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Show Summary
In this episode of the Real Estate Pro Show, host Erika interviews Kelly Winget, founder of Alternative Wealth Partners, who shares her insights on private equity and real estate investments. Kelly discusses her journey in the alternative investment space, the significance of opportunity zones, and the strategies for navigating qualified opportunity zones. She emphasizes the importance of investing in operating businesses, building relationships in the private equity sector, and the challenges investors face. The conversation also touches on future trends, including the role of AI in business.
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Investor Fuel Show Transcript:
Kelly Ann Winget | AWP (00:00)
So I love opportunity zones. I’ve been kind of obsessed with this plan since it came out in 2017 and I’ve kind of watched it grow over the last several years. And you know, the initial incentive of the opportunity zone is that you take capital gains, you invested in an opportunity zone fund that invests in property or businesses located inside of these opportunity zones. It would defer that capital gain taxes until 2027 and then it would eliminate all of yourcapital
gains taxes on your future appreciation of whatever your new asset was. You have to kind of think of it as like a blend of a 1031 plus a Roth IRA sort of thing. And so I call it like the super Roth because you do pay your taxes, but you’re paying it on the original gain and it’s deferred. So you’ll be able to find and leverage some tax incentives that might reduce that burden by the time that you pay it. And then you get to invest heavily for, I mean,
estate so you should be expecting to be invested in these things for five to ten years anyways. You have a ten year hold but then you have the freedom with that cash after that. When you sell the property all of that appreciation is tax free. You don’t have to continue to find property after property after property to 1031 into oblivion. You get to like take your winnings off the table and start investing in something else you know. You can get really creative on the tax planning side and and the opportunities don’t with the big beautiful bill
they’ve made it permanent. So now it’s just the locations are changing every 10 years, but that means that you have this vehicle that you could essentially just invest inside of forever and it removes the capital gain from all of those things that you’re investing in. It’s crazy.
Erika (03:15)
everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and today I’m thrilled to be joined by Kelly Winget. She’s shaking things up in the private equity and real estate space. Kelly, it’s awesome to have you here.Kelly Ann Winget | AWP (03:29)
Thank you for having me.Erika (03:30)
So let’s dive on in. Kelly, for those who don’t know your world yet, give us the rundown. How did you get started in the real estate game with private equity?Kelly Ann Winget | AWP (03:40)
Sure, so I am the founder of company called Alternative Wealth Partners. It’s a private equity company out of Dallas and I’ve been in the alternative investment space for going on 15 years, but I was raised by entrepreneurs and…you know, both my parents were in financial services. They were, you know, way ahead of their time flipping apartment complexes and houses in the seventies and eighties. And, you know, that energy kind of carried through my upbringing. So when I eventually found my way into, you know, private equity, I took a non-conventional route. I’ve worked in everything from healthcare to construction and demolition to, you know, oil and gas. five generations in oil and gas. So that was kind of my, first foray into, what I do now, which is managed diverse
private equity funds that invest in everything from real estate, oil and gas, tech startups. You know, I’ve seen it all. I’ve raised almost a billion dollars over my career into the private equity space. so, you know, real estate is one of those assets that falls into alternatives. Most people think alternatives are something crazy like cryptocurrency, but it actually just includes everything that is in a stock bond or cash.
Erika (05:32)
Yeah, so when it comes to that, are there specific markets or regions or type of investments that you’re looking at? What is that? Give us the rundown for those who are new to this.Kelly Ann Winget | AWP (05:45)
Sure, so.Private equity is exactly what it is. It’s not trying to hide anything. It’s literally just privately held things. And so when we look at real estate, it’s usually as an afterthought to the businesses that we’re looking to acquire or build. And so the way that we approach real estate is, is this a piece of property that can house a business or does it house a business currently? And how can we bring more value to that real estate? We’re heavily involved in the industrial and commercial space.
anything in residential right now I feel like it’s super saturated. It provides a lot of financial freedom for people because it’s the easiest way to get into an alternative asset that has a lot of wealth creation around it. There’s no barrier of entry. You can use your money, someone else’s money, little money. You can leverage debt. It’s a very easy asset to go and acquire where private equity is a more sophisticated investment strategy that requires a
a little bit more hands-on experience, capital. And so kind of like the graduation process is like you have your stocks and bonds portfolio, then you buy some real estate, that real estate provides extra capital, maybe some tax incentives that frees up more capital, and then you start getting into like venture, private equity, and some other kind of more sophisticated investment strategies.
Erika (07:05)
when it comes to those private equity strategies, how does that tie into real estate opportunities like opportunity zones?Kelly Ann Winget | AWP (07:13)
So I love opportunity zones. I’ve been kind of obsessed with this plan since it came out in 2017 and I’ve kind of watched it grow over the last several years. And you know, the initial incentive of the opportunity zone is that you take capital gains, you invested in an opportunity zone fund that invests in property or businesses located inside of these opportunity zones. It would defer that capital gain taxes until 2027 and then it would eliminate all of yourcapital
gains taxes on your future appreciation of whatever your new asset was. You have to kind of think of it as like a blend of a 1031 plus a Roth IRA sort of thing. And so I call it like the super Roth because you do pay your taxes, but you’re paying it on the original gain and it’s deferred. So you’ll be able to find and leverage some tax incentives that might reduce that burden by the time that you pay it. And then you get to invest heavily for, I mean,
estate so you should be expecting to be invested in these things for five to ten years anyways. You have a ten year hold but then you have the freedom with that cash after that. When you sell the property all of that appreciation is tax free. You don’t have to continue to find property after property after property to 1031 into oblivion. You get to like take your winnings off the table and start investing in something else you know. You can get really creative on the tax planning side and and the opportunities don’t with the big beautiful bill
they’ve made it permanent. So now it’s just the locations are changing every 10 years, but that means that you have this vehicle that you could essentially just invest inside of forever and it removes the capital gain from all of those things that you’re investing in. It’s crazy.
⁓
Erika (08:58)
Yeah, that’sreally exciting. Would you say for you, is it more about the opportunity itself within that or are you targeting specific markets or regions for that?
Kelly Ann Winget | AWP (09:45)
So there’s specific areas in the country that are designated as opportunity zones. And for the most part, they’re just kind of like right outside of metropolitan areas or they’re like, they can be in super rural areas. If you’re interested in like more of like the farm or like raw land development, you might want to go further out and look for opportunity zones that fit there. But for us, like we’re looking at operating businesses. So they’re going to be inside of metropolitan areas or right outside the city.places where they’re kind of on the way up to like gentrification or like, you know, there’s some interest in that area being developed because the whole point is that you want the asset to grow in value, but there’s all these different kind of nuances to the project that you’re required to do. you buy a property for a million dollars, you have to put a million dollars worth of improvements into that property in order for it to qualify. You do that over 10 years. And so you want that property to ultimately double and triple and quadruple in value.
and you have that opportunity when you’re just outside of the growth, because eventually it gets there. And you have to the asset for 10 years anyways. So we’re looking for those things that are just outside of big growth areas. We have an Opportunity Zone project right now. It’s about two and a half hours outside of Dallas, but it’s in between two very large towns. And so we have the ability to, if we create industry there,
the employment will come and the growth of the city will come and then there will want to be housing development. There will want to be restaurants there. We’re bringing highly technical skill sets there. So those people want to have nice restaurants and stores and things to do that don’t currently exist. And so we wanna be where the development is going.
Erika (11:28)
Absolutely. And those private equity opportunity zones, can be complex. So what kind of advice would you give for someone navigating that?Kelly Ann Winget | AWP (11:37)
So I guess there’s two ways that an investor could think about an opportunity zone. It’s, I want to passively invest in something that somebody’s actively managing on my behalf and benefiting from that? This is gonna be for investors that are used to investing in multifamily syndicates, where they’re a ⁓ limited partner or just kind of a passive investor. If you have significant amount of capital gain, like let’s say you had a ranch property or you owned a large something,soldier business and you’re looking at a 5, 10 or higher million dollar capital gain event, then you could consider building your own.
qualified opportunity zone fund. It has to be structured that way, but you can do it yourself. Family offices do this for themselves when they have a particular type of interest. Sometimes like, let’s say I’m in Omaha and I have, you know, I sold my business for $50 million and I might really care about, you know, the growth of South Omaha. So I might set up a qualified opportunity zone for my family and invest in South Omaha with my capital gains, build
buildings, put an office space in, whatever. You can do that yourself if you have a large enough, you have to make sense with the cost of running something like that, which is gonna be about, if you’re focusing on one area or one property, it could be 200, $300,000 a year, you could change that. it’s typically, if you’re gonna do it for yourself, you should be looking at a 10 to $20 million capital gain event.
Erika (13:06)
And for that, there specific types of operating businesses or real estate projects that you’re seeing the most potential within the qualified opportunity zones?Kelly Ann Winget | AWP (13:16)
Sure, sothe projects have typically been, which is kind of a disappointing thing about the incentive that was created. It was created under Trump’s first term and he’s a real estate guy. So it’s really like build a hotel in the middle of nowhere and hopefully somebody will come or build a multifamily like right outside of town and whatever. But you have a tax-free growth.
So you want to be aggressive in what you’re investing in because you’re taking whatever the appreciation is tax free afterwards. And so the program has only been used to invest in real estate that, you know, typically one and a half or two X’s over time. Whereas the operating businesses, I buy a metal forging company doing 2 million a year. I can put that on an opportunity zone property and scale it to four or $5 million a year. I can sell that $40 million.
in 10 years tax free. That’s very different than me investing a million dollars into a property and it going two million dollars. Like I might as well pay the taxes on that then hold it for 10 years. So that’s our perspective about it and so there’s not a lot of opportunity zones out there that are focusing on the operating business. We’re really involved with like infrastructure, energy, national security, our…
Qualified Opportunity Zone Fund is focused on defense. So we’re looking at defense-related, government-related companies. This could be metal forging, textiles, parts, technology, anything that’s going to be government affiliated. Because we’re trying to onshore everything, right?
When it comes to how the military spends their money and the government has to be made in America or at least tried to be made in America first. This includes all the foreign aid that goes overseas. you know, any any type of conflict we’re supporting with money, that money comes back into the United States because even our allied countries have to purchase US first. So we’re trying to expand that capacity so that everything is that’s already being made here because they have been since World
War II, ⁓ just expanding that capacity. Those families that own those businesses haven’t done anything to scale their business because why would they? They have a very nice government contract. They make a couple million dollars a year doing the bare minimum. And so there’s no energy or effort to grow their business. The third generation is uninterested in running a manufacturing business. They want to be YouTube or TikTok stars. And so, you know, we get to go into those businesses and say, hey, we
want to continue your legacy, you know, we’re going to buy your company, we’re going to preserve what you’ve built, but we’re going to take it to the next level. We put next generation leadership in and we scale it to sell it, you know, in seven to ten years.
Erika (16:44)
Yeah, wow, that’s so fascinating. And what is that process like for finding those businesses? Because, I mean, I’m sure they’re out there, but, know, is there a database or, you know, is it about making connections? What is that like?Kelly Ann Winget | AWP (16:57)
It’s kind of a little bit of both. So there are like business brokers out there, I’m sure investors get.approached all the time with hey buy this business. They’re doing half a million dollars a year and they’re going to sell for two million dollars. You know, I try not to do work with brokers just because they take such a large percentage of the deal. I do a lot of work within my network to like go and find these opportunities because most of the time when we approach these they’re not looking to sell. You know, they’re kind of just settling.
And we get into a conversation of like what that looks like to actually move on from the business. So a lot of the effort that we’re doing is actually going in and convincing these people to sell us their business instead of finding somebody that’s already in a position to sell. Just because we can get a better price.
can be a little bit more aggressive on what we offer and we can also keep the family intact if they still want to operate a part of their business or have somebody involved in the daily operation of the business. That’s kind of the biggest difference between like a large private equity firm and like what we do because a large private equity firm is gonna be like here’s your check go away and then they come in and like obliterate the business and then turn it into a robot you know so we we approach it a little bit differently and that only
works when we’re able to like have control of that relationship.
Erika (18:18)
Absolutely. And for you, when it comes to building those relationships, have there been specific networking groups that have been helpful? Or how have you been able to scale that?Kelly Ann Winget | AWP (18:28)
The family office space is like a really interesting one to be in because everybody’s just like an eccentric billionaire and so you know you’re dealing with a lot of different personality types and I think like fortunately for me like I went into sales at 15 so I wasI dealt with every type of personality. And then I went into, I was working with 60 doctors, then I was working in demolition. So like, I’ve seen it all. And so for me, it’s very easy to walk in, like I could decide tomorrow to go into like a roofing conference, because I want to buy a roofing company and like talk to everybody in the room and figure out who’s got kind of the best situation going on. And then, you know, working on a deal. You really just want to be in the
industry space. So if you’re interested in getting into like a manufacturing company, then you’ve got to find where the manufacturing company is going. You know, is there a parts conference, a machines, you know, conference, something where they are going, where you can kind of like in an informal way and start to engage with that community.
They’re not going to be in investor conferences really unless they’re presenting or something. The investment conferences are really great to find other investors or to find on market deals. But if you’re looking to really get creative and find off market opportunities, you have to go where those people are.
Erika (19:40)
Yeah.Yeah, absolutely. That makes so much sense. Have you noticed any unique challenges with, you know, buying these businesses in the qualified opportunity zones? You know, because every, every business owner has a moment where things go sideways and they have to pivot. Do you have a moment like that in your journey?
Kelly Ann Winget | AWP (20:14)
yeah, I mean I…I, one of my largest portfolio companies, right, it’s both the bane of my existence and my favorite deal. And it’s changed a hundred times over the last seven years that I’ve been involved, in good ways and bad ways. But going back to feeling creative about being able to do these kinds of opportunities, you just have to kind of roll with the punches. And if you, at your core, believe
and what this asset can turn into, then it doesn’t matter what the hurdles are because at the end of the day, you see where it’s going and the path is rough, but it’s still going forward. So I hit those things all the time and it can be difficult when you’re not…
when you’re not fully engaged, think that’s one thing that maybe your listeners need to understand is you can’t be one foot in and one foot out in this kind of investing. With real estate, you can be pretty passive, but if you really want to start to generate generational wealth with stuff, you’ve got to commit full time.
Erika (21:18)
Absolutely. And for the newcomers, do you see any common mistakes that you you can share so that they don’t make the same mistake?Kelly Ann Winget | AWP (21:27)
⁓The best salespeople have a lot of really good marketing. And so just because the deal looks really pretty and you saw it on Facebook or Instagram or whatever, you really like have to take the time and do due diligence. And even if your due diligence is simple Google searches, like you need to find out if the people have been sued before, you know, you need to find out what their actual track record is. And there’s ways to verify the information that they’re selling you on whatever
pitch deck they’re sending you or webinar presentation or who Ross stage performance they’re doing like there’s really you’ve got to you’ve got to do some third-party validation of the things that they’re talking about it can be exciting and new and I just think that people just need to have a little bit more ownership of that decision and letting some then letting somebody just convince them to do something because everybody else’s
Erika (22:19)
That makes a lot of sense. hear a lot about due diligence on the podcast. Kelly, what’s on the horizon for you? What are you exploring? What kind of impact are you looking to make?Kelly Ann Winget | AWP (22:32)
We’re looking at some really exciting deals. think that there’s a lot of focus on AI and for us we’re not, and I felt this, I’ve been in crypto for a very long time too, but like it’s looking at something in a different way. Everyone is chasing the dot AI companies, which is very exciting, but the reality is that AI is here. It’s not going anywhere and you need to be looking at how is the application used acrossevery industry. So when we’re evaluating a deal, we’re looking at not just, okay, it’s an AI technology, but, you know, is the business or is the opportunity at its core functional?
And is AI improving that? Or are the companies that we’re invested in using AI to scale? It’s not about just the AI technology itself. Same with crypto. Yes, there’s a cryptocurrency, but it’s built on a technology. How are the companies using the blockchain technology to make their business better? And so that’s what we’re looking at when we’re evaluating deals.
Erika (23:36)
Yeah, yeah, that’s exciting. With the AI or not the AI, are there any tools or systems or mindsets that you’re leaning into to stay ahead?Kelly Ann Winget | AWP (23:46)
I mean, I have a very great relationship with my chat GBT. But for the most part, we’re looking at the companies we’ve invested in that use AI are trying to address systematic issues in different industries, whether it be the financial services space, business entrepreneurship space. We’re leveraging the tools that we’ve invested in across our entire portfolio.Erika (24:10)
Yeah, that’s exciting. Well, Kelly, before we let you go, if someone wants to reach out, learn more about what you’re doing at Alternative Wealth Partners, or maybe they need to explore some qualified opportunity zones with you. What’s the best way for them to connect?Kelly Ann Winget | AWP (24:26)
So I’m pretty active on LinkedIn. You can find me on LinkedIn. It’s Kelly Ann Winget. I think I’m the only one. And then, of course, you can always reach out to us on our website, which is alternativewealthpartners.com.Erika (24:36)
Awesome. Kelly, I love how you’re blending private equity with real estate to create real impact. It’s inspiring stuff. Yeah, it was a joy. And for everyone tuning in, if you got value from this episode, make sure that you’re subscribed to the Real Estate Pro Show. We’ve got more conversations coming your way with operators like Kelly who are building incredible businesses. We’ll see you on the next episode.Kelly Ann Winget | AWP (24:44)
Thank you for having me.
