JF2266: Hidden Investing Secrets With Holly Williams #Skillset Sunday

Holly is a returning guest from episode JF1600. She has been investing in real estate for the past two decades with multiple properties in New York, Texas, Mississippi, and the Carolinas. She also started syndications during the same time Joe Fairless did and in fact, was one of Joe’s first investors. Today Holly is going to be sharing with all of us some insights on her new book called “Hidden Investing – Secrets that the top 1% know”. 

Holly Williams Real Estate Background:

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“Multifamily syndications, has grown beyond my wildest dreams, and it’s changed my life ” – Holly Williams

TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the Best Real Estate Investing Advice Ever show. I’m Theo Hicks and today we’re speaking with a three-time guest, or soon to be three-time guest, Holly Williams.

Holly, how are you doing?

Holly Williams: Hello, Theo. It’s so good to be here with you.

Theo Hicks: Oh, good. Thanks for joining us again. So her last episode was Episode 1600, so make sure you check that out. And today is Sunday, so we’re doing a Skillset Sunday, talking about a specific skill that our guest has, and we’ll be talking about her book called “Hidden Investing”, which is secrets that the top 1% know. So we’re going to get some of those Holly’s secrets today.

Before we get to that, as a reminder, she has spent 25 years in advertising as an executive, while slowly dabbling in real estate. She has two decades of real estate investing experience. Currently, her portfolio is in New York, Texas, Mississippi and The Carolinas.

She is based in New York City. And to learn more about her book and to get yourself a copy of her book, that we’re gonna be discussing today, you can go to https://hiddeninvesting.com/book.

So Holly, do you mind telling us really quickly what you’ve been up to since you’ve last been on the show? And then we’ll hop into that book.

Holly Williams: That’s great. And I thank you again for having me on the show. I’ve been involved in syndications as long as Joe has. I was one of his first investors, as your listeners may know or may not know. And then I began to work with him and kind of learned along with him, kind of at the same time, although he’s always been more advanced than me.

So little did I know — I knew that real estate investing was an amazing way to build wealth, I knew about the tax benefits, I knew a lot of those things, but if you have a full-time career, I was not focused on it, right? It’s very difficult, it’s a ton of work.

So, when I discovered multifamily syndications, it’s grown beyond my wildest dreams and it’s changed my life. By investing passively in syndications, I was able to build wealth, and I watched my parents along the same time do everything that we’re taught in school. I went to business school, I didn’t learn anything. I didn’t even know what syndication was. And when I started learning about it, the only reason I really got into it is because I believed in Joe. And throughout this journey, I’ve realized that we are taught in school – or at least I was, growing up in a middle-class family and going to a state college, all of those things that we do… I was taught many, many, many things, and a good portion of the things that I was taught to do from a financial perspective were really myths, and it didn’t work for my parents.

The whole system basically is really set up for us to die broke. When we put money in a 401(k) and we retire, through a financial advisor who works with us on a retirement plan, all of the things that you’re “supposed to do”, it involves withdrawing a certain amount of money every year. As a matter of fact, the IRS requires you when you’re retired to withdraw this money. So when you do that, it’s taxed at a [unintelligible [00:06:31].19] rate, which I didn’t realize. And once you sell the stock, it’s gone. So I think in our minds and I know in my parents minds, if you have a million-dollar nest egg, we think “Oh, the stock market’s going to return 8 to 10 percent a year, whatever, and that’s going to provide me with an $80,000 income” and that’s just not what’s going to happen in most cases. So it comes down to luck, and luck is not a real great strategy.

So the more I learned about syndication, the more I learned that you could invest passively in a private investment and bypass a lot of the huge fees and those sorts of things that Wall Street does, I began to awaken. And the more I looked around, the more I studied and understood, and sort of basically associating myself with people that are very wealthy and did grow up with this kind of learning… These guys know – there’s a whole world out there that you really have to know somebody; it’s a club… And it really changed my life. And that’s how the rich stay rich. So it’s just my belief. I’m not a financial advisor, I’m not a CPA. I’m just a person that’s telling my experience here with private investing. My eyes opened up the more I learned what was available, so I decided to write a book about it.

Theo Hicks: I think I heard in that intro — because you said in the book you go over 10 things at the top 1% know. And I think I caught a few of those in there, but I doubt we’ll get through all ten. Maybe starting at the most important and then going down, what are these top ten myths of investing?

Holly Williams: So the first sentence in the book is “Our belief systems run deep”, and a good part of the book talks about the mindset of the wealthy. And I’m going to speak for myself, and probably a lot of the listeners can relate to this… We get our values from our families, from what we learn in school, from the media. We’re bombarded with all of this stuff. And I go to school, and my antennae go up when I hear there’s an investment opportunity; I’m like, “Why didn’t I learn about it in school? Why didn’t my parents teach me about it? Is this about Bernie Madoff?” Because that’s all the media tells us about.

So the very first thing that happens is that I go back to my view of the world that I was given. And the wealthy – and I’m talking about the people that have generational wealth, and grow up understanding what I’m about to say, is that their view of the world and their view of how they relate to money, how they look at investing, how they live and what role money plays in their lives, is just very different. And they understand a lot more about how money really works.

When you go to a bank or you go and you invest in a mutual fund or whatever, they’re taking that money and they’re investing in private investments. So they understand that, and they understand how money works, and the velocity of money, and keeping it moving around, and good debt and bad debt… So I go into a lot of those things. And there’s nothing original in the entire book, but what I’m hoping to do, my goal with the book is just open people’s eyes.

You can research what I’m saying, and please, refute me. But it’s true, right? And people tell me, “This is too good to be true. This has got to be a scam, this has got to be–” And the wealthy know about this because their view of the world is shaped at an earlier stage.

The second thing is I was brought up to think that only one person can go to the top, or you have to win the Spelling Bee. We’re all very much brought up – or at least me – in a scarcity mentality; when you go to work in the corporate world, I’ve got to go up the ladder, and if I go up the ladder, you can’t go up the ladder. I’m going to go up the ladder faster than you. And all of those things — well, if you look around at what the wealthy do, they think of a job or whatever as a learning experience and a springboard, and they don’t think about that as the end game, or they don’t think about getting money as the end; it’s a tool to get to where they want to go.

So they plan their lives, and they realize that when Jeff Bezos gets wealthy, that he may very well be a jerk. I don’t know him. But I will say this – he’s not taking anything from me and you. There’s a large segment of the population today that wants to redistribute the wealth. You hear these people, and you see it all the time – people win the lottery and then they are broke in five years, or whatever. And then you hear stories about how people get wiped out financially and then they were able to build it back, right?  Well, it’s because of the mindset.

If you redistribute wealth, there’s a reason it’s just never worked in history, because it’s the mindset first, and it’s learning about money, and it’s changing those built-in behaviors, that frankly, society wants us to have, because it keeps us working, and a cog in the wheel, and it keeps the wealthy wealthy.

So it’s not really a secret; people talk about it. Warren Buffett says all the time that he pays a lower tax rate than his secretary does, whatever. And we just go past that. We don’t focus on that and begin to understand exactly what he’s doing. And what he’s doing is, yeah, he’s buying stocks, but he’s not going into his Fidelity account or E*Trade and buying stocks like you and I are. That’s not what he’s doing.

So it’s just a very different way of thinking about money. So the first couple of chapters is about that abundance mindset, that way of thinking about money. “The 1%” was a better title. It’s really the 0.5%. I mean, really, really wealthy people, that know how to build generational wealth. And again, what we’re taught to do is spend it all and die broke.

Theo Hicks: Perfect. I agree with everything you said. Keep going. What are some of the other myths? I’m going to let you talk, mostly because I want you to get as much of these myths out as possible.

Holly Williams: Sometimes I ramble, because I’m passionate about this. At the end of the day, my Why is that I watched my parents really follow the rules, and I watched myself follow the rules. I started out filling out the 1040-EZ form. 20 years later, I found myself not wealthy, in my mind, living in New York City and paying 50% of everything I made in taxes and watching it go poof. So I don’t believe that the government is a good steward of my money.

Another thing I talk about is the tax code is meant to tell us how much money we owe in taxes. That’s not what the tax code’s meant to do. The tax code is meant to incentivize us to take certain actions so that we can add value to the economy, and grow the economy. And many people smarter than me have figured out the tax code; and it’s not my job to decide if it’s good or bad, it’s my job to follow the laws of the land.

When people say “So-and-so is finding a loophole in the tax code” or whatever – that’s not what they’re doing. They’re following the laws of the United States of America. So by learning those and learning what the government wants me to do, and following what the government wants me to do, I add value to my life, to your life, we have employees, we’re able to grow wealth… And what’s been amazing to me is that I’ve been able to help people like my brother, who grew up just like me, and he’s like, “Oh, my goodness.” I’ve been able to help some of my colleagues in advertising and some of them say, “Oh my God, my accountant says it’s true”, and I’m like, “Yeah, it’s true.” So that’s one myth.

The tax code’s a gazillion pages long and 90% of it is how to do things that the government wants us to do. Another chapter is about — 9/11 really shaped me, and it shaped a lot of people. I watched people jump out of buildings and it was terrible. I was living in Manhattan, and had just flown on in that morning, and it was [00:15:25].05] day.

Now, Coronavirus, just before the pandemic — but I learned a lot from 9/11, right? You learn a little resilience, and that all people are not good, and you need to trust, but verify… And we were all down at ground zero, trying to help, and Christy Whitman was the head of the EPA at the time, and she was just conveying probably what she knew. I don’t think it was intentional, but she came out and said, “Okay, there’s nothing to worry about. The air is safe at ground zero.”

So one title in my chapters is “The myth is the air is safe at ground zero”, because cut to double-digit years later and I’m attending funerals all the time. And I have friends that are awfully sick. So the air was not safe at ground zero, and the experts didn’t know. And we’re seeing it today with Coronavirus. Do we wear the mask? Do we not wear the mask? What kind of mask do we wear? How is this spread? How is it not spread? You can fly on a plane. You cannot fly on a plane.

So all of those things – I don’t think that the quote on “experts” are intentionally going out and saying, “I’m going to lie to these people so that a lot of people would get this thing and die”, but I do think that they really believe, that that’s what they’re saying. But they’re not sure. Well, it’s the “not sure” part that they don’t really tell us. So we’re not taught to really think critically anymore in school, and we’re taught to take what’s given to us and go follow it. And you can still be very respectful of people, and the experts are very smart people, and you can still be respectful of people, but not just take everything they say as the Bible. And I would urge you not to take everything I’m saying. This is my experience. This is one person. So I’m hoping that this will spark some in people’s minds that, “Hey, I’m not the only one talking about it.” And if you start researching it, you can see that pretty quickly.

Theo Hicks: I think my last one is interesting. I’ve talked a lot of people who say that their best ever advice is — they have all the qualifiers, they say “Don’t listen to every single person [unintelligible [00:17:32].11] You’re going to find people who say, “Do not do this specific niche”, or say not to get into real estate in general, and they have all their different reasons why… And to, as you mentioned, be respectful, but make your own decisions.

Holly Williams: Correct. And there are many, many, many ways to invest in real estate, and in anything. And that goes back to looking at your values, looking at what values we were given, and the map of the world that we were given. That maybe it doesn’t work as well anymore.

So my husband, for instance, was taught and it was drilled into him that mortgage is bad, mortgage is bad. You have a paid-for house. Mortgage is bad. And you know something? We have two houses that are paid for. I know that that’s probably not the best use of that equity. I know all of that. I know all about pulling out money. I know all about how to do that safely. But you know something – if it were me, I would do that. But it’s not just me. So if it’s going to cause my husband to stay up at night and worry, it’s just not worth it.

So you have to really understand, I’ve dumped a whole lot of ideas from my map of the world or whatever that I was given, and that’s one of them that I realize is probably not the best financial decision… But not everything in life is a financial decision.

So you really have to decide what you want, and what you feel comfortable doing, and the kind of life that you want to live. I get it, I’m surrounded by all this positive thinking, and I’ve done all of that… But my husband isn’t, and he’s not going to. It’s just not worth it, right? Because I love him, and I don’t want to cause him to be super-stressed about anything. So that has value to me.

So I think it goes back to what kind of investor do you want to be? Where are you in your life? And where I am in my life is about cash flow and capital preservation. And real estate syndication is the way that I do it, and the way that a lot of other people do it; it’s all about not losing money. I need that money for retirement. So to me, that’s the kind of real estate investor I am. There is no doubt that you can take a burned-out building, and it needs a doctor, and go in and rehab it, and make it beautiful, and sell it, and triple/quadruple your money. I’ve made money with depreciation… But you’re depending upon the market. So I don’t do that today.

So it goes back to your values. But what’s key, I think, is to understand that. I know what I’m doing when I’m not paying off my mortgage. People say, “Oh, my God, you’ve got all this equity. What are you doing sitting on it?” And I’m like, “Hey, listen, that’s a personal thing.”

So I think that you have to really understand what’s important to you and what’s not. And the wealthy – that’s really all they care about, is what’s important to them. And a lot of it is maybe because they are wealthy. But if you want something, you’ve got to study people that have what you want, and do at least a little bit of what they’re doing.

Theo Hicks: Exactly. Well, Holly, I wish we could have gotten through more myths, but it is what it is. I think you said some really good ones. You said a lot that I probably missed, so it’s definitely worth relistening to as well as getting her book.

But the ones I did pull were number one, the mindset and realizing that the wealthy have a certain mindset that they got early on in their lives, most likely. We’re taking about people with generational wealth… And that was passed down to them, as opposed to most people are just getting their mindsets from school, from their family, from TV, from whatever. So realizing that and understanding what that wealthy mindset is, and getting rid of your values and adding their values.

The other one was the scarcity versus the abundance mindset. So the myth was that when you’re going out there doing a deal, you’re taking that deal from someone else, as opposed to having that abundance mindset, which is—

Holly Williams: There’s always another deal.

Theo Hicks: Exactly. What the wealthy have. And you gave a good example with, if you were to give it someone who doesn’t have a wealthy/abundance mindset a bunch of money, they’re just going to lose it all. Whereas the saying that “the hardest million is the first million” – because once you make your first million, you know how to make it again, even if you lose it all.

The other one was the tax code. So the myth is that the tax code is just telling you how to pay your taxes, when in reality, it’s something that’s meant to incentivize people to take certain actions to grow the economy, and the incentive is paying less taxes.

The other one was the myth that the air is safe at ground zero. And the thing there is that the experts while they’re smart and should be respected, you need to have critical thinking skills, and make your own decisions. So if someone’s telling you to not do a deal, just because they’re someone you perceive as an expert, doesn’t mean you should just listen to them; you should still pursue it further. Because again, they might have different values, and things that might be important to them that aren’t important to you… Which goes into the other myth you said, which is about the mortgage being bad, being good. And the lesson there was that just because something might be good financial advice doesn’t mean you should blindly do it. There’s other factors that come into play as well.

In this case, for you, you believe there might be a better use of that money, but it’s not worth doing because it’s something your husband isn’t comfortable with. And your husband is valuable to you, so that is one of your values. I thought that was really interesting and important as well.

And then for all those myths, you said they all kind of come back to the values. So again, make sure you pick up her book, it’s called “Hidden Investing”. I’ve got the link, it will be in the show notes.

Holly, I really appreciate talking to you, and Best Ever listeners, as always, thank you for listening. Have a best ever day and we will talk to you tomorrow.

Holly Williams: Excellent.

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