Today on the show we’ve got Holly Williams, author of “Hidden Investing – What The 1% Know That We Don’t”. Growing up in Houston, Texas, her parents did a good job of teaching her to put money in her 401k and live below your means. 

When her parents died in 2010 and 2011, she realized they had done all of that but she watched them worry in their later years. When you take your money out you’re taxed at the full rate. Your expenses don’t go down when you retire. 

Holly worked at a successful Ad Agency and 15 years later she was paying 50% in taxes. One year she had a 1099 for $65,000 and she wasn’t even able to claim her daughter as a deductible. You think you’ve made $10,000 but you still have to pay for capital gains.

About 6 years later, Holly was given the opportunity to invest passively in a garden apartment complex. She started taking money out of the stock market and putting more of it into the multi family syndication. When you’re investing in a REIT (Real Estate Investment Trust) they’re getting the tax breaks, it’s not passed to you.

Then Holly entered a world she didn’t know existed. REIT’s are a mutual fund that invest in real estate. Mutual funds own about 50% of the large apartment complexes. The public REIT’s are mutual funds that buy property but in essence you’re buying a mutual fund still. The fund gets the tax breaks but it doesn’t pass through to you.

Big real estate investment firms own another 25% of these large apartment complexes. A few examples of these companies are Alex Rodriguez, Roger Staubach and Ebby Halliday which was just bought by Warren Buffet.

The Shift

The other 25% are owned by entrepreneurs who have gone in and said, “I can do that.” There are a lot of FCC regulations around this type of investment. One of them being that you have to have a personal relationship with whoever is investing. If you don’t know someone then you can’t play. That’s why this is hidden investing.

You can buy a REIT, but you’re buying a mutual fund. If you want to invest with the big guys then you’ll need $200,000-$300,000 minimums. You have to be an accredited investor. 

Most of the people Holly works with are also accredited investors. Simply put, it’s a bunch of people who know each other who are getting together and buying an apartment complex. This was a game changer for her because it allowed her to invest in income producing real estate. You get all of the depreciation that benefits with real estate but you don’t have to do any of the work.

When a REIT takes a 9% acquisition fee, as general partners they take only about a 3% acquisition fee. When a public offering does management fees they do it on the value of the asset, not how much money it’s making. The way Holly and the general partners set it up, they don’t get anything until everyone else gets theirs. 

Sharing Hidden Investing

When Holly moved money from the stock market, she started making 6 figures and it was tax deferred. Then she started KeepMore.com to share the information she discovered. The tax code is written to incentivize us to do certain things to give us tax breaks through investing in Real Estate.

We’re not told lies, we’re just not told the whole story about tax breaks and advantages. The information appears to be complicated when it’s not. 

Holly shares about the advantages of depreciation in Real Estate and in your business. Most Real Estate Investors do this. None of this is a secret, Holly just didn’t know about it. We are programmed to think if it’s too good to be true, then it’s too good to be true. 

With cash flowing apartment complexes, the profits are shared as they go along. Holly is involved with 12 syndications now, 18 total. You can buy Real Estate for cash flow or you can buy for appreciation. They know the enhancements wanted they can make to raise rent prices. 

Even if the market tanks, they’re still collecting rent. It’s about relationships and being good landlords. They’re renting to working America – nurses, firemen, cops. 

Hidden Investing Full Time

Holly retired from Advertising 2 years ago and now does this full time. Hidden Investing provides her income. There are risks involved. Any investment is a risk. She learned how the wealthy think about money. It’s a mindset.

Then Holly goes on to share how the multi family syndication works, what she’s learned through this versus what she learned in college and even what advisors know and teach. They don’t depend on the market. With hidden investing, you mitigate risks and know what can go wrong.

Holly shares about PMI – Private Mortgage Insurance and how that can help you get into a home. With that you’re counting on the home market going up but if it doesn’t then you could be in trouble.

The wealthy think of money as a tool. It’s a mindset. It’s the attitude, the motivation and it’s the why.

Through Junior Achievement, Holly works to try and teach them about money and business. There definitely needs to be more education about money.

We regularly give our money to people that tell us, they do not know what is going to happen. It’s not logical. Wall Street gets richer and richer and richer, no matter what the market is doing.

Links:

www.keepmore.com

www.hiddeninvesting.com

Recommended book: “Rich Dad, Poor Dad” by Robersons Kiyosaki

Relevant past episode –

Episode 06: Real Talk about Real Estate Investing with Rashauna Scott