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JF1600: Let’s Talk About How To Keep More Of Your Money with Holly Williams

Holly and Joe are long time friends, going back to Joe’s advertising days when they were co-workers. She invested in one of his first deals and never looked back. She discovered a tremendous way to invest her money and not only keep more of it, but also create more of it for herself. Today she’s a full time investor and entrepreneur focused on helping others find these opportunities to keep and create more money. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Holly Williams. How are you doing, Holly?

Holly Williams: I’m doing great, Joe. How about yourself?

Joe Fairless: I am doing great as well, and…

Holly Williams: Happy new year!

Joe Fairless: Happy new year, yes. Episode 55 is when we did our interview the first time you were on the show. That is so long ago, that’s so many episodes ago, so here’s what we’re gonna do – usually, I do a Skillset Sunday or Situation Saturday with returning guests, but it’s been so long… I mean, you were the 55th interview guest on the show; we’re just gonna do a normal episode.

Best Ever listeners, if you recognize Holly, then props to you, because you have probably listened to every single episode since you listened to episode 55… And just as a refresher in case you haven’t checked out episode 55, which is titled “A creative alternative to just renting out your house”, we talked about a lease option that she did with a home that she owned… Holly is a passive investor with a passion for helping others passively invest and keep more of their money.

She’s the founder of MQ Ventures and a partner in over 100 million dollars in multifamily communities. She’s based in New York City. You can learn more about what she does and her company at KeepMore.com. With that being said, Holly, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Holly Williams: Sure, Joe. I have single-family home investing experience, as with episode 55; we had a four-family house in Brooklyn, we’ve done  a couple of single-family homes in other markets – Texas, whatever… So I think that’s how you and I met each other, was through mutual friends in Texas, and a board that we’re on together…

Joe Fairless: Texas Tech?

Holly Williams: …and all of that. So I’ve always known that real estate investing was a good thing. But I had this career in advertising that I liked; I’ve bumbled around from 1990, I came here to New York City and never left. I met my husband, and we have a daughter… And eventually sold my Manhattan apartment and moved to Brooklyn… So I’ve had real estate back and forth, but I had this career, and I did everything that you’re supposed to do.

We all have a map on how the world’s supposed to be, and my map was to go to school, do well, get a job, have a kid, get married, not necessarily in that order… And then I was also taught to buy real estate, but it’s a lot of work. It’s a lot of work to invest in real estate, it’s tough to get started if you have a full-time job… Something usually has to give, especially if you’ve got a job like I had, where I was traveling all over the place… And I was really happy and did okay; I did pretty well… And it was really you – I have to credit you, and I try to give it back and share what I know now – because you’ve really shared… I guess we’ve learned a lot together in some of it, but you gave me an opportunity to kind of help you get going. So I invested with you…

It’s so funny, because my investors today say “Holly, I’m just doing this because of you. I trust you. I don’t understand–” and I’m like “Listen, you’ve gotta understand this.” They’re like, “Well, I understand it, but I’m just not sure, I’m scared”, blah-blah-blah. And they understand it cognitively, but they almost think it’s too good to be true, because we’re programmed to think otherwise; we’re programmed to be given a set amount of choices for investments.

So when you came to me and said, “Holly, I’m gonna buy an apartment complex”, I was like, “Whatever, go for it.” So I invested in that with you and began to learn about this. Then you called me one day and said “I’m gonna buy another one. Can you help me raise some money?” and I thought it would be so easy. I thought that everybody would understand, because I know a lot of people with a lot of money from my career, and I thought, “Oh, I’ll make a few phone calls.” Oh, my goodness…! Because that’s when it really dawned on me that I wasn’t the only one that didn’t understand this; I wasn’t the only high-earning professional — I didn’t even know what an accredited investor was, and I was one… And there was just a lot that I did not know. So the more I began talking about what I was doing, the more people just didn’t get it; they thought it was too good to be true – that’s what I’ve heard so many times.

The reason it’s probably too good to be true is because in a way we’re by-passing Wall-Street. The framework that most of us – or at least I’ll talk about myself – were brought up in is to invest in mutual funds, let professionals handle it, and all of that. And basically, they’re taking cuts all the way down the line, and we are conditioned – at least I am conditioned – to believe that my 6%-7% is good. As a matter of fact, I’m ecstatic about a 6%-7%, or I used to be. Now I know that there are other ways that you can do things.

Now, that said, I’m still in other investments. You shouldn’t put all your eggs in one basket, but this has changed my life, and I was able to quit my job about three months ago, and I focus now on just providing access for people to some these — I know you, of course, and I’ve been totally immersed in this for about the last 3, 4, 5 years, and the more I do it… I know what a good deal looks like, I know how to evaluate it, I know what questions to ask, and I’ve learned all of this over the last little while just networking and talking to people that were smarter than me, including yourself, and it’s a great thing.

So that’s what Keep More is all about, because I was working like crazy… So all this stuff kind of happened at one time. You started doing this… Once you start making a little money — I’m 56 years old, so… Anybody that lives in New York City in much else than a third-floor walk-up with three roommates is an accredited investor. There’s a good chance that you are, right…? And we pay taxes like crazy, and [unintelligible [00:07:50].13] on our stocks, and stuff, and it says “Woo-hoo! You made $8,000. Woo-hoo, you made…”, but we’re paying capital gains taxes on all this.

I didn’t snap to this, and I’m a smart person. I’m not that smart, but I’m pretty smart. And when I got a 1099 that said “Congratulations, you’ve made $65,000 on these mutual funds, and because you’re in this tax hell that you live in, in New York City, you owe $30,000 in capital gains on this $65,000 gain”, and I’m like, “Wait– whoa… Hold the phone… I didn’t take $65,000 out. I don’t have $65,000. You’re saying I made $65,000, but I don’t have it!” And that is what happens in mutual funds. They’re buying and selling stocks and they’re making money all the way around. It says maybe I’ve got 0.75% expense ratio, and all that… Read the fine print.

People tell me that PPMs for passive real estate investing are scary, “It tells you all the horrible things that can go wrong…” Are you kidding me? Any mutual fund…? Forget it, you’ll never invest in another one. You can’t even find them. You have to ask for those… They give you the summaries online, and they’re about 150 pages, and if you ask them, then they send you this inch-thick thing, the terms and conditions of the mutual fund.

I’m not against them, I’m still in them, all that stuff, but I know now a lot more than I knew then, and I know now that I don’t understand; I thought I did, because I can tell you about Kenney Ratios, and stuff… I thought that I understood the stock market, but at the end of the day I really don’t. Apple went down today, right? I don’t understand all of what the trade agreements — what the impact is on Apple’s business. I don’t understand their margins, I don’t understand the worldwide share of cell phones. I’m not in that business, so I don’t know enough to invest in it.

In real estate, I know. I’ve been there, I know the pitfalls, I know what we’re doing to mitigate the risks… I don’t know that we’re gonna make five times the thing, I don’t know what the return is, but I can tell you that capital preservation — when you’re buying for cashflow… I can tell you what happened to rents in 2008, and in class B properties like we focus on they did not go down, and most of the time they went up.

Joe Fairless: That $65,000 gain on the mutual fund – I hadn’t heard about that… So you didn’t cash out that mutual fund, and that’s why you just had to pay $35,000 out of pocket?

Holly Williams: Yeah, because he was buying and selling. And they all do that, we just don’t know it. Look, I can’t tell you, Joe, the number of people I’ve told that story to, and they’ve come back and said “Listen, I’ve looked at my taxes last year, and you know what, I’ve paid capital gains taxes on 20k on a mutual fund that was outside of an IRA.” It’s crazy.

I don’t believe that these financial advisors come to work and say “I’m gonna screw over my clients.” I really don’t. I think that their blueprint is the same as ours. They don’t know that there are other opportunities.

A lot of my investors want to do what I’m doing and tell all their friends, right? And I was on a call recently, and this person was a real estate professional, they were a realtor, and they’d been a realtor for like 20 years in New Jersey. They had no idea that [unintelligible [00:11:30].19] Not a clue. Or the ins and outs, or how it worked, or anything. Not a clue. It’s amazing.

Joe Fairless: When you’re speaking to investors who aren’t familiar with it, what are some of the questions that you typically get?

Holly Williams: They believe it’s a REIT, first of all. “How is this different from a REIT?” They ask “How do you manage the apartments? You’re not in Dallas, you’re not in Tennessee  (or wherever the property is), so how do you manage that? Why doesn’t everybody do this?”

Joe Fairless: What’s your answer to that one?

Holly Williams: Oh, that’s the best. I told my CPA, I said “For the love of God, why didn’t you tell me about this?” My first accountant — I’ve switched accounts, but even my new accountant didn’t tell me, really. He said “Holly, they’re not available. They’re not something that is offered; you have to know someone. You have to have a relationship with the person that has one of these.” So only my friends and family and people I know can even participate. And then on top of that, you have to be an accredited investor, which is an entirely other conversation, which I could talk a long time on that, too.

The point is that this is private money, and this is what the uber-wealthy people are doing. And God love you, and God love all the people that are really doing this, because I feel it’s my duty to tell people that I love… Because I’ve watched my parents — you see the stock market right now; it’s crazy, right? So if you’re in the stock market, I don’t care how safe — as a matter of fact, I moved some of my daughter’s 529 money over a while ago, about a year ago, because I had a feeling this thing was gonna go… And I moved it to something “very safe.” It’s down. She still goes to college, so don’t worry — my point is that if you are relying on the stock market to live on when you’re retired… Remember, I’m 56, right? If you’re relying on that for income, it’s awesome if it’s up, but it’s not so awesome if it’s down… And you can’t live – or at least me; they tell you “Oh, you’re gonna not spend as much money in retirement”, and I don’t know about anybody else, but that’s not true for me. “You don’t need as much money…” – of course you do.

I watch my parents, [unintelligible [00:14:10].02] and I watched them die in 2010 and 2011, while the stock market was down, and I watched them have to withdraw from their portfolios, and they probably in 2008 had half a million dollars, and when they died it was pretty darn close to where — I was giving them a lot of money, too. And to see that, and to see how hard they worked all their lives, and to see because of the timing that’s what happened… And what is so amazing about this is that your principal can grow, but you get income from it.

So through the course of rolling over and avoiding taxes, I’ve been able to pretty much make enough money to more than pay my bills… So I’m focusing now on spreading the word and making a little income to replace that now. So that’s what I do, and it’s working out quite well. I’m having a great time with it.

I suspect just in the last 3-4 months of doing this full-time, and taking the advice of really smart people that I’ve surrounded myself with, that I’ve been able to really jump-start my business, and I feel like I’m doing some good in the world, actually. I really do.

Joe Fairless: Based on your experience in real estate, starting out as a passive investor and now being a general partner on deals, what is your best real estate investing advice ever?

Holly Williams: I think that eventually you just have to pull the trigger. You can analyze and analyze, but everything has risks, and I think you need to understand those risks, and then ask the question “What are you doing to mitigate the risks?” If you ask your financial advisor what they’re doing to mitigate the risks, they can’t answer that.

Eventually, it takes a leap of faith. Everyone is afraid… Not everyone, but at least me. And I think that you have to just trust that you know more than you think you know, and if you’re dealing with good people that have the same sort of life framework… There are bad deals that you can invest in in real estate syndication; there are people that are doing it different ways than I like to do it. So you’ve gotta get with like-minded people, that have the same goals, because that’s what it’s about. You can do fix and flips, you can buy stranded properties that need a doctor, that you go in and stabilize them, you can build ground-up construction, you can do a lot of different things. I don’t know enough about that to invest in it, and I’m not sure I would because it’s riskier than I like to do; I’m not comfortable with it, especially at the age that I’m at… And most of my investors are the same, because I talk to people like me.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Holly Williams: I’m ready.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:17:07].15] to [00:18:15].04]

Joe Fairless: Alright, Holly, best ever book you’ve recently read?

Holly Williams: Recently read… I would say “Never Split the Difference.” Everybody read it, but I did, too. It’s good.

Joe Fairless: What’s something that you’ve implemented in your business from that book?

Holly Williams: I think just to shut up. And I haven’t done that in this interview, but…

Joe Fairless: Well, I’m interviewing you, of course.

Holly Williams: [laughs]

Joe Fairless: I would hope you wouldn’t shut up. Good. Alright… What’s the best ever deal that you’ve done?

Holly Williams: Well, my Manhattan apartment was a good one, and that’s not a syndication… But I would say the best one I’ve done is the first one that you called me on and you were trying to raise money. I try to do what I say I’m gonna do. It’s important to me to do that. So I told you I was gonna raise some money, and I didn’t. It was harder than I thought. I was talking to a friend, “You sold your last company for 350 million dollars. What is wrong with you, why are you afraid to do this?” Now this person is on board, but he wasn’t four years ago, or whatever.

So I’ve put a lot of money into that first deal, and it was THE best thing I could have ever done with that money.

Joe Fairless: What’s a mistake you’ve made since you’ve gone full-time in this business?

Holly Williams: I think every mistake that I’ve made has been more of non-action rather than action. And I don’t even know if it’s a mistake… We do what we do when we’re ready to do it, and when we feel comfortable to do it. I tell investors all the time, “Don’t do this if you’re not feeling it. If you’re gonna stay up at night worrying about it, don’t do it.”

It’s more of a non-action, and I — again, and I don’t think I’m unique… You’re smarter than you think. At the end of the day, there are so many people smarter than me; and if you’re the smartest person in the room, you’re in the wrong room. But I really do kind of know what I’m talking about, and it’s more believing that and internalizing that, and I think that just getting myself in the right framework… Because we are given this blueprint for how life is, and you’re not supposed to leave a high-paying executive job, you’re not supposed to do that. That blueprint is outdated, because it really was okay for me to do that, but it’s amazing how I was afraid; even though cognitively I knew what the answers were, I was still afraid to do it.

Joe Fairless: Best ever way you like to give back?

Holly Williams: I think just sharing… There’s a lot of different ways, but I honestly believe that what I’m doing, providing access to these types of investments to people. I try to give back what I’ve been taught freely, so that’s really the way I give back. I’m beginning to get involved with some things, time-wise… I used to have more money than time, and now I’ve got a little more time, so check with me about a year from now and see what I’m doing time-wise… But I donate to a lot of things.

Joe Fairless: What’s the best way the Best Ever listeners can learn more about what you’ve got going on?

Holly Williams: KeepMore.com. That’s really my mantra of paying way too much tax, and… It’s not that people are being like “I don’t want them to know because I wanna hog it all myself”, but they don’t want you to know because they wanna hog it all themselves, right? [laughs] Because nobody would pay taxes.

Joe Fairless: Well, Holly, I loved the passion… You speak with conviction, because it’s a personal story. It’s one that you have experienced first-hand, you’ve seen the benefits of investing in the type of deals that we put together, and that mutual fund tax thing – that’s crazy, to be taxed on money that you don’t have in your bank, because it’s still in a mutual fund, but you’re still getting taxed on it… That’s insanity.

Holly Williams: I’m putting together a presentation and I have that 1099, and I have the tax return on how much capital gain taxes I pay. It’s really true.

Joe Fairless: Thanks for sharing your story. Great catching up with you again. I hope you have a best ever day, and we’ll talk to you soon.

Holly Williams: Thank you, Joe.

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