The Learning Leader Show With Ryan Hawk - 094: Clayton Morris – What Is Your Freedom Number? A Crash Course In Real Estate Investing

Starting point is 00:00:00 What I admire, and I don't know that I have it, and I really, really work on it and something that I'm, you know, I know that I've had it when I've been passionate about something, which is focus on the one thing, right? It's the sort of the Gary Keller finding extraordinary results, you know, his great book, The One Thing. And how to be more productive by just focusing on that simple, powerful concept of focus, no matter what gets in your way. You've got personal issues. You've got things you need to check off on your personal to-do list, pick up laundry, pick up dry cleaning, pick up, you know, kid at preschool. Great. But when you are in your most productive hour or two hours of the day, you know, some people are inexhaustible. Like the Grant Cardones of the world seem like they've got 12 hours of energy.

Starting point is 00:00:45 Most of us have one to two. So why are we wasting those one to two hours on email? Are leaders born or are they made? Our host, Ryan Hawk, believes that leaders can be made through determined, focused, work on learning the art and science behind the makeup of other successful leaders. Now it's time to inhale knowledge and exhale success. You're listening to The Learning Leader Show with Ryan Hawk. Hey guys, before we get to this great conversation, I want to let you know that this episode was brought to you by Mizzen and Maine. You'll probably remember from episode 64, I spoke with

Starting point is 00:01:28 a CEO of Mizden and Maine, Kevin Lavelle, and we promised to continue that dialogue as we both progressed on our journeys. And we certainly have, and we formed a partnership. And Kevin and his great companies and support and people that he works with have agreed to sponsor my podcast. But for me, I'm very picky when it comes to this. I only wanted to work with people who I truly believed in their products. So this is not just a sponsor to me.

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Starting point is 00:03:14 times, use the code Ryan Hawk 3 and you'll get $50 off. Again, I love Miz and Maine. I love everything they stand for. And I promise when you try the search, you will too. Hey and welcome to the Learning Leader Show. I am Ryan Hawk. Really. interesting conversation tonight with our featured leader. It's Clayton Morris. Clayton is the weekend anchor for Fox and Friends on the Fox News channel. He's also a big time real estate investor, even more so than I originally thought before this conversation was had. And so I think you'll find this one interesting because it went in two completely different directions. Initially, we talked about some great leaders, some of the

Starting point is 00:04:07 characteristics that they share, why they are that way. And then the second half of the conversation is all about how all of us can invest in real estate. So just a couple more things we got into. Clayton's GTD process. That's getting things done method for accomplishing the necessary task in order to be successful. Clayton will explain further what this means during this conversation. And then his turnkey real estate business, his fly on real estate investing. And even if you have no extra money, or at least you think you don't, he will share ways that you actually do.

Starting point is 00:04:45 Then how all of us can find our freedom number and how we can achieve it if we educate ourselves in the real estate business. Definitely a different type of an episode for the Learning Leader Show, but certainly an interesting one. I think you guys are going to love it. It's Clayton Morris. Clayton's so excited to have you here on the Learning Leaders Show. So first of all, thank you for being here.

Starting point is 00:05:17 But I got a quick question to get us rolling. And that's around high achievers, people who have sustained excellence over an extended period of time. You certainly fall into that category, but also people that you've spent time around do as well. So I'm curious, both from whether it's describing yourself or others that you've spent time around, what are some of the common characteristics that those people all seem to share? It's something that I try to teach my son and my daughter, which is when you fail, that's a great thing. You look at failure not as an end point, but really a beginning point to tweak, move on, shift your strategy, learn from it and continue on. For instance, teaching my son to ski.

Starting point is 00:06:02 He said, Daddy, I keep falling. I said, good. You know what? I want you. He's five years old. This was when he was four. I said, good. I want you to fall about 100 times today.

Starting point is 00:06:10 He said, why? I said, because every time you fall, you're going to get bad. better. And then soon enough, he was rocking and rolling down the ski slope. And I see that commonly through the people that I work with, both at a high level in broadcasting, but also, you know, CEOs and other individuals that I meet on a regular basis in my job. They don't, they really don't take no for an answer. I just, I never take no for an answer. My wife jokes that when we hit a wall, we just find a way around it. And I'm not a Marine. I know it's like a Marine way of looking at it, that there's no such thing as an object in our way.

Starting point is 00:06:43 We'll go under it, over it, around it. You find a way around it. And that really is one common threat I see from all of these individuals who succeed over a long period of time. Are there, or who are the few people who pop in your mind when you think of sustained excellence? You know, in the television world, there are people who despite, you know, that despite, you know, leaving one person, particular network or losing their job, they persist. So, you know, a couple of names pop to mind. I would think you read about different people in the broadcasting world who maybe they've, you hear about contract negotiations they've gone through, that maybe they didn't go so well

Starting point is 00:07:28 or whatever. They had a book that bombed or they were at a network in the left. And so, you know, for instance, Bill O'Reilly, the guy, he's, you know, he's getting older now, but on the Fox News Channel anyway, love them or hate him. I don't care about your politics, but here's a guy who has been number one for like, you know, years and years and years and years. Why? Because he has a certain love every day when he has a meeting. He knows that the stories that he wants to do on his show have to resonate a certain way with him and that he doesn't take no for an answer on getting things done. People will kind of get in his way and they'll tell him that, oh, we can't do it this way.

Starting point is 00:08:04 And he just says find a way. It's sort of the Steve Jobs way of getting the best out of people. You tell me, no, well, there's a way. We're going to find a way to do this. We're going to find a way to get it done. You know, the few weeks before the iPhone launched, the first iPhone, right? It had plastic instead of glass. And he's like, it just doesn't feel right.

Starting point is 00:08:22 I'm sorry. And they're like, what? We're about to launch. What are you talking about? It doesn't feel right. And literally had to get rid of plastic as a screen and have to ramp up somehow and make glass on the iPhone, you know, just a few short months before launch. But he got people to get it done.

Starting point is 00:08:38 And they told him he couldn't do it. And he said, I don't believe you. We're going to do it. It's interesting you brought up Bill O'Reilly because I think he certainly is a polarizing guy depending on. And certainly this show is not one about politics. I mean, it comes up from now and again and that's okay. But do you, is he a guy, since you guys both work at the same place and both are on TV, is he someone that you look to as a mentor or do you have conversations?

Starting point is 00:09:01 No. No? No. No, I just was, you know, thinking about people who have gone. through quite a bit of adversity, but have remained steady. Okay. You know, even keeled, because I'm not one for melodrama, and he's had a consistently high-performing career.

Starting point is 00:09:17 My mentor, the person, the reason I got in a television was because of David Letterman. Ah. I'm a huge David Letterman fan, and, you know, here's another guy who just demanded excellence, and he went through, obviously, everything that happened with NBC and didn't get the job on the Tonight Show and ends up charting. his own path, you know, talks with Johnny Carson about it, and he decides to go to CBS, and launch their first ever late night show and, you know, creates the late show and gets full executive control of it and gets to own not only his show, but the show that comes

Starting point is 00:09:48 on at 1230 after his show and carves out quite an incredible audience and quite an incredible career. So he was always my mentor. He was the guy, the reason I got in television. I wanted to be David Letterman, I think, at a young age or just loved the way he looked at the world and wasn't afraid to break down the wall of the camera and television. So if somebody spilled coffee on the set, you know, his cue card guy spilled coffee, he'd turn the cameras around, which you would never see someone do, right? And you'd see the cue card guy. And so at home, I was just fascinated with this idea that he was sort of breaking this wall

Starting point is 00:10:25 that was separating the audience from this studio. And I love that about him. You mentioned Steve Jobs. You mentioned Bill O'Reilly and now David Letterman. when I actually it's funny last night on I believe actually one of your competitors was airing the Steve Jobs documentary I think Alex Gibney made it right you've probably seen it but I wonder in this this has come up before on my podcast with whether it's jobs or Elon Musk or an O'Reilly now with his name brought up do you think what is it about the fact that some of

Starting point is 00:11:01 these generational type leaders who have created world class, I mean, world-changing products, whether it's a rocket that's going to send us to Mars, an electric car, an iPhone. What is it about some of those people that, do you think it's mandatory to have to be like that? Because both of those, I'm speaking now of Elon Musk and Jobs, both of those guys have, they have probably a group of people, in some cases a large group of people who will not speak positively about the way they treated other people.

Starting point is 00:11:37 What is it about that type of leadership? Do their brain just wired differently, that they're solely focused on sending a rocket to Mars or creating an iPhone that they just simply don't, at times, treat people well? I think that could be it. Yeah, I mean, Steve Jobs, you know, there are people who talk about him now as the years

Starting point is 00:12:00 that they worked on the Mac or whatever it was, where he could come in and throw a hand grenade into their whole project. They think they're on the right path. They're almost done. He could walk in and pull one of his hand grenade moments, which is, we need glass on this and not plastic. Or, no, no, we need this entire font changed because this doesn't look right in the menu bar. Everything would have to change. But they talk about it, the most grueling, they got sick.

Starting point is 00:12:29 You know, they had physical problems because they were working so hard, Steve Jobs, but they also look back fondly and say, you know what, those were the best years in my life. Because he got me to do things, I didn't know I was capable of doing, which I find remarkable. But I also think among them, what I admire, and I don't know that I have it, and I really, really work on it and something that I'm, you know, I know, I've had it when I've been passionate about something, which is focus on the one thing, right? it's the sort of the Gary Keller finding extraordinary results, you know, his great book, The One Thing. And how to be more productive by just focusing on that simple, powerful concept of focus, no matter what gets in your way.

Starting point is 00:13:11 You've got personal issues. You've got things you need to check off on your personal to-do list, pick up laundry, pick up dry cleaning, pick up, you know, kid at preschool. Great. But when you are in your most productive hour or two hours of the day, you know, some people are inexhaustible, like the Grand Cardones of the world seem like they've got 12 hours of energy. Most of us have one to two. So why are we wasting those one to two hours on email? Why not just do that when you've got your downtime, your sleepy two in the afternoon siesta time?

Starting point is 00:13:42 That's when you should be doing email. But no, during that 10 a.m., whenever you're, I call it your power hour. For me, it's between 10 a.m. and noon. Those are my power hours. I have to get two of them usually. And it starts to trail off for me about 1130 in the morning. But in that time, I know that the night before, I'm setting up my GTD system, my getting things done system for the next day. And I'm looking at what will I accomplish during that power hour? What is the one goal that I have right now in this year? And how do I break it down in those manageable steps? And laser-like focus on that thing.

Starting point is 00:14:14 So I'm not on Facebook and I'm not doing – someone sends me a text. I've got to do this other little thing. You know, I put my phone in airplane mode. I put my Mac on. Do not disturb. I just work on that one project for during my power hour, or power two hours, whatever it happens to be. And then when I'm done with that, all of the other tasks for the day are sort of the wrote basic little stuff, you know, return emails, send an invoice, you know, respond to this. But it's not like the high level willpower, mental capacity focus.

Starting point is 00:14:46 And I think that's the difference with some of these leaders is they have the one thing and they know what it is. They're going to build Tesla. That's it. that's all they're focused on. I love it. If there's one takeaway already, and that's so important. See, I think people see it and we read about it, but then actually the execution portion is where we completely drop the ball.

Starting point is 00:15:10 Is there a specific tactic? I mean, you mentioned that you have to basically shut everything off or put it on airplane mode or so that you're not going to be disturbed. Is that the main thing you need to do? Or is there a mindset shift that needs to happen to say, okay, here are my two hours, here's my 90 minutes that I'm going to get things done. I'm going to get this one thing done. Right. Well, Ryan, I mean, to me, honestly, this is my biggest hurdle in life.

Starting point is 00:15:36 This is my biggest flaw. This is my biggest personal flaw is lack of organization. I've committed this year to working on this habit. And I just finished reading Charles Duhigg's book on The Power of Habit. Yeah. You know, and he wrote it a few years ago. But one of the things he talks about is willpower as a cornerstone habit, right? And how do we get to a habit?

Starting point is 00:15:57 We have to create routines. So being consistent in those routines creates habits. And then habits, of course, can be sustainable for years, hopefully, if you keep up the routine. So it's very, very difficult. If you have ingrained habits in your life to break them, you've got to break them with a new routine around certain triggers. So for me, it's at the end of the day, I used to wait sort of until eight or nine o'clock at night. and I kind of think, you know, maybe having a scotch watching a movie with my wife or something. And I'm like, oh, I don't want to jump open up Omni Focus right now, or I'm using To Do Now, which is my new productivity manager for GTT.

Starting point is 00:16:34 And when I say GTT, hopefully I'm not, do you understand, you know the getting things done methodology? Yeah. Okay. So I want to make sure your audience does too. So. Yeah, let's explain that, though. Yeah, go ahead. Sure.

Starting point is 00:16:45 So David Allen wrote Getting Things Done a number of years ago. He is a future guest on this podcast. Oh, great. Yeah. David's a good guy. His new version of getting things done just came out last year, so it's updated and so forth. But the methodology is still true, regardless of when it was written. And the methodology is this, right? Get everything that's currently in your brain, out of your brain, and into an in-basket. Spend three hours, shut everything out, tell your kids, you're busy, tell your wife, you can't do this right now. Every item that's taking up your mental capacity right now, put it in an inbox. So that is pick up long. laundry, start PowerPoint project, clean up desk. Everything that you know you need to do, paint garage, goes in there. Don't leave anything out of that box. Now you can sit back and you say, okay, everything's out. Mom's birthday presents, everything is in this inbox. Then you go through

Starting point is 00:17:41 and process it. So then the processing piece is so important. If anything takes you less than two minutes to accomplish in that inbox, you do it now. So if it's return email to John about this afternoon's meeting, do it. It's going to take you one minute. Do it. Now it's out of the inbox and it's in the garbage. Gone. Anything that requires more than two minutes, you either defer it to someone who's going to do it, your assistant, your wife, your spouse who handles this particular item in your household workflow, great. If not, it gets deferred. And if it's not deferred, then it gets put into its own project. So work on PowerPoint project is probably not a one-step process. I imagine there's research involved. You're going to do, you know, you're going to outline it. So you break those into

Starting point is 00:18:25 manageable steps, the outlining process, all of those things. And then you devote certain calendaring time to that project. So what I used to do is at the end of the night, I used to kind of look at my landscape for the next day. And I would say to myself, okay, tomorrow, during my power hours, I want to work on PowerPoint project. And I would, on my calendar, block that time out, PowerPoint project. Then I open Omnifocus or to do whatever. There's plenty of great software out there for this. Those are my two favorites, though. And I'd look at the PowerPoint project and step one is research. You know, step two is outline, whatever it happens to be. And I'd work on step one and step two. And then maybe I don't get finished with it today in that two hours. I'm sure I won't. Then I look at the end of the day and I kind of, you know,

Starting point is 00:19:10 look again for my power hour the next day, and I'm going to put that same project in there because it's not done yet. So that's really the getting things done methodology, GTD. And then what I love about GTD is there's also a someday maybe folder. So when someone, shiny object syndrome comes along and says, hey, Ryan, do you want to start a new podcast with me about fishing? And you love fishing, and I love fishing, and you're like, I know your podcast is doing great. And you've got a lot of things on your plate, but maybe, and you're like, yeah, that sounds like a great idea. Instead of just acting on it, hey, let's do it tomorrow. Then it derails everything you're currently working on. You put it in the someday maybe folder and you kind of review it every few months.

Starting point is 00:19:48 And then after three months you're going to look at it and you're going to be, yeah, I'm not doing this fishing podcast. No way. And you just delete it out of there. Or if it still really has your attention, you're really, really interested. You've been thinking about it and sitting on it and working on it. Then you jump back on the phone with John and you say, John, you know that fishing podcast idea? Well, I've been thinking a lot about it over the past few months. Let's start to actually move this into a reality now. So it really is powerful. But my biggest failing as a human being is that I wasn't sitting down the day before,

Starting point is 00:20:15 to answer your question in a very long-winded way, is sitting down the day before and looking at my next day and saying, okay, what focus will I have during my really productive hours? Because if I don't do it, then I sit down on my computer, Ryan, and I open it up, and I'm like, oh, I didn't map anything out, and I'm just kind of kind of full around. I'm going to do like one step on 80 different projects. and I'm not really being productive. I'm working on this Facebook thing.

Starting point is 00:20:40 I'm working on this, and it's just a mess. I'm laughing because this is a huge issue for me, man. I'm sure it's a lot. I mean, I hate it, and I know it. That's why I mentioned it. I hate that it is because I'll even sit there in the middle of where I'll, you know, an email will pop up or whatever, something that distracts you.

Starting point is 00:20:59 And you're like, ah, and then you're left just deciding, okay, what am I supposed to be doing? And so I think this is such a crucial thing that so much, many people, but you have to consciously plan and prepare and have a system and build a habit. And that's, those are the things you're talking about, Clayton. But normally I would do this earlier, but we just got going. I loved it, man. But I want to take a step back and, and talk about you.

Starting point is 00:21:23 And when people ask you, Clayton, what do you do? How do you answer that question since you do a lot of things? Yeah. I mean, and, you know, I've gotten a lot more focus because I think used to be, you know, sort of a, a jack of all trades and a master of nothing. And last year I had a bit of a breakdown. And it was real hard. I mean, my wife looked at me at the end of the summer and she said, because I was like

Starting point is 00:21:49 kind of complaining about this one person that I had hired and it wasn't really working out. And it was like, what am I doing? And it was around a project that I didn't really have my heart in. And she said, so I guess you're going to start a new project then. And I said, what? And she said, you know, I've counted. And I didn't want to say this, but I've counted like 90.

Starting point is 00:22:06 different projects you started this summer and didn't finish. And it was like someone socked me in the head, you know, the bag of pennies. I was like, oh, really? Yeah, I guess you're right. To me, they all seemed like they were part of the same overall goal in real estate, you know, and I do real estate investing. I have a turnkey business now. And but what I started to realize was, whoa, what am I doing? What am I chasing? So she would ask me, she said, what are you chasing? I've got a great career in broadcasting, but I've always had entrepreneurial, you know, blood in my body. And I wanted to make it on my own and build something that would create legacy wealth from my family. So to me, I started building a career, you know, a move towards real estate over the past number of years in real estate investing and so forth.

Starting point is 00:22:56 But they were all like little strains of that and never really laser-like focused on my main goal. And so after she said that to me, she said, you know what you need to do? You need to find out what you're chasing. And you need to talk about that. And you need to just slow down and stop and find out what you're going after. Because if you look around, you've got everything you need right in front of you. You don't need anything else. And it was like, it would just knock the wind out of me.

Starting point is 00:23:27 But it was also the best, you know, it was the best day of my life because she was, and I were together for like two days on this little trip when this all kind of happened right before it. And it was just like tears and just like joy. And I just had this contented feeling. Like, wow, everything just changed for me after that. And for the next month or so, I didn't do anything. I did my broadcasting career, but when I'd come home, I was sitting and I'd meditate. I just sit with the kids.

Starting point is 00:23:54 I just would like sort of stare out the window. I just read a few books. I just listen to music. And it was like, you know what? and actually like real estate deals started happening around me in my world and I wasn't doing anything to like having have anxiety about it to you know to create them they were just happening because I was allowing for it to happen and towards the end of the you know right around the holidays or I would say October I started I turned to my wife and I said you know there's so many people

Starting point is 00:24:24 that I bet suffer from this like fear of lack which is what I discovered I was chasing this idea I was chasing other people's dreams and desires. Oh, this guy's doing this. I should go do that. And, you know, this fear of money. I grew up here and, you know, we're not the Rockefellers. You know, money doesn't grow on trees. So I just had this negative association with money and that I've got to hoard it and hold it.

Starting point is 00:24:44 Otherwise, or, you know, God forbid it's going to be taken from me. And everything just opened up when I realized that that's just the exact opposite way I should be living. Where money is not mine, it should just flow through me. You know, need to start giving as much as I can. donating money, giving money away, and also not having living in fear anymore and realizing that everything I had and needed is right in front of me, two kids and, you know, my wife, my house, my career. And even if all of that was taken away from me, not my family, but if, you know, the career, everything was taken away from me, fine. We'd move into a one-bedroom place somewhere and be

Starting point is 00:25:19 fine, you know, or we've got family. We'd go shack up with them for a few months, so we got back on our feet. But you know what? It wouldn't matter because we're still together. And it was just like the most peaceful feeling thinking like, okay, this is all fine. Okay, great. Now I'm not chasing anything anymore. And a funny thing started to happen. In real estate, I had been building this turnkey real estate business where I help people, you know, get their first rental properties.

Starting point is 00:25:41 Yeah, I was going to say, when you say turnkey real estate, can you define that? Sure. So for a few years ago, I had started buying rentals out of state. I live in New Jersey and I built a team in Indianapolis and Redford, Michigan, and contractors, my property management company, everything, and I'm buying, you know, $30,000 house, single-family homes, putting a tenant in place, great long-term tenant. We've rehabbed the house from soup to nuts and helped, you know, and getting a great return on my investment. So I always try to have like a minimum, like a 12% ROI on my properties and, you know, the cash flowing like $675 a month.

Starting point is 00:26:18 And my goal was I wanted to get to what I call my freedom number. And so I started doing this for myself a number of year. And what I mean my freedom number is how you add up all of your expenses. And I actually have a giveaway on my website for free. If anyone wants to download, it's a PDF that can like walk you through how to find your freedom number because I think it's so powerful once you realize like the number of houses you need to cover your monthly expenses, the number of rental houses you need to cover your monthly expenses is just so low for most people that it'll blow your mind. And you can start working towards that goal of creating passive income for your family. And I started to do it for myself. Then it was my mom. My sister, I was helping get their first rental properties.

Starting point is 00:27:00 Then it was friends. Then it was friends of friends. And I looked at my wife. I'm like, I kind of got a business, you know. And before I knew it, I created this turnkey real estate business where I talk to buyers every day who call me up and want a new property and I, you know, add to their portfolio and we get it done for them. And they love it. And they love it. And they All they do is collect rent checks, and that's it. And so you ask me what I do now. I think I'm an entrepreneur. I'm a real estate investor, an entrepreneur, and a national broadcaster, you know, and news broadcaster.

Starting point is 00:27:31 And having that focus and knowing that I can create empowerment for people, helping people achieve financial freedom as my one thing, you know, it really all sort of coalesced and came together for me. Instead of 80 things, I was like, wait a second. people have a negative fear of money, they feel like they can't get ahead in life. I've been suffering from this. I've been chasing things my whole life. Just stop. Look around and start to create empowerment through this. And it's been life-changing for me.

Starting point is 00:28:01 So that's kind of, that's what I tell people I do. That's a lot still. So, I mean, or it's two, I don't know, and they're not completely separate, but the business of being on the Fox News, I know, is I think a lot people probably know you from that. And then you have other groups who know you from your real estate business and then the ones who know you from both. But really, too, you could probably do one or the other and have that be your primary job. And the fact that you do both, why is that?

Starting point is 00:28:31 Well, I love television. I've always loved the medium of television since I was a little kid. You know, I would sneak downstairs and watch Letterman and Carson back to back when my parents thought I was in bed. And I grew up doing stand-up comedy at local comedy clubs when I was like 15 and 16. I mean, yeah. And so I loved that world. And, you know, and then you reach a certain level of, I think, I don't know, I say expertise, but sort of the Malcolm Gladwell 10,000 hours where you love it, you have such a command of it that it's who you are in many ways. But there was always that piece missing for me, which is you're still collecting a paycheck, right? No matter, even if you're playing for the NFL, it's why so many people in the NFL, they leave the NFL and they go broke because they waste. all their money on fancy cars and they didn't invest in real estate. Then you have like a few people who were smart and bought like apartments and condos and single family homes. And they're like,

Starting point is 00:29:24 you know, they're giving speeches and speaking engagements because they're flying Fran Tarkington in because he's created businesses. It's like, you know, there's a difference, I think. So for me, it was still a paycheck. You know, unless you're a multi-millionaire as an actor or, you know, you've invested, you have some big inheritance or something like that, you're still going need a way to create passive cash flow for you and your family for years to come. And I, you know, frankly, there's no other way to do it. I mean, look what's happening with the stock market right now. So, yeah, I, I'm really interested in this, actually, Clayton. So I want to talk about the, for the people who are listening, and I am in this, this boat, who say,

Starting point is 00:30:07 ah, I love that. And this sounds so great. Like, you got this, this passive income coming in. It's, it sounds so simple and easy. What about for the person who has never done it? And they're saying, this is really cool that Clayton has been able to do this. I want to do this. What are the first 30, 60, 90 days? What are the first things you would do? And I'm talking about people who they've got a little bit of extra money. They're not living paycheck to paycheck. They've got some cash. What are the first things they should do over the course of their first three months if they want to start doing what you do. Well, one thing I would say, first of all, is

Starting point is 00:30:44 and why I created this free cheat sheet, if anyone wants it, if you're driving right now and you, please, do not get an accident as I kind of help you understand your monthly expenses and what that means. So if you just go to my website, you can link it up however you want. It'll be in the show notes, yeah. Awesome. So it's just clayton-Morris.com slash freedom,

Starting point is 00:31:04 and it's just like a three-page thing. And I talk to investors every day on the phone. phone, who they can't believe, first of all, I'm talking to them on the phone. So the first step is, call me. I will talk to you. I know that sounds strange. You're like, yeah, right, whatever. I'm telling you.

Starting point is 00:31:21 Go there, I will help you get started because I'm passionate about it. I have a great career, and I want to help as many people as I can. And frankly, I'm really upset and angry about the lack of education in this space, right? We see commercials for fidelity investments and, you know, follow their green path to retirement. you're never going to see ads on television for creating passive income through real estate. You know why? Because there aren't all these middlemen making millions of dollars off of you and your money in a 401k plan. And all of this money from fees and management fees, there's not.

Starting point is 00:31:56 Have you ever seen a real estate commercial? No. Yeah. Have you ever seen a commercial for broccoli? Right? We have commercials for things that are typically not good for us. And it really is the truth. And it infuriates me that people, like, join a company and they think, oh, I'm all set.

Starting point is 00:32:15 I've got a 401 plan. I'm set for retirement. The average 401k upon retirement is anywhere from $70 to $90,000. You're going to live off of $70,000 to $90,000 for the rest of your life? So you retire, you know, 62. How far is that going to get you? Yeah. That's nothing to hand down to your family, to create legacy wealth for your family.

Starting point is 00:32:36 So when people, I ask people this, and often people say, oh, I want to be a millionaire. And I say, why? Why do you want to be a millionaire? Where it's kind of arbitrary, when they actually start to go through the freedom cheat sheet, they actually start to like put it together. The way I break it down is simple. And you realize you don't need anywhere near that level of money to be truly wealthy. And it's kind of astounding when people break it down.

Starting point is 00:32:59 So I'll kind of give you the nuts and bolts here. The first step is to literally do this. So you know what your goal is. The first step, and when I get on the phone with people, I always ask, I say, what is your freedom number? They're like, oh, my God, I couldn't believe it. It's only 15. Or it's 30. That's it.

Starting point is 00:33:14 And I couldn't believe it. And I get so excited about it. So here's how it works. You take the average of six months of your finances, your expenses, okay? I want you to throw out the holidays, because that's always going to be weird because you're spending more, whatever. So take six months of your expenses, monthly expenses, and I want you to look at everything. You went out to movies, dinner, you know, mortgage payment, rental payment, car payment, school payment, whatever it is.

Starting point is 00:33:40 And I want you to take the average of six months of that. So let's say for the sake of argument, it's like $5,000. Okay? That's everything. Or let's say it's $4,500. I want you to pat it by like 10%. So you just have a little bit of extra. So that's like you want to go out to dinner a few more times.

Starting point is 00:33:57 You want to take that family trip to Disney World, whatever it is. You pat it by like 10%. Okay. Now you're up to like 5%. thousand dollars a month that's all you need right then you're financially free you're totally covered financially free so when you talk about being a millionaire why okay now break that down by how many houses you would need rental houses to cover that that's about 12 houses it's 11.5 houses or something 12 11.9 houses it where i buy them which is mid you know middle of you know middle of the

Starting point is 00:34:26 country so 30 to 40 thousand dollar house three bedroom one bath garage driveway 30 to 40 thousand-dollar house with where are these? I mean, I talk to California investors all the time. They cannot believe it. I'm in New Jersey where... No, where are these houses, though? I mean, I... Oh, so I do most of my, the houses that I do are in the Midwest, but my market where I have my whole team is in Indianapolis. Okay. So, too... This seems like a small amount of money for a house that size.

Starting point is 00:34:52 Yeah, I know, and you'd be surprised. And, you know, being one of the number one rental markets in the country because of the growth and the commerce across the United States between Chicago and Cincinnati and, you know, a lot of long-haul trucking companies that there have to go through. And, you know, it's really an amazing area. And you get a lot of the blue-collar jobs. And so, yeah, that's the average. You go to Cleveland for properties. I have some in Michigan. They're a little bit more expensive. But that's what you're looking at in taxes, like $500 a year. So you get the benefit of low taxes. Indianapolis doesn't have a flood zone. We saw what happened in St. Louis recently with all the flooding, which is another great.

Starting point is 00:35:30 rental market. So there are many reasons why I love Indianapolis, affordable, hardworking, a lot of job growth, safety, you know, just affordable, low taxes, et cetera. Right. And then you have a team, you have to have a team of people to do the day-to-day stuff when things go wrong, right? Right. So I have a property management team that manages my properties and they manage properties for, you know, my clients, et cetera. So when you really break it down, so you look at those houses, you look at those numbers, and I've got my calculator here. If you've got like $5,000, you basically divide that by the annual rent of these houses.

Starting point is 00:36:05 So at $6.75 a month times 12, that's $8,100 for one property. Then you want to take out expenses and you know, you want to figure vacancy expenses, et cetera, like what you figure for your numbers. And I don't want to get too bogged down, but the worksheet kind of goes through it all. And you realize you're like, wait a second, honey, 12 properties. That's what we need to be financially free. And then anything on top of that is just icing on the cake. So this million-dollar idea that I had in my dreams that I wanted to be a millionaire really gets thrown out the window.

Starting point is 00:36:37 Because now what you really want is net worth and you want cash flow. And you start to switch your paradigm in your mind and it just, you know, it becomes. So that's, to answer your question, the first thing you want to do is figure out your goal. What is my goal? And you want to work in reverse from there. And very odd. And I love to help people on the phone. I mean, before our call today, I was on with three different investors helping them walking

Starting point is 00:37:03 through, like, their different financial situations. You know, one individual has no money, but he's got a great job. He has a 401K. Okay, so he's got some money in his 401K that he can actually borrow from, not withdraw and get a penalty, but borrow from it. And so he's about to borrow from it and buy his first rental property. He pays that back to his 401K company over about a 16-month period out of his payroll check, and he's got his first property.

Starting point is 00:37:28 That money was sitting in a 401k doing nothing for him, and now it's going to be producing $675 a month, and he's got net worth. He just increased his whole net worth like $30,000 to $40,000. And that's the goal. I mean, that's what I get excited about is helping people for the first time do this, because there's really not that much education products out there,

Starting point is 00:37:47 things to help people in this. And it's really sad, and I get really frustrated by it and upset. And you write about, I've seen on your blog, creative ways to borrow money to, like you're just mentioning, to buy your first rental property. I think the most recent one was getting a HELOC to get your first rental property. Right. You can, yeah, getting a HELOC, which is a home equity line of credit. Yeah. So a lot of people have equity in their house. Let's say you own a hundred, $150,000 house, and you only owe 90 on it. Well, go to your local bank and get a home equity line of credit. All you

Starting point is 00:38:21 need is like $5, $10, $15,000. You don't even need that much. leverage that. That's your equity, right? It's sort of the anti-Dave Ramsey rule. I was just going to say, he came up, he came to mind, and I've talked to people who work for him. What do you think about his method or strategy? Maybe there's just multiple ways to get things done, or just that you just fundamentally disagree? No, he helped me get out of debt.

Starting point is 00:38:47 So that's where I think he's powerful, right? I was $45,000 in debt number of years ago when I started out. I thought I was never going to get ahead until I started putting things down on paper and following his plan to get myself out of credit card debt. And it worked. But what I think where I disagree with him and what a lot of, you know, a lot of my friends who are high-level investors that own 200, 300 properties and their multimillionaires just disagree with Dave Ramsey fundamentally is that they believe that there is a difference between good debt and bad debt. And quite honestly, I think it's been proven that that's the case, that there is a difference. bad debt is 18% interest rate on a credit card. Yeah.

Starting point is 00:39:27 Right. Good debt is using the equity in your own home to purchase positive cash flowing real estate that is increasing your overall net worth for your life and for your family. There is a difference, right? That's your equity. So if a bank is going to lend you $50,000 on your equity of your home, well, then you can turn around and buy two rental properties without, and now you're earning. $1,200 a month in positive cash flow because of the equity in your home? You know, Dave Ramsey would say, have no mortgage, have no debt at all.

Starting point is 00:40:02 Okay. Then a lot of high-level investors who are multi-millionaires believe in refinancing until they die. Jason Hartman says, refi until you die. That's his motto. And so I just, I have a fundamental disagreement around that philosophy. I'm much more in the Robert Kiyosaki, Rich Dad, Poor Dad book, mentality being that the home you live in is the worst investment you can make. and, you know, buying rental real estate. My wife and I believe in the golden goose versus the, you know, the golden egg philosophy.

Starting point is 00:40:34 I'd rather have a goose that's producing eggs than just the eggs themselves that aren't going to produce anything. What about people who just fundamentally are risk averse, but they're smart people. They do good things. They load up on their 401K, every paycheck. They have set money to go to 529 plans. they have set money to go to their financial advisor to save. They're making good money. What do you say to those types of people?

Starting point is 00:40:59 I think understand your goal, first of all. But also understand that what does it mean to be risk averse? To me, look what's going on with the stock market. I don't know those companies. So I often ask people like, yeah, but I don't understand real estate. Okay, well, what don't you understand? People need to live places. They pay to live in them.

Starting point is 00:41:21 If you can buy a property at a great price, so you're closing with a little bit of equity when you close, you're not overpaying for it, and you know that the rent is going to cover any leverage you have on the property. So let's say you actually have a mortgage note on a property for $380 a month, and your tenant is paying $6.75 a month. Okay. I mean, you don't need to be a genius to know that that's a great deal, right? Now, I look at the stock market. I don't know those companies. why is suddenly these 30 companies that I'm investing in, you know, taking a nose dive? Because some board of directors somewhere made some decision that has nothing to do with me,

Starting point is 00:42:00 and I have no control over? Talk about being risky. You know, I just don't know. And we have a 529 plan as well. We stopped contributing to it because I'd much rather have the money that I make from my investments work for my kids' education than putting $30,000 into my kids' education, 529 plan. and suddenly the stock market takes a dive, and now it's down to 15,000. It's like, well, wait a second.

Starting point is 00:42:24 I worked really hard, put a lot of money into my kids' future, and the stock market with having nothing to do with me is now half of what I put in it. That's ridiculous. So I don't know. I just think people, let me lay this out for you, for people who are curious about real estate. I have a friend who owns, he probably owns more than this now, but he owns 79, properties in the Detroit area, which includes Redford and those areas outside of, you know, outside of Detroit, but in Detroit as well. And for those of you who aren't familiar,

Starting point is 00:43:00 Detroit took like the worst, took the biggest hit during the recession. The city, I think, had to declare bankruptcy. It was a disaster. He owned 79 rented properties free and clear. He may have actually had leverage on some of them. I think he did, meaning he had mortgages on some of them, and they were all rented with tenants. During the recession, he didn't take one hit on his rental income. Not one. Why? Because during a recession, people can't get mortgages, and they need a place to live, right? They still need a roof over their head, so they're going to rent. He also was renting them for like $700 a month. So what is he going to do, lower the rent to $675 a month for them? No. You don't like lower the rental. What's $25 going to do, right?

Starting point is 00:43:51 Right. So you just don't. So he didn't take one dip in his rental income. And that is consistent from many, many investors that I talk to that have multiple, multiple rental properties during the downturn because people need a place to rent. And quite honestly, during the upturn, people still need a place to rent, you know, and you're able to increase rent because there's more competition. So, in a worst economy, rental real estate is fantastic, and in a great economy, it's fantastic. As long as you're not buying in Manhattan and Miami and ridiculous places like that, you know. Yeah, the one other thing I've heard from people who have been in this a little bit, maybe they've dipped their toe a little bit, and maybe that's probably part of the issue,

Starting point is 00:44:30 is that there's just a lot of headaches that come with it. Like I said, people who don't pay, not great tenants, just day-to-day things to fix up the house that you just don't have time to do. and so is that where the property manager comes in to help? Because I mean, I could see the headaches being stressful on a family. Right. If there's just bad things happening all the time or you're constantly having to fix things or get a better tenant, things like that. Right.

Starting point is 00:44:56 So that's why I set out in the very beginning to never have a phone call. I don't want phone calls when a toilet valve is broken and needs to be fixed. That's why I'm happy to pay 10% of my monthly rent income to my property management company. They will screen my tenants before they place them. So they will make sure that they are, they've got employed, they're employed. They have employment verification. Yeah. They don't have a criminal background.

Starting point is 00:45:23 So they check for a criminal background. They also check with previous landlords to make sure that they're a good upstanding tenants that have paid on time. They do a credit check. They do everything for me. They show the properties to the tenants after work, you know, six o'clock at night, whatever it is. And I don't live in that state.

Starting point is 00:45:38 So I would never do that. And then if, you know, five months into their tenancy, some, you know, there's the leaky faucet, great, call the management company. They send out Joe the plumber and he fixes it. And I notice on my statement at the end of the month, there's a $40 charge for a new, you know, to fix a sink valve. Great. I don't want that phone call it to in the morning. I think a lot of mistakes that people make is that they think they have to do it themselves. Well, we don't know.

Starting point is 00:46:03 We don't want to be landlords. And I totally get that. Again, this is why, because there's no education out there for people on this are very little available. And it scares off a lot of people, and it really makes me mad. So, which is why I want to help as many people as I can get through this. And so I think people make the mistake of thinking that, well, they get their first rental property, well, it's in our backyard, so we can manage it, honey, great.

Starting point is 00:46:26 And while we've got a great tenant, and then they're under an illusion then, and then they pick up their second rental property and they get a bad tenant because they're doing it themselves. and they're like, oh, and it kind of colors their whole experience. Instead, from the very beginning, they should have gotten a property management company. Even with the first property. Even with the first property. Because it's very hard to walk it back. Like once you are just making that extra 50 bucks a month because you're not paying a, you know, it's kind of hard to like walk it back, right?

Starting point is 00:46:56 Yeah. Oh, okay, well, now I'm going to roll this into a property management company, so I don't have to deal with that anymore. It's very difficult, very, very difficult to do. So, I mean, it's not like logistically difficult. It's just like emotionally difficult to do. Because you've been doing it for so long and that's the one that we first got, honey. So that's the one near us. We should just keep handling it ourselves.

Starting point is 00:47:17 And you've got a good relationship with the tenant. You go over there and check on it occasionally. And I just don't want to do that. I got you. So we're up against it, I know, pretty quick. But are there a few, we mentioned a few books, but are there other books that you would advise people to read? or maybe they're books that you gift to others after you've had phone calls with them. What are some of the best pieces that people can read?

Starting point is 00:47:40 Because I know you mentioned there's not a lot out there. Yeah, I mean, as far as real estate goes, I think if you really want to understand the fundamentals of real estate investing, Gary Keller, who of course created Keller Williams, he wrote, before the recession, he wrote a book called The Millionaire Real Estate Investor. And it's a book that every day I'm on the phone with investors talking about and recommending because the fundamentals are so fantastic. And had people paid attention to the fundamentals in his book, we wouldn't have had the recession. People wouldn't have gotten like five-year balloon notes and over-leverage themselves.

Starting point is 00:48:11 His fundamentals are still true today as they were then. So it's still the book. I just reread it. And it's so true. It's exactly how I do my real estate investing. And so his whole methodology is buy a million, own a million, cash flow a million. So let's say you're 39, 40 years old. Well, right now you're in the buying phase.

Starting point is 00:48:30 So we want to increase that net worth. Let's get 10 properties. 20 properties. Maybe we're only making $100 on each property because we have a note on them and we've got, you know, whatever, $200 a month, that's fine. Guess what? After that's paid down in 10 years, then we're going to own all those properties free and clear. And that's when they start to cash flow. Most people kind of go into it thinking cash flow first. You should really think of increasing net worth first. Play the long game. Exactly. And five, 10 years, you use the tenants, the tenant's money to pay down the notes that you've got on this property

Starting point is 00:49:04 if you don't have any money to buy them free and clear. So I love the millionaire real estate investor. Again, it was written before the crash, but it's still as relevant as ever today. And I'd also recommend Susan Lasseter Lyons. She's written a fantastic book on how to get private money. There's so much money out there, Ryan. It would just astound you. You talk to your friends who's got $300,000 just sitting in a savings account,

Starting point is 00:49:29 and they don't know what to do with it. If you could talk to them about, well, how would you like to make 6% return on your money? I'm going to buy five rental properties. They'll say, great. So she walks you through how to do it. So the book is called Getting the Money. And I'm telling you, I know, I know people are sitting there saying, there's no way there's this much money out there.

Starting point is 00:49:52 There is. There's so many people that have money sitting in a self-directed IRA that don't know what to do with it, that are looking for better returns in the stock market. Stock market's 3 and 4% returns. If you're lucky, you know, the houses that I buy, I try to get a 12% return. So anyone who has money sitting there would take that deal any day of the week. You said buy a million, own a million. What was the third part?

Starting point is 00:50:17 Cash flow a million. So how many properties do you currently have? So my turnkey business, we do about 10 properties a month. you know, fixed by, or we fix them and then work with our clients on the back end of that after we've rehabbed them. Personally, I have 12, let's see, we have 12. And we just brought a 13th one. So 13, my goal in 2016 is to buy two per month.

Starting point is 00:50:43 I wish I could buy all of my, you know, all of them, but I can't. You know, I've got a, my wife would kill me. So my goal is two a month in 2016, so 24 this year. is our goal. Nice. Okay. So yeah, it's going to be a focused year for sure. I love it. This is, this is really interesting. I learned a lot. And Clayton, I, coming into this call, I expected to talk about like TV and all these other things, and we went all real estate, which is people could probably tell them I'm fascinated by it because it's not something I'm well versed on. And so I've learned a lot, and I can assure you all probably be reaching back out to you. And I appreciate the, you mentioned earlier,

Starting point is 00:51:25 you want people to call you and talk to them, I can attest, you know, I sent you a cold email and the response was, you responded pretty quickly, and I appreciate that. And that's why I was excited to have this conversation. So I appreciate you being here. And so you mentioned Clayton Morris.com slash freedom. Where else would you send people to find you online? Sure. So people can just reach out to me on Twitter. I'm Clayton Morris on Twitter. You know, Facebook as well. You can reach out to me on Facebook. Those are the primary places. Is anyone jumps on Twitter wants to send me a message there? I always respond.

Starting point is 00:51:58 If you go to my website, I will absolutely respond there as well because I'll get an email sent right to me and I'll send you an email right back and we'll jump on the phone. We'll set up a calendar time and literally, I mean, I'm not joking when I say. I've got my calendar booked or open. So I use a calendaring software. So I'll wake up in the morning and I'll have like 10 people will have like filled up my calendar for the day just to jump on the phone and talk for 30 minutes. And it's wonderful. And they'll write in what they want to talk about in real estate or investing. And I'll just, you know, spend that

Starting point is 00:52:31 half hour and take a break for lunch. And I love it. I'm just that sort of look at a way of giving back. And I swear to you that this is the way that I really want to try to help people and give back. So do not, if you're sitting there thinking, I'm not going to reach out to him, he's not going to pick up or answer. We're not going to talk. You're full of it because I'm telling you I will and I'll want to help as many people as I can. Very admirable. I was going to say it's interesting. I haven't had a guest who is this open to say, hey, call me. We'll talk. And I absolutely love it. I can promise you, I'm going to be calling you too in the future. So we'll be jumping back on Skype, email. And so I really appreciate you investing your time here with me. Clayton, as I know it's obviously important to you. So

Starting point is 00:53:13 thank you so much for being here. And as I mentioned, we will certainly be continuing this dialogue as we both progress. Awesome. It was an honor and I'm flattered that you had me on. Awesome. Great. Thanks so much. Thank you. This episode of The Learning Leader Show is over, but we have plenty more to keep you locked in until next time. Head over to Learning Leadershow.com for more information and to request your favorite entrepreneur, CEO, world class athlete, or anyone else that inspires you. You can also talk to Ryan directly by reaching out to him on Twitter at Ryan Hawk 12. Thanks again, and we'll see you next time on The Learning Leader Show.

The Learning Leader Show With Ryan Hawk - 094: Clayton Morris – What Is Your Freedom Number? A Crash Course In Real Estate Investing

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