He learned the good, the bad, and the ugly of real estate. He helps others build a rental portfolio and live financially free. Hear what he’s up to now!
Best Ever Tweet:
Clayton Morris Real Estate Background:
– Real estate investor and the President of Morris Invest, helping people build passive income and wealth
– Host of Investing in Real Estate podcast, which has a laser focus on buy and hold rental properties – News anchor on America’s number one morning show FOX & Friends on The FOX news channel
– Co-host for “FOX & Friends First.”; an hour-long expansion of “FOX & Friends”
– Based in New Jersey
– Say hi to him at http://morrisinvest.com/
– Best Ever Book: Four Spiritual Laws of Prosperity
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless; 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 fluffy stuff.
With us today, Clayton Morris. How are you doing, Clayton?
Clayton Morris: I’m doing great, Joe. Thanks for having me.
Joe Fairless: My pleasure, nice to have you on the show. A little about Clayton – he’s a real estate investor and the president of Morris Invest, which helps people build passive income and true legacy wealth. He’s a news anchor on America’s number one morning show, Fox And Friends, on the Fox News channel. He’s the host of Investing In Real Estate Podcast with a laser focus on buy and hold rental properties. With that being said, Clayton, do you wanna give the Best Ever listeners a little bit more about your background and your focus?
Clayton Morris: Sure. It’s funny you say “focus”, because it was never really my thing – discipline, focus… Chasing shiny was always my biggest problem, so it wasn’t until I got focus and zeroed in on a question that my wife had asked me, “What are you chasing?” a number of years ago that really had me sit back. It was like a punch to the gut.
I started out in the broadcast world as a child. I grew up wanting to be David Letterman; I’d sneak downstairs, I would watch Letterman and Carson while my parents thought I was asleep. So I started a career in broadcasting and traveled all around the country as a reporter, living in different cities, and anchor NBC news, CBS news all over the country.
While I was there I was noticing I was renting from a lot of people, and I was dealing with a lot of landlords. I don’t know, I grew up with that Rich Dad, Poor Dad mentality; I grew up with the poor dad mentality – work for the paycheck, and that sort of thing. So it just started to slowly dawn on me that I was somehow missing the boat. Working for a paycheck and making 32,000 dollars a year, and literally my rent exceeded the amount I was making from my paycheck.
Joe Fairless: Been there…
Clayton Morris: Yeah… And something just wasn’t right. I was seeing these landlords I was renting from; they were living many miles away, they weren’t even in the same town, and I was mailing off a rent payment to these people, and I thought “What is going on here?” That’s when the seed started to be planted, my friend.
Joe Fairless: Alright, seeds were planted. What has transpired between then and now, and what year was that when you initially got the a-ha moment?
Clayton Morris: I remember listening to Rich Dad, Poor Dad when I moved to Los Angeles to start working in TV, and I was a producer. That was 1999-2000, right after college. Then I moved to Montana as a political reporter for CBS news, in the capital, renting. I was by myself, renting from this couple who lived in Missoula, about three hours away. I never saw them, I just mailed them a check; absentee landlord. That was that a-ha moment, in 2000, and it took me a few more years to really take action.
I had a lot of debt. I had like 30,000-40,000 worth of credit card debt, I did not have good credit, student loans… God knows. I just bought records and Chinese food on the credit cards. It was brutal times. People have this perception of TV… You’re not making anything in those small markets, living in the middle of nowhere. So I had that a-ha moment, but it just took me a long time to claw out of that debt hole and start taking action.
Joe Fairless: Yeah, the a-ha moment was in 2000. Then it was, “Okay, now I gotta put the pieces in place”, as you said, “claw out of the debt hole.” When did you buy your first property?
Clayton Morris: It was 2004-2005, somewhere in there. The show that I was working on at the time, called The Daily Buzz — I was living in Dayton, Ohio, and they kept promising us that they were gonna get us out of Ohio, they were gonna build a studio and we were gonna move. They said, “Well, be in Ohio for a month or two”, and they moved us to Florida, finally, after two years that I lived in Miamisburg in Dayton, Ohio. Lovely people, I actually miss Ohio a lot.
They moved us to Florida, and I sight unseen found a realtor on the phone, and I just took action. I made a connection with a realtor; he went and looked for me and found a one-bedroom condo on a golf course, not too far from the studio. Fun nightlife nearby… And I bought it for 74,000, sight unseen. It had a 1970’s vibe inside; it needed to be updated. That was my first purchase.
I moved into it and started doing the upgrades myself, and I would spend the nights… Because I had to work early morning; at 4 in the morning I’d be up to do the show at 6 AM. I’d be home by lunchtime, and I’d be just starting to put drywalling, and speckling and ripping out old light boxes, and toilets… Doing it all myself and learning as I went.
Joe Fairless: The sexy parts of real estate…
Clayton Morris: Right, right. Yeah, pulling off old textured wallpaper, which now, by the way, is back in style. That old wood textured wallpaper… Man, it’s expensive… Holy smokes!
Joe Fairless: [laughs] So you got your first place in Florida. What city was that?
Clayton Morris: Orlando.
Joe Fairless: You got your first place in Orlando in 2005 – did I hear that right?
Clayton Morris: Yeah, right around then.
Joe Fairless: Okay, right around then. You got your first place, 74,000… Do you still have it?
Clayton Morris: No, I ended up flipping it.
Joe Fairless: Okay. What did you sell it for?
Clayton Morris: I ended up selling that bad boy for 110,000. I lived in it for two years, so I was able to avoid the capital gains on it, because I was living in it. This is when the power of off-market real estate became apparent to me, because two doors down – she was an older lady, she had smoked for like 35 years, lived in this place for that long, and her family knew that it needed a lot of work and they didn’t wanna put it out in the open market because it was just not gonna get the price they wanted, and it was gonna be too much of a hassle, and they didn’t want to have contingencies… It was gonna be a pain.
I made an offer on this two-bedroom version of the one that I had already fixed up myself. So I had some awareness of what to do. I bought it – and by the way, I bought it with 100% financing… 110% financing, because you rolled in the closing costs also.
I would have to be up at 4 in the morning, and I’d be in there until one in the morning, working on the place, with music on in the background, putting in new cabinets, hanging dry wall, painting… Everything. Light boxes, ripping out… I had to pain the stuff so many times, because there was an inch layer of tobacco – or whatever it was – from her smoking, and you just couldn’t get it out. Primer, primer, primer…
Joe Fairless: Gotta put KILZ on it…
Clayton Morris: Yeah, gallons of KILZ… And sold that one also. I bought that one for 80,000 and sold it for 120,000, or something like that, right around that same time. Then the market crashed and all hell broke loose.
Joe Fairless: So you didn’t have any property when the market crashed…
Clayton Morris: I did, I had some other properties. I used some of this profit – and this is where you live and learn. I made some huge mistakes. A lot of people say this is like going to graduate school… So I took the profits from this, I was living high on the hog; I was single until my late twenties and early thirties, and bought some speculative land project up in North Carolina with a buddy of mine. It was a Phil Mickelson golf course project where they were building a club house, and they were gonna be building in multiple phases… Oh, man. I put like 30,000 in that; that went belly up as the market collapsed. The builders pulled out, Phil Mickelson pulled out…
It was total disaster, so I went through foreclosure. I had another property in Fort Myers because of that. It wasn’t just well enough for me to try one North Carolina thing and test the waters; I had to do two in Fort Myers and one in North Carolina, and they all went belly up.
Joe Fairless: And then the dust settled on the market crash… What did you do after that?
Clayton Morris: Well, now my credit was ruined, so I really had to just refocus. I was trying to refocus myself, and I moved to Philadelphia, my home city. I focused on being a news anchor, saving up the money as much as I could.
I couldn’t buy anything because my credit was shut, but it really forced me to learn about real estate off-market, how to be unique, how to be creative about getting money, how to start to think about real estate in a different way, and that’s really when I dove in… I remember taking a Larry Goins course. I think it was called Ultimate Buying And Selling. It was in the mid-to-late-2000s when I started taking that course, and just wrapping my brain around the idea of locking up properties, doing wholesaling to acquire properties etc.
That’s kind of how things started out for me. I started then managing to save some money and started buying some properties in the Midwest (single families), and that’s how I started building up with cash. I had to use cash. Maybe I didn’t have to… I know there’s a lot of experts out there who are listening right now saying, “Come on, you could have done it in so many different ways with private money, and this and that”… Of course, knowing what I know now… But I started using cash, which is still fine, because now all these properties are free and clear. They were cash flowing, I rehabbed them… They’re still generating great cash flow for me today; I have no repairs on them all these years later because I took care to put in the mechanicals and put in the furnace and water heater, and update the windows and roof… And that set the template for what I do now.
Joe Fairless: So you were physically located in Philadelphia at the time when you started buying these Midwestern properties?
Clayton Morris: Well, I was in Philly for about a year, then moved to New York City. I got the job at the network, and that’s when I started making network money, and started doing really well. So I moved to Fox News Channel in Manhattan, and started then — and still, my credit was screwed up, you know? And I still also had a deficiency judgment come forward in a property that I was still dealing with, because I was going back and forth with this Florida property, and ended up having all my assets frozen. I woke up one morning and I couldn’t even buy a cup of coffee.
So here I am, at this moment in my life… I reached the network, I’m blessed. Not many people get to reach a network news job, after living all over the country… And I come into the studio, and I go downstairs where there’s a cafeteria, a nice restaurant. I go downstairs to buy a cup of coffee and an egg sandwich, or something, and my card is declined. I said, “You’ve gotta be kidding me. What’s going on?” and I just thought I would have an overdraft problem. I go upstairs, and every number on my Bank of America account is all in red. [laughter] I couldn’t do anything, it was like “Your life is over. Click here.”
So I called the bank and they’re like, “Yeah, your assets have been frozen by” – and then gave a name of some law firm, or whatever. I was like, “You’ve gotta be kidding me.” I just took a deep breath, regrouped and realized “This is the worst moment in my life right now.”
Joe Fairless: Hopefully that’s the worst moment in your life…
Clayton Morris: Yeah, up to this point, right? I’m 40, who knows…? So it was brutal, but that still was when I was still having to save up that cash. That’s when I started buying properties. I was in Manhattan; I started really thinking seriously about my approach to buying properties. I’d buy one every few months and rehab it with my team, and I had great contractors, people I could really trust… I just started building it that way, slowly, and slowly, and slowly.
Joe Fairless: The first Midwestern property while living in New York City – how did you find your team for that property to do the rehab?
Clayton Morris: It’s all who you know… A friend of mine was born and raised just outside of Detroit, not too far from the Ford factory and headquarters. I’d become close with him, and he was the head of the Disney cruise line, and we became fast friends in Orlando for many years… When I told him what I was doing, he said “My brother is a fantastic general contractor in…” – and he told me where, because I said “I’m flying into this city, I’m gonna take a look at these properties”… And he said, “Well, my brother lives there.” I said, “What?!” That’s just kind of how it happened, serendipitously, and I just started putting these pieces together.
You and I talked about this before when you were on my show – you’re compelled in certain directions to go in life, and this started for me when I was on an airplane flight to New Zealand; I was going to visit a friend of mine, to take photos, just to shoot for a week of photos in the mountains… And I was half-asleep, and the couple next to me (in their fifties), they were going to New Zealand also, and after 16 hours of sleeping and tossing and turning, we were ready to land, and 30 minutes left until we land and I we just get to talking.
They asked how long I was gonna be there – I said about five days. I said, “What about you?”, and they said, “We’re gonna be there for two months.” I said, “Who gets to go to New Zealand for two months?!” and he said, “I’m a real estate investor.” And he started telling me where he was investing (in the Midwest), he and his partner, and that’s how he’s able to travel the world and do what he does – passive income, cash flow… They told me these towns in Michigan… So I literally booked a flight the moment I got back from New Zealand, right to that town. Then my friend’s brother happens to be the contractor in that town… Stars align, things make sense. When you listen to your intuition, it makes sense.
Joe Fairless: What were the numbers on that, for the first Midwestern deal?
Clayton Morris: I was going back through some of the archives here… It was a short sale; I think I ended up picking it up for like 24-25, roughly… 3-bedroom, one bath; it was a corner property, it had a big backyard, and I was not scared away from people with pets. I thought, “This is a fenced backyard, this is gonna be great. I can even maybe charge a little bit more for someone with a dog, who would love this big yard”, and I just dumped on it.
Joe Fairless: So you were clearly — I don’t wanna jump to assumptions… Are you investing for cash flow with a $24,000 property? This is Detroit, right?
Clayton Morris: Well, it’s actually out of Detroit. If you throw a stone… You’re not in the city of Detroit; it was technically Redford, Michigan. So the zip code is Redford. I bought properties there and in other states in the Midwest, but Redford, Warren, and some in Detroit, because there’s a lot of great properties in Detroit when you get into some of those burned-out zones. you have to know your streets, of course, and you have to know what you’re doing, but some great, solid brick homes that are cash flowing for me for years.
Tenants in those properties signed five-year leases with me. Single mom with a young girl, who wanted to be in the school district (a good school district where my property is located).
Cash flow – I guess I didn’t fully understand it then, because I was thinking I wanted to be all things to all people. I want a huge equity, I want appreciation, I want cash flow… And you realize you can’t do all three. Pick the two that you’re strong with, that speak to you, and go with those. It’s like trying to get fast-food thinking you’re gonna get quality, speed and convenience. You’re not gonna be able to get all of those things.
Joe Fairless: And low-calorie, with no sugar.
Clayton Morris: Right… And you know, certain companies try to do it, and then it comes back to bite them in the butt sometimes (look at Chipotle). You can’t be all things to all people, so for me it’s cash flow. I like to buy below market, so that I’m getting a nice little piece of equity, so that my net worth is going up in addition to being able to buy this great cash flowing property. But appreciation for me – I learned my lesson with what happened with those speculative land deals I ended up going through.
Appreciation for me as an investment vehicle was dead. I don’t care what anyone said, I don’t what any guru wanted to come and tell me, there’s no way I’m investing for appreciation again.
Joe Fairless: So cash flow with some equity going into it, or after the repairs are done?
Clayton Morris: Or instant equity, knowing that if “Okay, that property’s worth about 40-45, but I’m picking it up for 26-27… I have that wiggle room to put in 8,000-10,000 and still have a nice little bit of equity on the backend that I didn’t have to pay for, that was sort of built-in equity. So my main goal is cash flow. Losing my job, living on the margins, being knee-deep in debt, raised in that philosophy of the Rich Dad, Poor Dad… I watched my dad lose his job when I was 13 and it just destroyed us… Or it destroyed me. We were fine, but I always thought the world was over.
Someone told my dad that he didn’t want him to work there anymore, and our lives were over. I remember crying to my best friend; I was like, “I think we’re gonna have to move and sell our house.” It was all fear-based. I grew up with an intense amount of fear around money, thinking that I’m not worthy of money, money doesn’t grow on trees, we’re not the Rockefellers…
I heard all these negative memes my whole life around money, so I committed myself to changing that, and it’s very important how I speak to my kids now about money. I don’t want them to ever think of lack in their lives; I want them to understand abundance and realize they can’t hold on to money either… That it flows through them, in order to help other people. That’s incredibly important, because when you hold on to it, you’re not only hurting yourself, you’re hurting other people.
Joe Fairless: Yeah, it’s an interesting philosophy. I like that a lot. It’s something maybe I haven’t consciously thought of. Subconsciously perhaps, but not consciously. I heard that, I like that.
Your company now… How are you making money with your company, Morris Invest?
Clayton Morris: Now I’m still using the same principles that when I found my properties in the early days, of buying them for myself – buying them off-market, trying to bring them up to value, where I can put in new furnace, new water heater, update the roof, put in new windows, new Pecks plumbing, new electrical, updating the kitchens and baths and making it a great place for somebody to live, and still making sure I’m still below market value when I’m done with it.
And also rent in great areas where the taxes are low, or in areas where there are stable, blue-collar jobs and those properties cash flow. That’s my main focus. Our clients are paying us for that – a high ROI. We try to hit 10%-12% on every property we do. Then it’s fully managed with our team. We have great third-party property management teams that we work with in our markets, who understand the variations in why that property will rent for 700 and why that one will rent for 725, the streets, and obviously making sure they’re doing all the background checks, employment verification and everything like that with our tenants. That’s our promise.
We try to keep it super simple, because I like to say… My first client was my mom. I was doing this, building up this portfolio of properties with my wife, and my mom came to me and she said, “Hey, I’ve got $40,000 to invest out of my 401k; I can do a loan out of my 401k, can you help me get one? I see what you’re doing, and I could use that cash flow.” I said “Sure!” and she said, “By the way, you’re gonna have to do everything, because I don’t know what I’m doing. I don’t know how to hire contractors, I don’t know how to rehab a home, I don’t know any of that, so can you just take care of me?” I said, “Sure!” She was really our first client, and we’ve kept the same standards in place, as we’ve grown.
Joe Fairless: You’ve attained success as a professional in what you do with your full-time job… What have you learned from that that you apply to real estate investing?
Clayton Morris: Taking action. When I was a young man and ready to move out to California — I’ve just turned 40, but when I was just graduating college from the University of Pittsburgh I came home (summer, 1999) and my best friend, Andy, was there. We were having beers on the front porch, and even though it was stupid of me to move to the number two market in television in the country – I should have moved to the 160th market first to try to get a job in TV, but like an idiot, I just packed up my U-Haul truck and said, “Are you coming with me?” and Andy said, “Yeah, I’m gonna do it. Let’s go together.” We’re gonna move to L.A. and I’m gonna get started in TV. I didn’t have a job, I didn’t know anyone, but I’m just gonna do it. Just take action, and I’ll figure it out when I get there.
My dad looked at me… Even though I grew up under that Rich Dad, Poor Dad and he was the poor dad –with a great upbringing, but he said “If you know you need to go to L.A., you’ve gotta do it! You just gotta go.” It was that little spark that he pushed me to take action, and it’s the same with real estate investing. People wanna hang out on internet forums and just — misery loves company. So many naysayers out there, whether it’s Facebook, or whatever… They all just wanna complain and look for reasons to not take action. So the same thing is true in real estate, as it is me taking a plunge and moving out to California. We all know people like this in our hometowns, who you know when you go back to that restaurant that you used to like when you grew up, you’re gonna see maybe even some of the wait staff is still there, because they didn’t take action and you did.
Joe Fairless: I love that story, thank you for sharing that. Are you ready for the Best Ever Lightning Round? Let’s do it. First though, a quick word from our Best Ever partners.
Break: [[spp-timestamp time="00:22:37"].28] to [[spp-timestamp time="00:23:32"].15]
Joe Fairless: Alright, what’s the best ever book you’re read?
Clayton Morris: The best ever book I’ve read… It’s a book that really changed my life in the past few years, and that is The Four Spiritual Laws Of Prosperity by Edwene Gaines. As I mentioned, I struggled with money, memes about money and wanting to hold on to it, thinking that you can’t donate money because there’s not enough for you. She breaks down in one of the laws in the book – and I don’t care if you’re Christian or whatever; it’s really not about Christianity, it’s not about any kind of religion – tithing, and the historical significance of tithing that 10%, and understanding to give that money to someone in your life who brings you spiritual nourishment (spiritual food, as she says). It could be someone like your waitress, who sees that you’re having a bad day and just spends extra few moments comforting you that day. “Oh, so you’re having a bad day… How about an extra cup of coffee? What’s bothering you today?” That’s the time that you give that person an incredible tip and show how much that person means to you.
So breaking those memes about money for me, in that book… It’s a great little book. She’s an amazing woman, Edwene Gaines. Check it out.
Joe Fairless: Best ever deal you’ve done?
Clayton Morris: It was a wholesaling deal in New Jersey. It proves every point of real estate – systems work, follow-up works. I had done a mailing in New Jersey where I live, and I found a property in a very affluent neighborhood. These houses were being kind of torn down or built out from $400,000 and being sold for $900,000. And I managed to do a mailing, I got these people, stuck to my guns on price, I sent them a purchase agreement when no one else did, and a month or two months later they followed up with “Is your offer still good? We’ve exhausted our going around the circle, we’ll take your offer.” I got it, and it ended up being a wholesale deal. It ended being a $43,000 assignment. Or, actually, I double-closed that one. So a $43,000 double-close. That was a big moment for me. That was my second wholesale deal I ever did.
Joe Fairless: Wow… You got spoiled. [laughter] Best ever way you like to give back, speaking of your best ever book…?
Clayton Morris: Well, you and I talked about this… What I try to do when people ask me, “Why do you give so much away?” I’ll spend 30 minutes on the way with investors, and they have no money — I don’t care, I wanna help people take action. I’ve been blessed with a broadcasting career, so one of the ways that I like to give back is to just share as much as I can… Share everything, be as transparent, open as a book.
I’ll jump on the phone with people, talk for 30 minutes, they’ll tell me about their financial goals, they’re struggling with this, and I’ll kind of just help them over that hurdle. I sort of try to be a mentor to as many people as I can. You and I talked about this, which is try to go in inner cities to help with that financial education, because we’re not taught this stuff. We were never taught this is the way to build wealth. We’re taught, “Go get a job”, and we were taught “This is how you balance a checkbook”, but we’re not talking about real wealth building in this country… So I try to give back in that way to the best of my ability anytime I’m asked. Any speech, going to a public library in the inner city – anything like that is what I love to do.
Joe Fairless: What’s the biggest mistake you’ve made on a deal?
Clayton Morris: That’s a great question… There’s been a bunch, but one sticking out to me is dragging out a deal for too long and making promises that I couldn’t keep to the seller. This would happen to be a wholesaling deal. At the end of the day, I lost my deposit – I wasn’t gonna fight that, of course – and the dragging out of the deal, and thinking that at the last moment I could just bail on the contract… People’s lives are involved in this, right? They’re planning on moving, they’re planning on packing up their stuff, and I thought for sure that I could sell this house; I thought for sure that I could buy this, I could do something with it… But it ended up being a disaster. A sewer condition with the property, with one of those big heaps — not even a septic tank, but the one before that…? The mound of sand… Cesspool.
Joe Fairless: Cesspool, yeah.
Clayton Morris: Yeah, and the New Jersey law – you cannot now sell that without it being upgraded. [unintelligible [spp-timestamp time="00:27:42"].28] all this money, I thought for sure that this house would sell, we could do a great deal. It ended up dragging on and on. She’s packing up, ready to move to Pennsylvania, and I just have to tell her I can’t do it. It was just heartbreaking.
Now I pull the Band-Aid off real fast. Right away, as soon as I can. Not waiting that long, 40 days, before I have to make a decision like that.
Joe Fairless: Clayton, what’s the best place that best ever listeners can get in touch with you?
Clayton Morris: The best place is simple – if they just come to my website… I’ve got a free download for people who are looking to build financial freedom; it’s the thing that I’ve built, that changed my life. It’s a four-page PDF that my wife and I, after a night of tears, brainstormed on our whiteboard, called Our Financial Freedom Number. It changed my life, it changed my business, and I’ve heard from hundreds and hundreds of investors who it has changed their lives. So it’s a free download, and if you’re interested, come to my website, MorrisInvest.com/freedom. You can download it there.
Just hit me up on social media, I’m everywhere, and I’d love to say hi to anyone who has any questions about real estate, or needs any advice, guidance. I’m always willing to help.
Joe Fairless: I really enjoyed our conversation, as I was expecting. I loved – as I’m sure the Best Ever listeners loved – hearing about your progression as a real estate investor, from your first place in Orlando, and the second place, to then some speculation on some golf course stuff that didn’t work out… Then being in a tough spot and identifying the best ways to buy. Your focus is cash flow; not buying for appreciation and crossing our fingers, but forcing appreciation through some renovations, certainly, but not crossing our fingers and hoping that it just appreciates, as well as making sure that you have equity going into the deals.
Then also the underlying foundation that you have of taking action. The U-Haul truck, going to L.A. story certainly exemplifies that. Thanks so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Clayton Morris: Thanks, Joe.
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