Today we have Holly Williams on the show! Want to keep more money and pay fewer taxes? Holly Williams is here to show you exactly how to do just that. She has mastered the art of investing in multifamily real estate, has saved thousands on her own taxes, and can teach you to do the same. Listen and learn!

Table of Contents:

• Where To Listen To The Podcast
• From Market Research Executive to Multifamily Investing
• Keep More So You Don’t Die Broke
• The Downside of Multifamily
• Cogs in the Wheel
• Debt Investing and Equity
• Keep More by Learning How to Think Critically
• How To Reach Holly Williams

From Market Research Executive to Multifamily Investing

Darin: Holly Williams lives on the East Coast in New York. She spent 25 years as an executive in advertising and market research. And she then found a way to invest in private market investments. She started saving taxes and keeping more of her income. That prompted her to want to share these opportunities with others.

So this is actually the first time that Holly and I are speaking together but I'm so excited. We just spent five, ten minutes chatting away and this girl's got some spunk. But we were both speakers at Dan Handford's multifamily conference last summer in Charlotte.

Holly: It's coming up again.

Darin: It's coming up again in June. I was looking forward to getting to know her a little bit better so I asked her to come on. And so with that, can you share with the listeners how many properties and how many units you're invested in?

Holly: Well, so probably north of 15 syndications as an LP and a GP. I've been doing this a little while. And before that I was an advertising/market research executive here in New York. I live in New York City and I fell into this.

Darin: This is a great story.

Holly: I thought I was the only person that didn't know about this.

Darin: About syndications.

Hidden Investing, What The Wealthiest 1% Know That We Don't

Holly: Yes. I was an accredited investor for years, I had no idea what that was. And so it was a gift. I tell people when they ask me, "How'd you get into this?" I say, "Joe Fairless needed money. He was a broke kid."

Darin: A lot of people know Joe Fairless and he's done very well for himself in the multifamily world.

Holly: He's a good, close friend. So yes, that's kind of how I got into, it was just to help him. And I didn't even know what I was investing in. Then when he asked me to help him on a couple of things, I started calling my friends that are much, I mean, forget it, they're rich and they didn't know anything about this either. And so a big light bulb went off because around the same time, a couple of years earlier, my parents had basically spent all their money through really no fault of their own. They did what everybody taught them and told them to do.

Darin: What were those things? I mean you mentioned that you wrote a book.

Holly: I did. I've written a book called Hidden Investing, What The Wealthiest 1% Know That We Don't. And basically, it's an easy read. It goes through 10 myths. Although now I have 11 because my husband turned 65 and let me tell you about Medicare, what a scam that is. But anyway, I digress. So that's not in my book, but it will be in volume two.

Darin: I'm not there yet, but I'm 52, so I'll be paying attention.

How We Think About Money Is Wall Street Driven

Holly: We will talk. So what I found in raising millions of dollars and doing lots of deals was that we are so brainwashed and programmed to think about money in a certain way. To think about investing in a certain way and it's all 100% Wall Street driven. So we're taught things like get a job, go put the most in your 401(k) and the 401(k) grows tax-free. Well, all we hear is tax-free.

But what I found out through my parents was that you have to take that out and when you do, it's taxed at full income, it's not taxed as capital gains. If you had taken that money and invested in a mutual fund even, which is basically what you're doing with the IRA, you would be paying capital gains rates. But we pay full, it's taxed as regular income. So you put it in when you're making no money and you're young and then you don't need as much money when you're retired. That's ridiculous, you need more especially what I've learned about Medicare. You need more money.

Darin: It's true too. I mean, I'll give you an example. Look, I've been in this for four or five years, but beforehand I am still a business owner with another business. But with that business I would try to max out my SEP-IRA which was at the time, I don't know, 50 grand or something I could put in a year.

Holly: Yes, which is great.

You Need to Keep More Money Now

Darin: And I was thinking like, "Okay, I'm saving that on income tax in this year." But the part of the false thinking is people say when you pull it out, your tax rate's going to be lower. Well, look, I want to have abundance. So when I pull it out, I'm expecting it to be higher.

Holly: I mean, do you want to downsize to a tiny condo and never go anywhere? Okay. But if you want to take the grandkids to Disney World and have a lot, I'm sorry, but you need more money now than you did when you were working.

Darin: Right. So that's definitely one of them. And so that I cut you off, that was number two.

Holly: Well, I mean it was, I go a lot into mindset because that's what really helped me. When you're a corporate fat cat.

Darin: Is that what you called yourself?

Holly: Oh, I don't know. I say I clawed and scratched my way to the middle. But your job really is to get your clients promoted and to get your boss promoted. That's how you move up the corporate ladder and all the games and all of that kind of thing. And that's all we know because you're smart, you're a business owner, all that. But yes, I grew up in a middle-class household and don't quit a job when you have a job and all this stuff. And I was invested in a lot of numerous multifamily deals and making a very decent income through those investments. Then I was involved in, though it's hard to do this when you have a job. If you want to be on the active side, you really have to leave your job.

How the Rich Gain and Keep More Wealth

Darin: As an LP, it's easy to do. You just wire your money into a deal and you go about your business.

Holly: It's the greatest thing ever.

Darin: Yes. And then all of a sudden three, four years later your money doubles and you're like, holy cow, that's like magic.

Holly: Yes, but we're taught things like the higher your income, the richer you are and the wealthy don't think about that. They don't want income. They want cash-flowing assets that have depreciation and tax strategies because our tax code is meant to incentivize us to do things that are going to help the country. That's what it's meant to do.

Darin: Spend.

Holly: Yes, if it was just meant to tell me how much in taxes I needed I mean, we get rewarded for doing things that the government wants us to do. Right or wrong, I didn't write the tax code. So our whole thinking is really messed up where only one person can be the CEO. Well, that's true, but there's lots of companies. If somebody else does well, then that means that I can't do as well. But that's not true. That's the scarcity mentality and that's not how the wealthy think at all. And so you really have to remove those limiting beliefs to me before you do anything because otherwise this sounds like a scam.

Darin: I agree. And people in this world, people that I've come across have really opened my mind from a mindset perspective. When you talk about how we were brainwashed or how we were and I'm not sure if I would use the word brainwashed.

Keep More So You Don’t Die Broke

Darin: But we were trained a certain way to think a certain way, is that I always thought they always pitched this, build a huge nest egg and how big is your nest egg? And then when you retire, you're going to pull from that nest egg. And then when I got involved with real estate folks, people started telling me, "Look, you could look at it differently and buy cash-flowing assets. Those assets generate cash flow that you use for your lifestyle. And as long as your lifestyle is underneath that cash flow, it doesn't matter how big the nest egg is. And then as you buy more assets, you have more cash flow, you can have a higher lifestyle."

Holly: So our system is designed for us to die broke. So every time every financial calculator, every retirement planner, the very first question they ask is "How long do you expect to be retired?" So the whole thing is based not upon building generational wealth, it's try not to die before your money runs out.

And we don't think about this and I do think it's brainwashing because it's just like that's what everybody talks about your whole life, my whole life. I mean this is just me. But the wealthy grow up in households that talk about generational wealth and talk about life insurance and how you can use that as your own bank.

Darin: Even just your website address, Keep More.

Focus on How You Can Keep More After Taxes

Holly: Well, exactly.

Darin: Their focus not as much on what their income is, it’s how much they get to keep afterwards, after paying taxes.

Holly: That's correct. When I left my job-job, so it's so interesting because there was no reason for me to stay in my career here and there really wasn't. But quitting my job, I mean I had to hire a coach and I was terrified. Oh, it was just insane stuff that we are just programmed.

Darin: In between the ears, man.

Holly: It really is. And so when an investor says, "I need to talk to my financial advisor", forget it. Listen, financial advisors are great, my good friend, I feel bad because every time I talk to him I take more money out. But he gets this now, he didn't get too much of it 10 years ago when I first started doing this, but he thought I was crazy. But then, so I write about him in my book and the challenge is I didn't learn about any of this in business school.

When you think about private investments, you think about Bernie Madoff, we're taught that Chase private client, you've made it, forget it. What people don't know or I didn't know, I'll speak for myself, is that there's a whole division of the bank, Chase Wealth Management and you need $40 million to get in there and you need 10 million of it to be liquid. And then you can get into the good stuff.

Business Schools Don’t Teach Us How to Keep More

Holly: And so what we're doing with multifamily syndication and they buy syndications, that's who owns these things. Hedge funds, the big wealth management. Goldman Sachs has one, all of them. And so they call it wealth management, but they're really brokers. They really want to sell you stocks and sell their bank services because that's how they make money. So that's all they know because they learned that in school too.

Their business school didn't teach them any of this either. And then when they got out of school, they joined Merrill Lynch's training program or Fidelity's training program and they taught them all about their stuff. And so all they know is their stuff just to put you in.

Darin: Yes, whenever you say financial advisor, I think that whatever the financial advisor has in their kit to be able to sell, that's what they're going to recommend. Because whether they're good, that's what they know.

Holly: Right. And I'm in all of that. I mean, it's not like I hate the stock market and everything, but people don't understand the stock market for the average person like me and you. Warren Buffett, is not going into his e-trade account and buying stocks like I am. He's going in with the wealth management people. He's going in and he's buying the company and getting on the board and all the hedge funds are going in and getting the companies started and growing and taking over another one.

And by the time that stock gets to the secondary market, that's why it's called the secondary market. I didn't know it was called the secondary market because all of the Goldman Sachs' original investors have already gotten out. So you're buying what they just got out of.

We Are Trained to Work in a Company

Darin: Yes. And so the common folk like most of us have been trained to work in a job or a company, is the stock market. When if you read about family offices and the private, they do have an allocation to the stock market but then they also have an allocation to alternative investments.

Holly: Without a doubt. And people say, "I'm in Vanguard and it's no load and they don't charge me a fee." Oh, yes, that's how they afford all the advertising. See, the terms and conditions on a mutual fund is, forget it. They can do whatever they want and there's fees all over. Their paying for every copy they make in the copy machine. It's just that when they're saying no fees, they're talking about their little management fee, but there's all these other fees in there. That's why the stock market returns 10% and you'll get 6 or whatever.

Darin: You don't seem to have fear because you ended up doing a big deal with Joe Fairless when you didn't even fully understand investments.

Holly: Oh, I was scared to death.

Darin: You were scared. Okay.

Holly: Oh, yes.

Darin: I think that fear is partly what stops a lot of people from getting into the alternative investment, into the private investments, into transactions like multifamily syndications and other types of deal is because you don't know what you don't know. And so that prevents people from taking the steps. So when you talk to people, how do you get people comfortable with taking a chance?

Learn to Keep More by Choosing Who You Listen To

Holly: Well, so to me, the only way I know how to do that is to just share my experience and so they've watched me. It's so interesting, I came from ad tech and I was a relatively early AOL employee and went to go. And I thought all these people would just give me money and they would be thrilled to invest in this. But to them, you see, this is, first of all, they don't understand it but they want to invest in ten startups. They want to get on the board and they want to do all this. And then nine of them will fail and one of them will hit and they'll get really rich. This is very pedestrian to them.

But the older people are getting in there seeing me and others, pedestrian it sounds better and better the older you get because what happens is that the stock market's great, it's just that they're telling us to hold for the long haul and they're trading in milliseconds. They're putting us in a mutual fund and because they work at the company, they have access to the stuff that all the really wealthy people have. So you're listening to people that aren't doing what they're talking to you about doing.

Darin: The other thing I think they don't really talk about as much is the volatility. So I mean if a stock goes down 50%, well in order to just get back to even, it has to go up by 100%. You don't have the leverage that you have in these multifamily deals. The equity is only say 30 or 40%. And so the property doesn't have to double in value.

What Happens to People Who Invest in Stock Market

Holly: No, it doesn't.

Darin: For the equity to double in value.

Holly: And I don't even buy for that. But we've been very fortunate in that we've had a lot of doubling and equity. With the stock market the government makes you take out your 401(k) too. And you see what happened in 2008, even if you were super safe, you still were down a lot. When it's down, you have to sell the stock to get the money. It's gone. You cannot recover it. So if you were forced to take out money or need it to live on or whatever and the stock market is down, it's gone. You cannot make it up. And that's what happens to a lot of people because the stock market goes up and down and up and down.

It's so funny because I have a good friend that told me early on, he said, "I don't understand real estate, I understand the stock market." I'm like, "Are you kidding me? What's Apple's margins in China? What is the free trade agreement or whatever have to…" They don't know. We don't have any idea. It just goes up and down and up and down and no rhyme or reason. They can have a good quarter and the stock goes down or whatever.

Whereas we buy an apartment complex, bunch of people all get together and we buy an apartment complex and the people pay the rent. Then we take the rent money and we go and we pay off the loan and all that stuff and all the expenses and then whatever's left, we distribute, you make money. So 100% of the time, if that number is a positive number, you make money.

Darin: Right.

The Downside of Multifamily

Holly: 100% of the time, if that number is a negative number, you're not going to make money. But most of the time you're not going to lose the principal because that's the whole thing. It's capital preservation and keeping that because you don't have to sell the asset to get the cash flow and the income to live on.

Darin: And in addition to that, one of the downsides of these deals, a lot of people will say is the illiquidity. You put your money in and you're not going to get it back for 3, 4, 5 years. But I saw during COVID, the stock market tanked and I had investors in deals, they couldn't get their money out. There was no ticker symbol.

I know for sure that some of them would've sold and taken a loss and instead we held on. Then the market got better and we sold the property at a significant gain. And all those LPs are so much better for it.

Holly: Without a doubt. And you're getting the other aha moment. So we go along and I'll just talk about me. I went along in my career and made a little more money, a little more money, a little more money.

Darin: I want to be your friend.

The Racket in Taxes That Prevents You From Keeping More

Holly: Well, not a lot. I want to be my daughter is who I want to be. My daughter is who I want to be. But so we go along and you get these 1099s at the end of the year. If you do anything, because I knew the 401(k) you needed more. So I was also saved on top of that, and put it in the stock market, of course. And you get these 1099s, "Wow, I made $2,000. Wow, I made 8,000." And so "Oh, isn't that wonderful?" And you hand it all over to your accountant and you pay taxes.

I got a 1099 that said, "You owe $60,000 in capital gains on this money." And I went like "Whoa, hold the phone. I didn't take any money out." You've made $60,000. You owe 30,000 in taxes because this is New York City, which that's a whole other topic that we could have a whole other podcast on. But I'm like, "Wait a minute. Whoa, I didn't take any money out."

Darin: You didn't even take any money out but they were buying and selling.

Holly: They were buying and selling and they would get paid for every transaction. It's a racket, man. And so I understand that. Then they keep the cost basis and you make it up. Like whatever. But I mean, that's nonsense.

Holly’s Big Aha Moment

Holly: That's ridiculous. So whereas when I did my first syndication, I was collecting a check every month. Every month, like 600 bucks or whatever it was, I don't remember. And then my K-1 at the end of the year, instead of that 1099 saying I made $60,000, this said I lost $60,000. And I was like, "Oh my God, this is crazy." So I had a couple of rental properties and it offset that and that was the big aha moment.

Darin: What do you mean by that? So it's all, I mean, I get it, but so you had other rental properties that had a profit on them.

Holly: Correct.

Darin: So you were able to take that loss and then?

Holly: Correct, because it's passive income.

Darin: So not only did you not pay tax on all the money that you got from the syndication, but you also got to cover income that you would've had to pay on this rental properties.

Holly: Correct. We were sending my daughter to private school with the rent from our Brooklyn Four family house, right? And it was crazy. We were paying taxes on that and this offset that. And I'm like, "Oh my God, this is-"

Darin: That's an aha moment.

Holly: That was an aha moment. And it's so funny because it's so hard to raise money when you first start out here, but my biggest thrill is when people call me and they say, "Oh my God, you were right. This is crazy."

Don’t End Up Like Your Parents

Holly: And that makes me so happy because I don't want people to end up like my parents and it's a mess out there. It's a mess. You're just throwing it to the wind. And we're also brainwashed that 10% is good or 6% is good, or buy this annuity and you're guaranteed five or 6%. That's crazy if you really think about it.

They're so good at selling you and they're not lying. You do, you make 6% and of course it's taxed at full boat it's all that stuff. And my daughter, we have one child and when she was born in New York State, everywhere they have these 529 plans, right? So it wasn't bad at all because in New York you could take 10 grand and put it into one of these things every year and it's a tax write-off, just state and local taxes which helps. Because they rape and pillage the land on the state and local taxes. So every year, from the time my daughter was born, we would put 10 grand into this 529 plan.

So cut to she's 18, she's ready to go to school, she's got this great amount of money to go to any school she wants to but all that whole time she had years where she made 10% or whatever, the entire, over the life of that 20 years, the return was 5.9% or something like that. Now I got the tax benefits. And so there were some additional things and I didn't know any better.

Make a Mistake of Keeping More

Holly: And if you're going to make a mistake financially, make a mistake where you end up with $350,000 at the end of it, right? I tell people. But if I had to do it over again, I would've had 700,000. Trust me. And so it's my brother, I have a brother and he was watching from the sidelines and all this.

Darin: Does he live near you?

Holly: He's in Houston. So I grew up in Texas. I grew up in Houston and I went to school in Lubbock and worked in Dallas for a little while. So I'm really a Texas girl actually, but I had no intention of staying in New York for 30 years. So my brother, I said, the only regret is that my parents that I could have really helped them, that they'd known about this. And Ken, my brother’s name is Ken, he finally invested after I was in this five or six years.

Darin: Your brother did.

Holly: Yes, he does two a year and he's got it going on and he's a believer and he said they wouldn't have done it.

Darin: That's why I was going to ask you, would they have done it?

Holly: They wouldn't have done it. And that's why I wrote the book because they wouldn't have done it because they didn't believe what I'm talking about, what we're talking about right now.

Cogs in the Wheel

Holly: And to make that leap and I probably would not have invested with Joe early on if I hadn't watched my parents. I knew it was a scam. Not a scam, but I knew something was dreadfully wrong then. So once you know, you can't not know. And it's interesting because I don't have a degree. My degree's in marketing and advertising.

I have asked really smart Wall Street people and all that, if you read this book and if you find anything that's not right, please, I even say it in the book. If anybody find, I'm not a professional, do your own research. I mean everything I'm saying, everybody out there don't believe a word I'm saying, go do your own thing. But I asked them and I haven't heard from anybody. Because they're not lying. It's just that we just don't know because we are only taught what they want us to.

Think about it, the school system, I mean, we're trained to be cogs in the wheel. We really are.

Darin: On top of that, even in the multifamily syndication space, you have this definition of accredited investor.

Holly: Just one more hurdle. It's ridiculous.

Darin: Right. And so now you have a lot of syndicators that they'll only take accredited investors because it eases up on the regulation and the exemption. And so now it's maybe you're not the uber, uber, uber wealthy, but you still have to have a decent net worth or make really good money or you're not even allowed to invest.

How Banks Keep More of Your Money

Holly: It is pretty crazy. And you can't even just look at them. You see, it's really a club. I've found out it was a club and I'm so very grateful to have, it absolutely changed my life and changed a lot of other people's lives. So I'm starting a podcast, it's launching next week called Hidden Investing.

That's why I'm doing it is to just like you're doing, just spread the word to more and more people because they talk about diversification. Well, diversification to Wall Street people are like different types of mutual funds like big companies, little companies, foreign companies. But it's all stocks, it's not diversification. And today, yes, I'm in stocks, but I'm also in an oil fund and I've got a life insurance policy that I save through. But we even got an insurance license because I am such a believer in it. Because most of the time you say life insurance and you think slimy salesperson. This isn't what we're talking about. This is what the banks do but you do it yourself and instead of keeping it in the bank.

Darin: Look, I was always taught that term, term, term, term, term, term, term life insurance.

Holly: That's what they say because they make more money to selling it.

Darin: Cheapest thing out there.

Holly: They make more money selling it.

Selling the Cure for Cancer

Darin: Yes. So I talk about the ripple effect. And when you first started getting in, you were like, "All right, there's got to be another way." And you found it and now you're going and telling other people and the people that are listening, there might be somebody that's just looking to get in it. If you're anything like myself or Holly in the beginning, look, that's the way you think as you think, "How can I grow my wealth for my family and how can I have additional streams of income?"

But then as time goes on, it's almost like finding a cure to cancer. You want to tell other people there is another way. And yet there's some people that look at you like you're trying to sell snake oil. But you're just trying to tell other people that there's another way for them to do it.

Holly: So I've just found attraction. I have friends that just won't do, they believe that they have a nest egg and that 5% is all they need to have a happy retirement and that they can sleep at night doing that. They believe that if it says Fidelity, it's safe. And that five or even if you're making 10%, by the time you retire, it's half that because the dollar, they keep printing more money and it's worth less and less. And so there's all of this stuff they just don't teach you in school.

Understanding Inflation

Darin: So talk about that, inflation. I've heard of inflation, but we're going through it right now. I didn't really fully understand it.

Holly: Oh, I know. I didn't either.

Darin: But now you hear, like I've got two kids in college and my daughter is like, "Oh my gosh, can't believe how much food is."

Holly: What a concept.

Darin: Yes, right? Well, now she's got a budget instead of just having us pay for it and it's in the fridge. But inflation seems like, "Oh, yes, inflation, inflation, inflation. I get it." But when it comes to investments, your investment really has to grow greater than the inflation rate or else your purchasing power is going down.

Holly: It's not going to. And unless you can time the stock market and good luck with that. I've made a lot of money in the stock market and I've lost money, but the money I've really made is what I've got worked for a startup company and gotten insider stuff. But I digress. So I think that we only know what we know. And you see the wealthy know all of this, even from the time they come out of their mother's womb, they're hearing this stuff. But I didn't know to tell my daughter until she was older.

Darin: Right. I mean, now my kids, I tell them when I get out of college, buy a duplex or a threeplex or a fourplex in your twenties, you're a first-time home buyer, three whatever it is, three and a half percent down instead of 20%. I wish somebody had told me that. Now they still got to go do it. I don't know whether they will or won't, but I wish somebody had told me that.

Buy Real Estate for Appreciation or for Cash Flow

Holly: This is what I've really learned. You can buy real estate for appreciation or you can buy it for cash flow. And they're thinking about Bitcoin the same way, I buy it low, I sell it high. I want to buy a house and I want it to appreciate, forget that. If it appreciates, great. But what you want is something that when you buy it and after all the expenses are done and everything, you have a positive number at the end of the day, the end of the month. And so that is what I want. If you live in New York, if you live in L.A, if anybody's listening to this and can find me something that's cash flowing.

Darin: So I want you to explain that a little bit more because to some people, all right, so say it cash flows and I'm making $200 a month. Well, that doesn't sound like a lot of money, right? But somebody else is paying down the principal.

Holly: Correct. And at the end of the time you hopefully own a home. And so that's one way to do it. What multifamily does is it just multiplies that by 100 x, if you've got a 100 unit apartment complex. So if you have a single family home and you're renting it out and you're making $300 a month or whatever and then the tenant decides to move well, so it's at least a month that it's going to be empty because they don't move out one day and you move the new one in. So there you've lost a month's rent or whatever.

Darin: And you went from 100% occupied to zero overnight.

Holly’s Methodology to Keep More

Holly: Right, correct. And so I always say rent where you want to live and buy where it makes sense to buy and invest it where it makes sense to invest. What I've found is that I've made more money passively investing in apartment complexes and you don't have to do any work. That's the whole thing. You have to be able to evaluate deals. I mean, there is a learning curve. You don't want to just invest like I did.

Darin: Right, exactly. I was going to say that. Look, you want to know the person. That's good. That's a good thing that you knew and trusted Joe. But I probably wouldn't have used Holly’s methodology on not having any idea on how the investing works.

Holly: Well, by then, I really had a little bit of an idea. By then I had seen the K-1, I had seen the losses, I had seen what this will do. I was learning a lot. So by that time I wasn't completely clueless. Now when the first one, I was completely clueless. I had no idea what I was doing, but I didn't put that much money in it. So anyway, I think that this is just an amazing way to invest. You see there's debt investing and there's equity investing. Now what's confusing is that they call the stock market equities because theoretically, I guess you own part of the company, whatever, you really don't.

Debt Investing and Equity

Holly: But, okay. And so there's debt investing and equity. So most people invest debt investing. So loaning people money, capital gains, all of those things that come in your 1099. Debt investing is actually buying into a real asset such as a business. Such as an oil well or a home or a multifamily or an office building or something.

So you're really buying the real estate. You're not just loaning money so they can flip the house. You are an owner of the apartment complex, so you own a small percentage and you really do have a small percentage of it and you really do own it. And so that's the difference. So you get the benefits, tax-wise, of buying a single family home or a duplex or a triplex. But the risk is spread out over a lot of units and you're not responsible for it. It can't turn into a money pit either. That's the other thing.

Darin: It can't or usually doesn't it?

Holly: Well, you're never going to lose more than you put it in, I'll tell you that. You can go in and put some money into a house and it can turn into, oh my God. You can end up having to pay a ton of money to salvage the thing. So it's an LLC and there's some legal things that are good about syndications as well.

REIT Is a Mutual Fund

Darin: Yes, if you compare, some people think, "Okay, well, I'll just buy a REIT." Well a REIT is another stock. When Holly talks about tax benefits, so if you invest in one of these syndications, each limited partner, general partner is going to own a piece of the LLC that purchases the asset. And then at the end of the year, depreciation is going to be allocated across all of the partners, whether they're general partners or limited partners. So if you're a limited partner in a syndication, that's where her loss came from, her $60,000 loss.

Holly: And all the costs.

Darin: Yes, because it's flowed down to each of the partners. But if you buy a REIT, then you don't get the benefit of that depreciation.

Holly: The REIT does.

Darin: The REIT does.

Holly: All REIT is a mutual fund that owns real estate and Wall Street is getting the tax benefits. So people don't understand that either. So in all you hear about with private funds is Bernie Madoff. That's all you hear.

Darin: Yes, I mean look, I think there's things that are scary about getting into this world.

Holly: Oh, yes.

Darin: The terminology. Syndication sounds really complicated. That's for somebody else. It's just a bunch of people coming together, buying an asset that they couldn't buy on their own.

Holly: Really what it is. And the stock market's scary too. I have a friend who's a plastic surgeon and he's got a very high income and all of his money's in cash. Oh my God. And again, his family came from Cuba. He was brought up to save, save, save.

Multifamily vs. Stock Market Investing

Holly: He's terrified, his parents saw what happened in Cuba. And he doesn't trust whatever. So he puts all his money in cash so he can sleep at night. But if you want to really build generational wealth and make your money instead of the $350,000 at the end of the 18 years, you have more than that, then this is one way to do that that I have found, at least for me, has been a wonderful learning experience.

Darin: Absolutely. And you get to pick the people that are running the deal. Where, look, if you buy Amazon stock or IBM, you see a few of the executives in some write-ups, but you don't really know the people that are running the business. Here if you like Holly, you call Holly up and you're in one of her deals. And you can call and say, "What's going on? I got the last monthly email." You get monthly emails with what's going on at the property.

Holly: That's exactly right.

Darin: And you can call up and say, "What's going on here? I see that this is happening." And not that you as a limited partner are going to be able to take control of the deal, but you have access to the people that are running the deal that could help educate you.

Holly: Well, right.

Darin: You don't really have that.

Holly: And it's so interesting 'cause there are ways you can structure these things and of 506(c), you can only take accredited investors, but you can advertise it. 506(b) you are allowed to have some sophisticated investors or whatever. So we usually use do accredited investors because it's just easier from a compliance standpoint and all of that.

Keepmore.com

But I won't let anybody invest with me unless I know them. Because what you want is, even though I don't have to, I can advertise, I can buy Facebook ads and get investors or whatever, but I am not going to do that. If you sign up on my website, which you should.

Darin: Keepmore.com.

Holly: I call you. We have a conversation before because I want you to understand my mindset and how we run these things because we're kind of together for five years.

Darin: When you say together, I've played golf with some syndicators and I'm like, "Hey, have you ever sent out an invite and then you left some passive investors off the invite?" And it goes both ways. You get to choose who you want to do business with as a syndicator and the syndicator can choose who the investors are in the deal as well.

Holly: That's exactly right. And so I want to make sure that this is not the house payment money or the college fund. Because there are things that we want to do. And you want, for instance, COVID hit. So we had our government telling everybody that they didn't have to pay rent.

Darin: We were all scared, right? What are we going to do?

Holly: Never have I had the government tell us that, tell anybody that we didn't have to pay rent. And so we were like rut row. So the first thing we did for everything, we said, "Let's save the cash." Now we always have reserves. We could carry the debt load for a year or so, six months to a year.

Plan How to Succeed and Keep More

Holly: I have a lot of rules around these things, which is why I only did one deal last year, but I'm about to do another one and it's been the first one that's fit my little rules. But the first thing we did was we said we're not going to do distributions until we figure out what the heck is going on. And then we found out as time went on that it was going to be fine because people didn't want to move and most people pay their bills.

Darin: Yes, absolutely.

Holly: So it was fine, but we didn't know that. And so you want people to understand that we had the money, we could have gone ahead and paid it. But it was prudent to just take a step back and go, "Wait a minute, let's just see what this is. We've never seen that in the market." So you want people to understand the business plan and what you would do in certain situations because you plan for this. We didn't plan for global pandemic, but we planned for something to happen.

Darin: Right, exactly. Where do you go from here? Because we talked about you're in New York, you may be moving to Florida at some point, you want to get the word out, you want more people to get involved. It sounds like you don't necessarily need to be doing this. I mean you could be sitting on the beach drinking a Mai Tai but you choose to.

Holly: But it's so much fun.

Keep More by Learning How to Think Critically

Darin: I think this whole conversation was all about, look, people need to take accountability for their money. I kind of thought to myself and this is part of the, whatever you want to call it, the brainwashing or the training or whatever, you put 10 or 20% over in the stock market and then you just forget it and that somehow it's going to grow. But what I've learned is that doesn't always happen and you're responsible for your own money. So you really need to manage it and you really need to figure out where are you going to invest it and who are you going to invest it with. I think that this conversation is about getting everybody to be accountable.

Holly: And you should be able to do that.

Darin: Right, exactly.

Holly: You should be able to do that.

Darin: Not only be able to, but you should hold yourself accountable to do that. Because I think that people, the government, whatever, just wants us to just put it aside and forget it.

Holly: So that they can make money trading it back and forth, back and forth, back and forth. And yes, that's what we're all taught to do. So if I can leave your listeners with anything, just learn to think critically and learn all you can and buy for cash flow. I mean you can buy for appreciation. So you can buy a vacant lot and build a housing complex on it and make a lot of money. You can also lose a lot of money.

Keep More by Investing in Cash Flowing Assets

Holly: So I buy cash flowing assets or I don't. People come to me all the time with deals where it's total reposition, it's not making money. Now they got to throw out deadbeat tenants. I don't even touch it. I don't even touch, build. I'm going to buy this. I've got the zoning approval for this, that and the other thing. No, I don't even do it. I buy for cash. I only bought cash flowing deals and with lots of wiggle room in there to if something goes wrong because it will go wrong.

Darin: Yes, none of these deals, I'm in a lot of deals both as an LP and a GP and very few deals go straight up. There's hiccups along the way. Oh, what's going on here? And then all of a sudden it turns around.

Holly: A lot of work. What's really interesting is that the deals that we've had a couple of where everything that could go wrong went wrong and they've made the most money.

Darin: Have they really?

Holly: Yes, because if you think about it, well we had a deal in Houston that we had a hurricane, we had Harvey where stuff flooded that had never flooded.

Darin: Your property flooded?

Holly: Well, it had never flooded before. It was like, this was Hurricane Harvey in Houston where people were driving around with boats.

Darin: Yes, right. So did your property flood?

Holly: Yes, half the property was under water. It was terrible. Then we had a fire, we had a tornado. But again, if you do it right, you've got income replacement insurance, you've got great insurance coverage that covers everything.

Multifamily Is About Solving Problems

Holly: So yes, we suspended distributions for two or three quarters while we worked all that out. But then the insurance company basically built us a new apartment complex and there was a shortage of housing in Houston. So we filled it up in a nanosecond.

Darin: It turned out even better, right?

Holly: Well, right. And we kept it probably another six months to a year and then sold it and made a lot of money. So it's all about having those plans B and C in place and you've got to find deals where everything does not have to go right for it to work.

Darin: Yes, I've read Sam Zell's book who was probably the top guy in real estate. The whole book was how he's solving problems and creating solutions in real estate. And when I did my first syndication, I partnered with Raj Gupta and he said, "Darin, man, real estate is all about solving problems." But I thought it was like you buy real estate, location, location, location. That's what they tell you, right? But when you're operating a business and there's things that are going to happen and how do you solve those issues. But, hey, Holly, what do you like to do for fun outside of work?

Holly: Well, so before I had my daughter, I was a big scuba diver. I'm going to start doing that again.

Darin: Where do you did you scuba?

Holly: All over the world. We got married later in life and I've been fortunate, I've been all over the world scuba diving.

What Holly Likes to Do for Fun

Holly: Like the Maldives. The Burma banks near Thailand, Micronesia where we did so much of World War II in the Pacific and Costa Rica where the hammerhead school, the Island of Cocos.

Darin: Oh, awesome.

Holly: And the Florida Keys too. The Bahamas too, right? So we've been very fortunate. And so my daughter's going to get certified, so I got to get back in shape and do that. I like to ride my bike.

Darin: You look like you're in shape.

Holly: I ride my bike.

Darin: Well, I think that that's important. It's like, look, most of the conversation is about building wealth, but we're only here for a certain period of time.

Holly: That's exactly right.

Darin: We have to be able to enjoy it, spend it with people we want, spend it with and do things that we want to do. And so I think that part of this is wealth building, but it's also freedom. Freedom to do what you want. Freedom to hang with the people that you want. So I love hearing that you've gone to some pretty cool places.

Holly: I have gone to some pretty cool places and I need to be doing that now. I mean, I need to be doing a lot of things. But it's interesting, these changes in life are just the same thing as the life of an apartment complex, right?

Serve Others by Sharing the Multifamily Opportunity

Holly: For the first time in 18 years, it's my husband and I and we don't know what to do with ourselves. He really doesn't know what he want to do. But I'm having a really great time and I feel like I'm making a contribution and growing wealth for me and my friends and people I care about and people that I don't even know yet. But you'll be my friend.

Darin: That's huge. I would sit in the church pew, well not pew, but we have chairs in there, whatever. And they talk about serving and I always grapple with, I don't really feel like going and picking up garbage along the side of the road. I don't know. But I feel like these syndications are a way to give back to serve. It's like, you're using your talents to build wealth, to build a community that people want to live in that's nice and safe.

Holly: You can make it better as opposed to sitting up here in New York as a spreadsheet, raping and pillaging the land and squeezing every dime you can out of it.

Darin: And then all your passive investors, they have different uses of the money. Some of them like it's retirement, some of it is they want to buy a car, some of it's college education and you're helping them and they may learn along the way too. So I think that, I don't know, whether that's me just wanting, it's a great thing serving in that way or not.

Get Holly’s Book for Free

Holly: It's a great thing and everybody's got assets. Joe talks about it in his book, about apartment syndication and if you want to know how to do this, he tells you how to do it. It's just a matter of doing it.

Darin: Yes, absolutely.

Holly: It takes a village.

Darin: Joe Fairless has a good book on how to syndicate multifamily deals if you're interested in becoming active, definitely pick that up. Now you said you had your book and that you were going to offer this or something.

Holly: Hiddeninvesting.com/book and use KeepMore when you check out and you'll get it, just pay shipping and whatever.

Darin: Keep More. And the website address, if people want to learn more about you?

Holly: They can go to keepmore.com or they can go to hiddeninvesting.com and both places will get you hooked up.

Darin: And if you want to meet her personally, June come and join Dan Handford's multifamily conference.

Holly: That's right. And we have discount codes somewhere there. I do have a discount code.

Darin: I do. Go ahead, use yours.

Holly: I think it might be Keep More.

Darin: Hers I think is Keep More in mine I think is Batchelder. I don't know for sure either.

Holly: I don't know. Keep More's easier to spell.

Darin: Yes, exactly.

Holly: You got to figure something out.

Darin: Exactly. Hey, Holly, I really appreciate you coming on, sharing with listeners. Listeners, I hope that you enjoyed that one. Until next week signing off.

How To Reach Holly Williams

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