:28
Don't want to get Like that's. That's an overview. Now, as investors, you're gonna be like what's going on here, like what are we doing?
John Libretti
Host
39:36
Yeah, because if I'm an investor right, and I'm like, like a normal real estate deal, whatever it is, three to five year play, seven year, play like on it. If you're looking at this, if I give you five, ten million bucks and I'm looking at this like I don't want to, i want to pull all my money out in three years Or five years in that three to five, yeah, in that three to five years You're yeah, you'll be a very happy man.
Nolan Borgersen
Guest
39:54
Okay, yeah, yeah, it's it's pretty crazy now, like people don't like like lockout periods. But I'm like if. In my retail world I was like if you're putting money every month into the SNP, like you're not gonna ask for it in 24 months, like you're making an investment, so Having a lockout of 12 months, i'm like what's what?
David Choi
Host
40:12
what are you doing? Well, my son only lies.
Nolan Borgersen
Guest
40:14
Your lockout the short period because you can get clawback provisions. Don't get into it, okay. Okay, there's three different buckets for investors, or you can just roll it over as much as you want everything settled.
David Choi
Host
40:23
Let me introduce you to that 50 million dollar fun guy because he yeah, you know what, yeah, you know crazy man He asked me. He's like Dave. I Want you to get involved in this fund because I know for a fact, i know for a fact that you could deploy into good, good investments.
John Libretti
Host
40:39
Um, I That's crazy. Yeah, and it's so it's so like outside the box, it's, it's Yeah rich Yeah.
Nolan Borgersen
Guest
40:48
Well, to talk about it a little more, like we took it over that from a different fund and like we were like let's start raising money. This is too crazy to like, it's insane. But what we did right was we're like all right, we can offer to retail investors friends and family and start opening it up, or we can like go to the institutional route and and see what we can do there. And we went the institutional route first because when you get an institutional investor, there's no like hiding behind, like there's no smoke and mirrors. They're doing their due diligence as far as like what their investment is there. If they're a 20 billion dollar fund, they're not gonna just like give money to you without doing their background checks and running analysis, isn't doing at all where you know a rich uncle might give you a million bucks if he told him you know you're opening a restaurant whatever it is, yeah we're like why don't we go the institutional route?
41:39
and that will force us to like have our operations down, to have all their legal docs down, to get everything, our SVP special purpose vehicle, spv like set up, like have the LLC, have everything our lawyers, and check, like, have it all done. And it was the worst, like it was hard, because we were trying to raise money from institutional players and every day it was another ask of them, so of us, before they can fund. But that forced us to do all the things that we knew we eventually had to do as far as a fund. And then, you know, we just got our first institutional investor to invest and now we're opening up to retail, which is now it's gonna be easy because we just did all of the work to get an institutional wow, you did the hard part first yeah, like a 20.
42:24
If a 20 billion dollar fund is gonna give you a couple hundred million or not a hundred million, like tens of millions of dollars they're gonna make sure.
John Libretti
Host
42:32
Yeah, they did their homework, they're gonna make sure, so why wouldn't somebody else give you 500,000?
Nolan Borgersen
Guest
42:36
so now, it's gonna be much easier of like the process of raising money. This is all I mean. I was in the retail world but everyone else was either like in investment banking or in capital markets or real estate, so not a ton of capital raising experience on the thing. So it was a large learning experience. But it was so valuable going the institutional route first because there's.
John Libretti
Host
42:59
Well, you guys did it. The the other way around right everybody starts with the mom and pops of friends and family.
David Choi
Host
43:04
So smart dude I'm raising money from, instance, a couple family offices right now some institutional players and dude.
Nolan Borgersen
Guest
43:11
They are asking for their lifting of my skirt all the way they're taking the skirt off. It took us like four or five months. A lot of damage to me right now because it's taken up a lot of hours. I was like their background checks this, that everything dude that's incredible which was great, though it's great that we have it all done and they give their funding as money so that's like, if I ask you for, if I ask you for X, you got it lied that yeah, over the system's ability to give you that information.
John Libretti
Host
43:40
So I want to ask you this, because you kind of mentioned it before. I think before we started the podcast, you guys started Steven Lewis somewhat as a hedge. Yeah, right, so I think it'd be kind of valuable for our listeners to hear, like what, really, what were you hedging? and? and?
Nolan Borgersen
Guest
43:53
what really?
John Libretti
Host
43:54
like pushed you guys to start this totally so.
Nolan Borgersen
Guest
43:55
We're in capital markets, which has everything to do with interest rates, liquidity, the economic climate. It's a secondary market and that has a ton of influence on like what's going on in the economy right. So when we saw what pal was doing and the entire situation of liquidity and the economy, we're like we need to be able to have find another revenue stream somehow, and I mean thankfully, our CEO Steve's like he's like an evil genius and he wrote this he's the best, yeah, yeah and they all, like my three partners, are unbelievable.
44:28
But we were like we need to find another stream and with this opportunity in the C-suite retiring, we're like this is a non-correlated like if the S&P is down 40% tomorrow, like lawsuits are still happening in yes, it's, people are still getting in car accidents.
44:45
It's completely non-correlated to the market so when the capital markets stink like and and we're struggling to move, whatever it is like we are, have a business. That is completely non-correlated. And I think when you're working in a market, whatever market, that is when, if all your eggs are in that market and that market's not doing well, you're not gonna do like it's like it's gonna be hard.
John Libretti
Host
45:09
No, let me guys are so divert not to interrupt.
Nolan Borgersen
Guest
45:11
You guys are so diversified how happy, like so diversified that you're kind of not impenetrable, but that's a lot more bulletproof than a lot of people that's the goal and just to touch on that, like you can't become too spread, then like that's also a risky run yeah because if you don't have enough resources, you're gonna not put effort into things you have to but you always should find ways and look at ways of like what if this goes bad? like what's gonna happen? how can I make sure?
David Choi
Host
45:38
if this goes bad, i'm still gonna be, i'm gonna do that, yeah, yeah, yeah, no, let me ask you something. This is my last question today okay go for it. Would you have your mother-in-law invest in your fun?
Nolan Borgersen
Guest
45:50
yes, yes that was a huge question for me, like in the beginning of the fun we were trying to get like all of our checks in a line and I was like like we were just like so eager to like raise capital and I was like I was new to it so I was like coming at it from like a devil's, like a devil's advocate perspective, like to like the partners and we all kind of were like all right, like what about this? and what do you mean? what happens here? like what happens if this happens? what if a case doesn't settle? like we, we asked all those questions and by asking those questions before like we went out to raise money's money, we were able to come up with solutions to you address those questions. So like if a lawsuit loses, the medical provider has to replace that case with a new case oh, you're giving me pretty advanced provisions yeah, so it's no way.
John Libretti
Host
46:35
That's most of the questions that when you go to raise money, that's probably the first five questions what if this happens? what if this doesn't happen? you know what I?
David Choi
Host
46:42
gotta cut you off because you know what it's put me out of business this game is over. Nolan, if the people want to reach you, where can they find you, my brother you can call me or text me at my cell 201 693 2124.
Nolan Borgersen
Guest
46:59
Vitrious loan group. I guess I should give both emails. If you're looking to move notes or paper, it's n. Borger son borger, grs en and vitrious loan group hey, it's about it really the it reo us loan group. I'll trust you guys to spell long. And then Steven Lewis is just and Borger, since it was a real pleasure to have you today. Thank you so much thank you guys, it was a blast.
RELEVANT LINKS
ABOUT ALLON AVGI
Allon is the Founder and CEO of AVGI. Allon started the company at 21 years old when he acquired his first real estate investment.
Allon has since developed a diverse real estate holding company that has reached $50,000,000 in AUM within only 4 years using his own capital and that of a select few individuals. As Allon starts to open the firm’s investments to outside capital and build strategic partnerships he has set a target to acquire and manage a $1 billion real estate portfolio by the time he hits 30 years old!
In his free time Allon loves reading, creating content for his social profiles, finding new art for his collection and in his words “envisioning the future”. Allon is a strong believer in giving back, both to his alma mater, Hofstra University & Chabad Lubavitch.
