28: Hidden Investing With Holly Williams

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 your 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. About 50% of the large apartment complexes are owned by these. 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 doesn’t pass through to you. Another 25% of these large apartment complexes are owned by big real estate investment companies. A few examples of these companies are Alex Rodriguez, Roger Staubach and Ebby Halliday which was just bought by Warren Buffet. 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. 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. 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. 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. Holly retired from Advertising 2 years ago and is now doing this full time. This is her income. There are risks involved. Any investment is a risk. She learned how the wealthy think about money. It’s a mindset. 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 is getting richer and richer and richer, no matter what the market is doing. www.keepmore.com www.hiddeninvesting.com Relevant past episode - Episode 6: Real Talk about Real Estate Investing with Rashauna Scott