Investor Story: Holli and Jim

June 12, 2020
By Rada Milenovici
Posted In: Investor Stories

As Director of EquityMultiple’s Investor Relations Team, I enjoy connecting with investors and learning about their unique stories, experiences, and strategies. Earlier this year I visited a number of investors across the Western U.S. This is an interview with Holli and Jim Howatson, who live on a property in the Greater Seattle Area and have together made numerous investments through the EquityMultiple platform…

Key Takeaways

  • Holli has achieved financial success and investing proficiency through continual self-education.
  • Jim and Holli appreciate opportunities to invest passively in a diversity of investments across the country.
  • Now that Holli is retired, she is wholly allocated to alternative assets (like private real estate) to avoid the volatility of public markets.

Tell us a bit about yourself… outside of work, what do you like to do? What freedoms do you make possible through investing?

Jim and I are both retired. We live on a large wooded property with trails through it that remind me of my childhood home when I used to wander through the trees and find trilliums and snails and pretty flowers. We have big farm equipment that Jim uses to create beautiful places on our property like our orchard, flower garden, and vineyard. I have a big sewing studio and love to make quilts and pillows and other home goods. We’re boaters and love being out on Puget Sound.

We have a big family – my two kids, his four, and fifteen grandchildren, none of whom we see as often as we’d like, but we’re close and spend time together as much as we can and when we do they are the best moments in life. Being able to enjoy our home, our family and our hobbies without worrying about our income is a real blessing.

Tell us about your journey to “accredited investor”… how did your career progress such that you are now able to establish income streams through passive investments? 

I think my journey is probably a bit unusual. I graduated from high school and left my small town – where Jim and I had met and dated during my senior year – to go to work in the big city. Not having a college degree, but with a desire to live as though I had one, I worked hard, listening and learning from those around me. I got lucky when, at 19, I went to work for a prominent Seattle law firm and found myself surrounded by very well-educated people I could emulate and learn from. I stayed in law for nearly twenty years, at the last running the HR and benefits department of one of the largest firms and there, learned about investing through the relatively new vehicle of 401(k) plans. It was a pretty natural jump to an investment advisory firm specializing in company retirement plans and I soon had worked to get my licenses and not long after started my own very successful firm. 

Before having retired you worked at a financial advisory firm. Was there someone who took you under their wing to show you what proper asset allocation looked like, how that changes over time, and how to evaluate new investment opportunities? Can you share one or two of those insights?

I read extensively. The only firm I worked for was affiliated with the Frank Russell Company who provided a tremendous education for anyone who wanted to take advantage. They had cutting-edge asset allocation modeling and, while after a time I came to feel like it was more ‘canned’ than seemed appropriate for my then-clients, it afforded me a terrific opportunity to understand the nuances of different asset classes and what happened when they were combined. Once I started my own firm, the majority of the clients were 401(k) sponsors so those allocations were pretty typical 80/20, 60/40, etc. portfolio mixes, but the owners of those sponsor companies could participate in more sophisticated investments.

I learned how to trade options and did that for about seven years, up through the financial collapse and about a year or so beyond the flash crash, continuing to provide positive returns in a completely miserable moment in time. I was able to discern the shift in trading that occurred in the latter months, when my trades would move against me because, being so small and far away from the action, other fast traders moved ahead of me so that I had to break my trades into smaller portions so that my volume didn’t attract contrary interest. My daughter became a partner in my firm for seven years during which she obtained her CFP; she’s probably been my greatest advisor. I was fortunate enough to meet a private equity firm in Chicago early in my business, which led to seeking other private equity investments which have been the bedrock of my ability to retire and our retirement income.

You mentioned that your grandchildren frequently come to visit you and Jim outside of Seattle. Is there any sage advice that you are offering them? If you could have done anything differently in terms of investing looking back, what would that be? 

I’m still not wise enough to offer sage advice, but I’ve always told my own kids a few things that I believe are cornerstones to living well: 

  1. Understand your resources – what’s in your toolbox; 
  2. Always be able to provide for yourself so you can make your own decisions – never find yourself in a position where you can’t do what’s best for your life;
  3. Make a decision, and if it doesn’t work, make another; and
  4. An ounce of prevention is worth a pound of cure. 

I don’t think I’d change much about how I have  invested. I invested heavily in myself, which is another thing I tell young people, not through formal education, but in always being aware and learning. I started saving early, I began saving in my first 401(k) plan as soon as they were available, and I’ve saved ever since. Until now. Now it’s spending time.

When did you first become interested in real estate investing, and why? 

Once I retired, I was really interested in generating income with my retirement funds. I had a house I was renting out and appreciated that source of income. We didn’t really want to buy other rentals and knew that we were really fortunate with our property manager and didn’t want to take that risk, but were looking to other ways we could invest in real estate. REITs are too impersonal. I like being able to pick our investments individually, not as a block of unknown properties. 

Are there any particular resources… books, podcasts, blogs… that were/are helpful in understanding real estate investing? 

Honestly, it was through the companies themselves, listening to them, comparing them, seeing how they presented their offerings. I’ve traveled all over the US and have a fairly good understanding of the economics of different areas, and found picking – or not – real estate investments in areas I had a sense would grow and prosper has made a difference. I appreciate how EquityMultiple lays things out in detail so I can quickly assess market comps and other more granular aspects of the investment thesis. 

What specific kinds of real estate do you like investing in (property types, specific markets, types of business plan, or positions in the capital stack)?

I’ve found a place for all of them in our portfolio. It’s one of the real benefits of investing through a platform like EquityMultiple: being able to access different types of properties and structures of investments all over the country. We have been able to tap into a wide variety of real estate – an apartment building in Brooklyn and a car wash in Georgia; steady income from lending, and the extra kick of a preferred equity position.

We speak often, and you frequently bring up the Sponsor’s track record. What does it mean to invest with a high-pedigree Sponsor and why is it so important

I want to know that the Sponsor has been around, hasn’t gotten into trouble (I research them outside of what EquityMultiple presents), has a bench with some years in it, and experience in their market. It helps if the Sponsor has had a few deals with EquityMultiple because I have confidence that you wouldn’t choose to work with a Sponsor that wouldn’t look good on your record. 

What has your experience with EquityMultiple been? What does EquityMultiple add to your portfolio and how do these investments complement your overall investing strategy?

It’s been a great experience. Jim and I feel like we’re really working together, that what we’ve shared about our investing strategy is well understood by the Investor Relations Team, and that you have a good sense of when an investment we’re looking at is going to suit us. We like some of the more delightful opportunities – the car wash has been particularly enjoyable for us as Breaking Bad fans.

Given the recent volatility in the stock market, have you maintained the same investment philosophy, or have you recalibrated your allocation? 

I have been surprised at my post-retirement market sensibility. I’ve always been invested in the stock market . . . until I retired. Now I’m wholly invested in alternatives. I sleep well at night. I don’t need to make 10% in one day and worry about losing 15% the next. Slow and steady, so we can live long and easy.

To discuss how EquityMultiple and our Investor Relations Team can assist you along your journey to a stronger, more diversified portfolio, please schedule a call or contact ir@equitymultiple.com

*This customer testimonial may not be representative of the experience of other customers. No testimonial is indicative of future performance or success.

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