Build Your Wealth Without Wall Street With William Bonati

Alternative Investor Mastermind, New Post

What are alternative investments? How do these assets help you control your financial future? Here to answer those questions are Jack Krupey and William Bonati, Jack’s longtime friend and partner at JKAM Funds. In this episode, the two discuss alternative investments and the different ways you can build your wealth without Wall Street. There are various ways you can earn and grow your money that doesn’t have to involve stocks and bonds and fickle markets. And, with today’s technology, all the information you need is within reach. Tune in as they give you their expert advice and guidance on how to strategize and optimize your investments.

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Build Your Wealth Without Wall Street With William Bonati

Welcome, everyone, to the very first show for the Alternative Investor Mastermind. I’m really excited about this. This is something we’ve been talking about doing for a long time. I have a lot of conversations with investors, friends, and business partners about the type of investing we’re doing, both real estate, which is my full-time role and job in investments, but also some of the more off-the-beaten-path investments. I know a lot of people in the cryptocurrency, oil and gas, investments in the pre-IPO company.

The goal of this show is to bring those conversations and the types of masterminding that we’ve been doing with our network to the rest of our entire community. For our first show, I think it’s only fitting that my first guest is William Bonati. He is my Partner in the JKAM funds and a longtime friend. William, welcome to the show.

Thanks, Jack. It’s great to be here.

While we’re introducing ourselves to the audience, many may know us, but hopefully we have a whole new base of audience too. If you could give us some of your background and, specifically from the lens of how your investment path went and how you started to become familiar with more alternative investment strategies?

Going way back to when I was a kid, I was always trying to do side hustles to earn money. When I was a kid, I was obsessed with dirt bikes, and dirt bikes are expensive, so my parents were like, “If you want a dirt bike, figure out a way to save money and buy one.” From the very early on, I was always hustling to try to figure out ways to earn money like raking leaves, doing yard work, landscaping. My mom owned a salon, so I would wash all the laundry or the towels for the salon and make $1 a load. I would have a spreadsheet on how many loads I needed to do to get to whatever amount of money it was needed at the time to buy a dirt bike. That’s been me from a very relatively young age.

I went to college and got a degree in Finance and Business. At that time, I was really interested in becoming a financial advisor because I felt like I could guide and help people create wealth and financial independence, and then I was also making a decent living myself doing that. After being a financial advisor for nearly six years, I found that the products and services, the planning and advisory services weren’t truly going to help people become financially independent or wealthy.

On top of that was the structure or model of compensation. As a financial advisor, it wasn’t going to lead me and my family to financial independence either. I was getting really burned out with that and really pretty unhappy. I was living in Miami at the time. We were at a friend’s house, getting together, just hanging out. I think it was like a barbecue or something. I ran into a guy that was about my age and he had built a portfolio of twenty single-family rentals.

He was super happy at a bunch of time. He had a lot of flexibility with his schedule. I honestly didn’t think he was sharper, smarter, or any more driven than anyone else. He had accomplished this. At that time, it was 2012, so you could buy a single-family rental in some of the suburbs around Miami for $65,000 to $100,000, three-bedroom, two-bath. Nonetheless, he had to raise money to do that. I was like, “If this guy can do it, so can I.”

Pretty much from that point on, I dug in really quickly into learning how to invest in real estate. I found a coach or mentor to show me the recipe, and at that time it was wholesaling. I had done some research on BiggerPockets on different investing strategies and how to get started. As many of you know, or maybe you don’t know, but in wholesaling, you don’t necessarily need to have a big capital outlay to do that. I quit the advisory business and ran my first campaign of postcards to absentee owners, and sure enough, it just blew my mind.

I literally made more money in the first three months of doing that. Then I had made an entire year previously as a financial advisor. From that point, it was a progression of wholesaling and then opportunities to flip. Flip and rehab houses came about. Eventually, I ended up learning about non-performing loans, and that’s obviously where you and I connected, and started doing that.

I think what we’re doing right now is I want to share this with as many people as possible because the path to true wealth isn’t going to come from your job’s 401(k) or your financial advisor, your CPA, your attorney or any of these advisors that are traditionally the people we seek advice from. The path to creating wealth will come from taking control of your own financial house. With the amount of resources and technology available now, this is a lot easier than many think.

Self Storage: Since we got the team together, we were able to make realistic offers.

We have a pretty similar path. I got into real estate right out of college, somewhat by necessity because of dot-com crisis. Fortunately, I had a job, but it wasn’t quite the way it was a few years before where you had your pick of jobs and could fly almost anywhere in the world to take a job almost anywhere like it was in 1998, 1999. By 2001, we’re right in the middle of the dot-com crash. Right at the beginning of the first real estate wave, you mentioned wholesaling, I had a similar experience with advertising, and it’s something I find myself preaching regularly, but occasionally I have to remind myself as well as not hesitating to spend money on marketing.

We sent out probably 1,000 postcards to absentee owner landlords, and I think the mailing costs $700. We were printing them on our own printers. I think we hired a college intern or a high school intern, somebody to print labels and manually stamp them all. I think it was $684 on the mailing, and we made six figures on. We found a number of landlords who own multiple properties that were willing to sell them either cheap or even give owner financing terms. It’s amazing what marketing can do.

I know we’re both going through this progression of figuring out the social media, the internet advertising side of things, which is a new world. I’m starting to feel old because it’s certainly a new world compared to what I remembered back in the day. That actually reminds me of another segue. It’s something you’ve had success in where it’s probably one of the only areas I’ve lost money on is on the internet business side of things that I never dabbled in. That’s something I think our audience want to hear.

I did that for a side hustle, so to speak, for a little while as well. I was in New York, this was 2014, 2015, I was investing in non-performing loans, trying to get my message out to as many people as possible, my network and beyond. During that process of researching like how to marketing and all that, I found out about search engine optimization. I went down the rabbit hole of learning about that business. It was fascinating to me because I hadn’t thought about it. As a user of the internet, I hadn’t really thought about every way that’s monetized.

It turns out that you can create real estate online as well. Without getting too into the weeds on it, I was like, “Okay.” I hired a coach or mentor for the SEO business and I learned that. I was building what are called lead gen sites. For example, I researched super-niched service oriented businesses in markets with populations of say 100,000 or more. I found piano-moving to be one of those higher ticket service businesses where a lead for a piano move is worth more than $20 or $30. If you move a piano, it’s a couple of hundred dollars to a thousand dollars if it was a grand piano and you’re moving it, you’re storing it.

Long story short is I built a piano-moving website, pretending to be a local piano mover. At this time, it was in Bucks County, Pennsylvania. I got that site ranking for the search term ‘piano movers’ for that local area number one in Google on the first 90 days. I started getting phone calls asking for quotes to move their piano. As soon as I got that first phone call, I called the three piano movers in that market. The first piano mover I said, “I have this person who wants their piano move. Do you want this lead?” They said, “No.” For lack of better words, he basically told me to F off. Then I called the second guy and he’s like, “Maybe.” Then I called the third piano-moving company and they were like, “Absolutely, send me all those leads. I would love to take them.”

That started the relationship where I just rented exclusively all the leads for that website to this local piano mover. He was paying $550, $600 a month. I literally had created this website. It probably took me two weeks to make the website in 90 days to get it ranked. That was just like another one of those businesses where it’s just unbelievable, the commerce and upside potential of that and creating online real estate assets.

I didn’t have the same level of success. One of the things when we met early on, it’s the same thesis on digital real estate and being able to take advantage of these online businesses. For me, it was really all about execution, but I did test the waters. That’s one of the things that we’re going to continue to communicate on this show is things that we’ve dabbled in that if they go well, we share them with our friends, our family, or our network of investors. If they don’t go well, I still share them with friends, family, network investors. I’ve never been hesitant to talk about things I’ve tried that haven’t worked out as well, and seek help and guidance beforehand, and even during to try to make them go well. The majority of things I’ve done have worked out pretty well. It’s enjoyable.

Why don’t you give us some more color on your background? You said that you were wholesaling initially there, then what happened?

Out of school, I was in Rochester still. I grew up in New Jersey, but went to college at RIT in Rochester, New York. I got into real estate shortly after college there. My landlord owned about twenty houses and was a real estate broker. He helped me get into the business pretty quickly. This was 2001, 2002, so it was the early part of the first real estate boom. Mortgages were plentiful. It was pretty easy to qualify for a loan. I had a decent W-2 job and solid income for a 22-year-old. Within a year, I bought three houses. Within two years, I had bought another 5 or 6, and quit my full-time job. I got my real estate license and built a property management business. I had a good run going in Rochester.

After the 2007, 2008 crisis, things just froze. I wanted to get back closer to New York. I‘d always wanted to live in the city. Luckily, a private equity fund buying non-performing mortgages needed real estate people. It was a new industry. They needed people who were doing short sales, wholesales, buying REOs. They needed people that actually knew that side of the business to work on the banking, and the fun side, just to make sure they knew what to do with these tens of thousands of non-performing mortgages that they were out taking over.

Self Storage: Since we got the team together, we were able to make realistic offers.

Blackstone is doing it now, serving of some of the big funds, but they’re at such a scale. They’ve got hundreds of employees. I also moved to Puerto Rico for those who don’t know. We’re going to have some episodes talking about tax savings and tax advantages of living down here, and how to structure your life in a way that you can build wealth without Wall Street, and have a portfolio of unique, interesting investment opportunities. I have a few thesis on this, but I’m just curious to ask you, what are your thoughts on why these types of alternative investments perform better than say stocks and bonds and more traditional Wall Street assets?

Because they’re not driven by quarterly earnings reports? I don’t know. They’re non-public. It used to be the country club deals, the power of your network and who you know. A lot of that has changed with the 2020 JOBS Act, where anyone can start a Reg D 506(c) fund and raise money for alternative investments like real estate. That has really opened the market to doing a lot more of this type of alternative investing, or making it a little bit more available to the average accredited investor or even non-accredited. I think those funds are available as well. People that aren’t, don’t have those networks of country club relationships or whatever it may be.

That has changed it a lot. To answer your question specifically on why do these alternative assets and investments perform better, I think it’s a matter of a perceived risk. A lot of times, the perception is that alternative assets are risky. It requires a higher yield. They’re not as liquid. Stocks and bonds generally perform over long-term averages that are 7%, but after-fees is probably 5%, versus the stuff that we’re investing in, the multifamily syndications are mid to high teens and twenties, but that’s significantly less risky than stocks are. I don’t have a good answer for you there, Jack. I don’t fully understand personally why these alternative assets often provide significantly higher returns, but more people aren’t doing it.

In general, it’s just a perception of risk. Most financial advisors are going to say that alternative assets, like multifamily syndications, are really risky. They’re going to recommend that you don’t do that because they have a conflict of interest or they have a lack of knowledge. It’s generally a combination of both, and that they don’t get compensated when they refer away to alternative asset type stuff. They also don’t understand it because they’re not personally participating in it. I can speak to that from experience.

I think that’s a perfect answer. You really hit the nail on the head. This is a relatively new industry. It has been ten years since the JOBS Act came out, and where you could actually advertise publicly for these types of private placement syndication deals. It’s still open. At least a majority of the deals that weren’t involved in are only open to accredited investors. Those that make either $200,000 a year, or if married, $300,000 a year, and $1 million dollar net worth. There’s a bit of a barrier to entry. I think it’s knowledge and access.

Liquidity is the only thing that’s maybe a benefit potentially on the public market sides. With liquidity, it opens up institutional capital in some cases. Many of our deals are too small for a traditional Wall Street firm. A multifamily building of 200 units that they’re raising $8 million, the average private equity fund doesn’t look at deals below $20 million. To me, it’s a perfect niche of deals that are too big for the small guys and too small for the big guys. That’s always an area that I’ve had a success. That’s that Blue Ocean Strategy, where most investors want to try to be in as much as possible.

It’s funny, we shared so much in common with the interest in the internet side of things, how we got into the real estate business, and even our current paths of a lifestyle type of a great business, but one that’s also not corporate, not tied to things. What are some of your financial goals over the next few years, as far as generating passive wealth and growing your family’s wealth?

In general, from a high-level, my wife and I wanted to be doubling our net worth every five years. That’s certainly very doable based on our savings rate and investment rate, and the returns that we’re getting out of alternative assets. With the goal of that being as the network doubles, so does the passive income part of it, so that at some point in the next 15 and 20 years, the transition from working full-time to ultimately being completely passive is a really easy transition. I guess that’s penciled down and put anything on paper as like a long-term strategy but high-level, that’s what we’re working towards.

You and I have both talked to so many investors over the last few years. For those that are still stuck in the traditional stocks, bonds, mutual funds, do you have any advice for people that have the assets and the net worth, but just haven’t quite gotten over the hump into the superior types of investment opportunities?

Self Storage: Since we got the team together, we were able to make realistic offers.

Knowledge is power. Both you and I could attest to, like once we learned about these opportunities and started participating in them, there’s really no going back. We wouldn’t go sit at a meeting with a financial advisor and let them tell us what to do with our assets. That’s not going to happen. Recognizing that not everyone is like us, not everyone has the time to devote to learning the business and learning about all the different opportunities. There still is this personal responsibility that you have to have to take the time and ownership of taking control of your financial house. The amount of resources that are available to you now to learn about alternative investing is unbelievable.

We’re probably one of 5,000 podcasts in the real estate space. I would just say, take some time to learn about the other opportunities, and be open-minded to that. My wife is a physician. She’s really busy with her practice and with her family when she comes home. Recognizing that higher-earning professionals have limited amount of time, you could do a limited amount of research, or spend a limited amount of time on improving your knowledge on alternative investments, and then figure out what’s of interest to you. Then partner with the experts in whatever niche that is. Maybe, Jack, you can speak to how we’re doing it. We’re not the full-time operator, boots-on-the-ground. We have the knowledge and ability to look at deals, underwrite them, and then participate in them. Do you want to speak to that?

Yeah, absolutely. When I was bought out of my old firm and I had to figure out where we were positioning this business, the thought of trying to recreate a business from scratch, competing against the operators that in many cases have been doing this for twenty years, it was daunting. Frankly, it’s not where my skillset was. I’ve always been a connector in a networking machine and putting things together and partnering. It didn’t make sense for me to try to compete with people that frankly I’d already had been investing my own money with, why do I want to start a competitor? There’s a way to work together.

What we found is these operators that are best in class, because this is not a Wall Street type of opportunity, they always need to help raise in capital. In many cases, it’s within 30 to 45 days. We found that we could actually partner with groups that I have a ton of respect for, that I felt were best in class. By partnering with them, we actually get better returns for our fund than say a normal partner or a smaller partner who’s maybe investing $50,000. We built this business around providing value to both the operating partners who are the quarterbacks of the deals that, in many cases, spend hundreds of thousands of dollars in maybe six months to a year of time just to find 2 or 3 good deals a year.

On top of that, for those passive investors who are too busy with their jobs, busy with their families, that don’t have the time to dedicate to researching and vetting operating partners, we can plug in and provide them both our expertise on the vetting, but also diversification. The average investor is not spreading millions of dollars across 50 multifamily deals. They may have a few hundred thousand allocation that they’re going to put into these alternatives. I think it’s much better for them to be diversified and partnering with groups like us.

A little bit about myself and my personality, I’m endlessly curious about different opportunities. I dabbled a little bit with my own personal money and the website side of things. That’s one of the few that didn’t go as well for me. Because I have friends that have high W-2 income, I’ve spent the last year or two researching oil and gas, and certain other carbon capture opportunities that have significant tax advantages that actually work better for high W-2 earners like doctors and very successful business owners that in some cases are better than real estate at least from a tax side. On the risk side, it remains to be seen. As we record this, oil prices are very high at the moment. We’re in the middle of that Russia-Ukraine conflict.

The point, and I think what I want to do with this show, is to continue to highlight interesting opportunities, interesting guests, and all of the alternative niches. In the coming weeks, we’re going to have a number of real estate people on because that’s one of our core focuses. We’re also going to have people that are experts on blockchain and oil and gas. We’re going to have a partner I’ve invested with on probably 6 or 7 deals now that lends money to companies, either that are small public companies or companies about to go public. They converted us basically a significant discount to the IPO price.

These are all really fun opportunities. I’m hoping that our base of audience enjoys just the exposure to these types of deals. We’re going to try to have some fun as well. One of our upcoming guests is also points and miles connoisseur like me. If you own a business and you generate a fair amount of expenses, one of the fun things to do is use your Amex or your Chase points and travel the world in first class for free. We’re going to talk about the lifestyle as well. I know you like to hunt, you like to travel, and you like to eat good food. It’s important to have some fun as well.

I’m super excited about hearing about sharing a lot of these alternative investment strategies. Some of the big challenges in hiring professionals is the time aspect of digging into these opportunities, and then also the knowledge part, being able to be knowledgeable enough to be comfortable with it. Hoping to expedite some of that for you, guys. We’ll give you guys some ideas on things that you should be looking at.

We’re probably close to wrapping this up. Let’s give the audience your contact information with JKAM. I have a number of investors I’ve talked to. You’ve got your own base of investors as well. I would encourage everyone to reach out to you both on the investment side, and if there are any requests, suggestions on the show’s future content, please don’t hesitate to reach out to either of us. William, why don’t you provide the website contact info as well?

You can find us at JKAMInvestments.com. You can reach out to me specifically at WBonati@JKAssetManagement.com. You can get me there. I’m pretty flexible to chat with anybody. I’m in Vail, Colorado, so if any readers that are out here in this area and want to connect, ski some local lines or some local spots on the river, just let me know.

We have a dedicated page for the Alternative Investor Mastermind on the JKAM website, but you could always reach JKAM at JKAMInvestments.com. My personal email is JKrupey@JKAssetManagement.com. Folks, thank you so much for joining. William, thanks for being the first guest. You’ve been a great friend and a business partner over the years. I’m looking forward to having some fun with this, and also providing a lot of value and content to our audience. Thanks for being here.

 

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About William Bonati

AIM 1 | Wealth Without Wall StreetWilliam has been an entrepreneur since 1998 and an active investor since 2005 with a broad background in business including insurance, banking, financial services, real estate, alternative assets and digital marketing.

In 2014, William started Infinity Asset Ventures LLC, a firm focused on investing in distressed residential single family homes nationwide. This included acquisition, management and disposition of assets through a variety of solutions to create win-wins for homeowners and investors. This included but was not limited to loan modifications, deeds in lieu of foreclosure, foreclosures, cash for keys, re-performing loan sales, non-performing loan sales, REO’s, fix and flips, wholesaling etc.

In 2016, WB Digital Marketing was founded from a need to grow his core business which at the time was real estate private equity. William found the opportunities in digital marketing very attractive and leaned into learning SEO, Web Design, PPC, Ads Management, Social Media Marketing and Reputation Management. As many entrepreneurs do William expanded his skills and focused on building a digital marketing agency and digital assets. The first website William designed and built was ranked on the first page of google search results inside of 90 days and from that point on William has been growing the WB Digital Marketing agency by continually learning, experimenting, partnering and implementing digital marketing strategies that achieve measurable results.

In 2016, Infinity Asset Ventures acted as the exclusive disposition trade desk for a distressed debt private equity fund with a portfolio of over 3 billion in assets. In this role Infinity Asset Ventures was responsible for the sale of distressed debt to middle market funds all the way down to the smaller funds trading only a few loans per month. Infinity Asset Ventures was responsible for total trades of more than 250 million dollars worth of distressed debt.

In 2020, William joined long time friend and colleague Jack Krupey, founder of JKAM Investments a boutique alternative investments fund to serve as partner in business development and marketing.