This episode is for any employee who dreams of leaving the rat race. Clayton Morris, former-Fox News anchor, joins Tom to discuss his transformation from TV star to successful real estate investor. Choosing to leave a lucrative, high-profile career was an easy decision, because Morris took control of his wealth by creating passive income that allowed him to ditch his paycheck.
03:31 – Why Start Investing When You’re An Employee?
11:23 – What Was Clayton’s “Aha” Moment?
13:35 – What Is The “Rip-off & Duplicate” Method?
22:29 – Why Are Taxes Your Biggest Expense?
Learn more about Clayton Morris by visiting http://www.claytonmorris.com/
Tom Wheelwright: Welcome to The WealthAbility™ Show, where we're always learning how to make way more money and pay way less taxes. Hi I’m Tom Wheelwright. I'm your host and founder and CEO of WealthAbility™. Today, I'm very excited. Think about this: what if you could choose whether you worked or not? What if you could choose whether you had a job or not?
A lot of us like what we do. We might have a high-profile job. We might have a job that is a dream job for us or a lot of other people, and sometimes we want to go, “Okay, it's a dream job. But what if we didn't have to do it? What if we had that choice?”
Today, I'm very excited to talk to somebody who's actually been through this. He's been in a high-profile job. You'll recognize this guy. You'll know who he is. You'll know where he came from. He's just an amazing person. We've become very good friends. Clayton Morris, many of you know, was the prime host of Fox & Friends for years and years, and at the same time, he started investing in real estate. He's going to tell us that story.
What I love most is that he's such a good friend, and of course, he's … I mean, I've been on his podcast five or six times. It's about time that Clayton Morris was on my podcast. I have to admit I'm a little nervous because Clayton's the master interviewer, and I'm typically the interviewee. We're going to do a little role reversal here. But Clayton, thank you so much for being on our show.
Clayton Morris: Oh, thank you, Tom. It's always great to connect with you, and, like you said, I'm just so thrilled that you and I have become really good friends. It's just funny to think, going back a number of years ago, you were a guest on my podcast, the Investing in Real Estate Podcast, where we talked about tax strategy. I think we reference you on our podcast probably once a show. We're like, “Well, Tom says this. Tom says that. You gotta do it because Tom says this.”
I love that you started your own show. I listen to it every time it publishes. I love it. I think you're just doing an amazing job. It's such a thrill for me to be here on your show.
Tom Wheelwright: Well, I appreciate that, Clayton. So, Clayton, take us back. You and I share something in common here, and that's the reason that we like being entrepreneurs. Let's talk about what was the trigger. Why did you even start investing? What was the impetus behind that?
Clayton Morris: I really got clear about what happened in my later years. You look back and you really see it all coming together. I grew up with a lot of really negative associations with money. When I was little, my parents would say, “Money doesn't grow on trees. We're not the Rockefellers.” They had W-2 employment jobs. They would get a paycheck. They had very little money in any kind of a retirement. They had no performing assets.
So I really grew up like the poor dad version. My dad is 83. He still works very, very hard, but he has not a lot to show for it in the way of cash flow. I watched my dad lose his job when I was 12 years old. I remember the day that he came home, and he was pacing around the kitchen. I was upstairs kind of terrified. I overheard him saying that, basically, he had been … He was downsized, but he just thought he was fired because he was whatever. He was the hardest working guy I know.
I remember thinking, “Wow. That boss just altered the course of our family,” that because he didn't have anything else as a safety net, cash flow, anything else coming in in the way of performing assets, that boss on that afternoon on that Friday just altered the course of my family. And-
Tom Wheelwright: Well, it's interesting that you said he was downsized. So he wasn't fired; he was just downsized.
Clayton Morris: Right. Right. He wasn't even really fired, but he thought … And he was like, “I'm going to hire a lawyer and go …” He was in his 60s now, so it'd be more difficult for him to get a job, and he just thought they were maybe playing the age card.
Tom Wheelwright: Wow.
Clayton Morris: But I remember him just being so angry about it. Instead of being proactive, he just was like … wanted to respond in that way. I remember thinking, “Wow. My life is over. We're going to have to move. We're going to have to sell the house.” I remember crying. I was 12. I didn't know what was going to happen.
Then it ended up happening to me. Years later, I'm working at Fox in Philadelphia, the host of Good Day Philadelphia, which is a morning show. They had encouraged me to move there and buy a house. It was my hometown of Philadelphia. I'm back. They ran all these promos. I was on the side of a bus with big pictures driving through the city.
Tom Wheelwright: Wow.
Clayton Morris: So they did a whole big campaign where … But when I got there, the woman who had hired me, the news director, she was fired the next day or that same week. She hired me to be the fun morning show guy. They wanted to make the show fun again. So I'm there now. I have no internal support. This news director is gone. They bring in a news director that wanted to take the show in a really hard news, “if it bleeds, it leads” direction in the morning. And I hated it.
Tom Wheelwright: Oh, wow.
Clayton Morris: It was just not a good fit. I was on a one-year contract. Nine months in, when there's an option window open in my contract, they called me up to the office and they said, “Hey.” It was a Friday. “How's everything going?” Said, “Oh, good, good.” They said, “Well, we have an option in your contract. We're not going to renew your contract.” I just felt like I was flashed back to being 12 again. I just felt like my whole destiny had been altered because of this one move.
I remember just walking home through Philadelphia and by Independence Hall and down towards my condo that I had bought to live there because they encouraged me to do it. I'm like, “Oh my God. What am I going to do? How am I going to pay a mortgage on this house? What am I going to do?” I vowed then … I didn't really put it into words, but I remember thinking, “I'm never going to let this happen to me again.” That was where I decided to take charge.
Tom Wheelwright: That's really interesting. It's so parallel. I went through very much the same thing. I was at [Price Waterhouse]. They had heavily recruited me to run their multi-state tax division in Phoenix, and I'd been at a Fortune 1000 company, In-House Tax Advisor. I didn't last as long as you did. I only lasted seven months, and they just flat-out fired me. This was, “It's not working out. You're gone,” etc.
I remember going home, and I had two young boys. I had two young boys, and I'm going, “Man, this is not a good thing.” Now what do you do? You're in this quandary. Now what do you do?
Clayton Morris: Well, what I did was I moved back home with my parents.
Tom Wheelwright: Oh, wow.
Clayton Morris: Here I was … I think I was 29 or 30 at the time. I had no cash flow, no performing assets, and I had this mortgage in Philadelphia now to pay for. I had a little bit of severance that they gave me but not much. Fortunately, we had gone through the crash, so we were on the other side of that. It was a hot real estate market in Philadelphia. I was able to sell it. I sold it for a bit of a loss, but nonetheless, I got out from under it.
But I was like, “What am I going to do?” I moved home to Reading, Pennsylvania, about an hour away from Philadelphia, moved into my old bedroom. How humbling is that? It's like Costanza moving home.
Tom Wheelwright: Wow.
Clayton Morris: I'm eating dinner with my parents again, God bless them. But it was a real tail-between-my-legs kind of moment, thinking about my life and what I wanted to do, and where was I going to go? Right around that same time, I got a job offer: fly down to Tampa to host a morning show down there. At the same time, I knew that the network, Fox News Channel, had called up and said, “We've basically been watching your career for a long time. We'd like you to come up. We have a morning show, Fox & Friends, on the weekends, and we're looking to remake it. We'd love for … to possibly have Clayton host it and come up and do a guest host spot.”
Well, things move slowly, so they kept dragging their feet. I was just like, “Well, should I take this job in Tampa?” My dad, who was a paycheck guy, he couldn't believe that when I got back from Tampa, I just turned it down. I just said, “I'm listening to my intuition. I think that I'm going to be going to the network. I just have this feeling about it.” Took a little while, but sure enough, Fox invited me up and I started anchoring Fox & Friends and was there for 10 years.
That was an amazing move for me to get there and to be at the network. That's when everything started to change for me. But I knew, still, even though I'm going to the network … That's the thing. Everyone thinks it's glamorous, and it certainly was. Here, my office was a few doors down from Bill O'Reilly's office and all that kind of stuff. But it's still a job. It's still a paycheck. It's still a W-2 job. I knew I still had to kind of figure that out and start to move into the world of performing assets and getting cash flow.
Tom Wheelwright: How did you start investing? How did you actually get into doing that? Because you did that while you were at Fox & Friends, right?
Clayton Morris: Right. So I'm at Fox & Friends, and I had gone through the collapse. I had gone through all of that. I had done some real estate stuff before where I had flipped a couple of condos when I lived in Orlando, one I lived in, one I lived next door to. That's where I saw the power of buying properties off market. The two-bedroom condo that opened up next door to me, this woman had lived there for 30 years, heavy smoker, and she passed away. I had to go in and fumigate the place. There was nicotine on the walls. It was crazy.
I sold these two properties right before the crash happened, and I took that money and put it into some speculative project, which I'll never do again. Now I buy single-families and do it smart. But then, man, I … So I really lost my shirt and then … through the crash. I didn't get back into real estate investing until after I got to Fox & Friends. My credit was hurt as a result of the crash. I didn't have the ability to just go out and get a loan on these things, even though I was making a great salary at Fox.
I was on a flight to … This is an amazing moment in my life. I was on a flight to New Zealand. I was going there for five days to shoot photos. A friend of mine is one of the greatest photographers in the world, and he lives in New Zealand. He invited me there to drive all around the South Island and take photos and everything. Natalie, my wife, gave me … She's like, “Fine. Go. I'll watch the kids.” So I'm flying there and … 16-hour flight. I'm on the descent. I finally start talking to the people next to me.
They're in their 50s. They weren't retired. They said, “Hey, how long are you going to be in New Zealand?” And I said, “Five days. They said, “Oh, that's a short amount of time for such a long journey.” I said, “I know. I gotta get back to work, my paycheck.” I said, “What about you guys? How long are you going to be here?” They said, “Oh, we're going to be here in New Zealand for two months.” I said, “Two months? What do you guys do that you can go to New Zealand for two months?” He just looked at me and said, “Oh, I'm a real estate investor.” I said, “Ah.”
For the next 30 minutes before we landed, I just picked his brain. He told me where he buys in the Midwest, what types of houses, single-family homes, 900 square feet, three bedroom, one bath, whatever. That was his milk and toast. That was his bread and butter. As soon as I got back, I called Natalie. Or as soon as I landed, I called her and I said, “We're buying real estate. Here's where we're buying it.” And that's when everything started for me. I kept the same formula as the guy on that New Zealand flight ever since, and that's everything I buy to this day. It's been the reason I've been able to reach financial freedom, thanks to that.
Tom Wheelwright: Here's what I love, and this is something that we teach on this podcast all the time, is that this real estate investor you met, and then you take this. You're doing one thing, and you're going, “Okay, here's where I'm going to invest. Here's how I'm going to invest. These are the types of houses. These are the size of the houses.” What really hits me here is you met somebody who had a very clear set of criteria for building wealth, and then you just go, “I'm just going to copy it.” I'm going, how beautiful is that? We call that R&D, rip off and duplicate. Right?
Clayton Morris: It's so true. I'm not reinventing the wheel.
Tom Wheelwright: Why would you?
Clayton Morris: Right. The thing is, you learn, as you know … I mean, a lot of the smartest real estate investors never went to college. They're people you don't even know their names. They're like the quiet ninja.
Tom Wheelwright: Absolutely. They have this tendency to drive the worst cars and have the dumpiest offices. Ever since I've been in Phoenix, for 30 years, I've worked … My whole career, I've worked in the real estate area as a consultant. I had this client, and his partner is still one of the biggest developers, and nobody who is not a developer would know him. But here's a guy. He's in a dumpy little office, back office. He drives a car for 30 years before he gets rid of it. And yet he's brilliant, and he's worth … This guy's worth literally hundreds of millions of dollars, one of the wealthiest people in Arizona. And nobody knows who he is. That is pretty typical of a real estate investor.
Clayton Morris: That's right. To go back to that formula, I ripped it off. It's so basic, and it's not only the way that I buy properties. I buy properties personally, so in that 50, 60, 70 thousand range all-in. That includes the amount I put into rehab, and then place a tenant in there with our property management teams that we work with. But that's also what led to my company doing the same thing.
Morris Invest, my investment company where we do this as a turnkey product for people, it's the exact same formula. So then I've just ripped it off for myself twice because it worked for me.
Tom Wheelwright: So why not have it work for others?
Clayton Morris: Right. So now that's what we do for other people. Natalie and I are buying three properties this week. They're in the 60,000 range. We got them for cheaper than that, but we have to put about 20,000 of rehab into them. They're going to be worth … I think they're worth about 70, 80. So we're getting them at that great price point. It's going to cash flow nicely, 800, 850 a month. I'll get five-year leases on some of those properties, and they'll stay consistently cash flowing for me.
I was buying those while I was at Fox. So when I announced that I was retiring at 40 … It was one year ago, actually, on Labor Day. I just had enough of all the crazy politics and just … You get death threats and emails. You're on in front of two million people; everyone's got an opinion. So I said … And I don't enjoy getting up at 4:00 in the morning anymore. I used to. I don't like doing it anymore. Now I've got three kids. I want to spend the rest of my life enjoying passive income, building this business, focusing on my family, being able to travel, instead of spending five days in New Zealand, be able to spend two months there.
It's been weird. It's been a whole year now not being on television, and people ask me all the time, “Do you miss it?” I'm like, “Do you know what's going on in the Supreme Court right now?”. I don't want to be on TV having to talk about all that stuff right now.
Tom Wheelwright: That's like saying, “Do you miss the circus?”
Clayton Morris: Right. Exactly. Exactly. No, I don't. I enjoy being able to sit here and talk to you at our home studio and be able to talk about financial freedom. This is way more powerful and impressive to me. I get the emails from people after you've been on our show. People are like, “Tom is a genius. Thank you so much for having him on. He's changed my life. Listening to his tax advice, reading Tax-Free Wealth, has literally changed my family's life. Thank you for recommending that.” Those are the emails that matter more to me than, “Hey, great interview today with Senator What's-his-name.” Who cares about?
Tom Wheelwright: After I was forcibly removed from Price Waterhouse, I go, “You know what? Who do I really want to be with?” I was looking at, “Who do I want to spend time with?” And I went, “I want to spend time with entrepreneurs.” When it comes down to it, I love entrepreneurs. I started my first business when I was nine years old. When I actually started my firm, my first accounting firm, I had … All these people came up and said, “It took you long enough. We all thought you would do it, but we just couldn't believe it took you 13 years in the corporate world before you finally figured out that this was your spot.”
It's just fun. The impact … Buckminster Fuller's, of course, the great genius, one of the great geniuses of our age. I know one of his quotes is that “The more people you serve, the more effective you become.” He says that's a general principle. The more people you serve, the more effective you become. So the idea that you've taken this and you've launched it to more and more people … I think it's fantastic. I love it.
What we're doing right now, as some of you all know, is that we're building a worldwide network of CPA firms on the Tax-Free Wealth Network™. With that principle in mind, the more … I did it at my own CPA firm. We built a CPA firm, did international CPA firm, 50 states, 30 countries. I've got a second CPA firm now. But now I can share that with other CPAs, and it's just the more … I think that the more … Once we figured out what we're doing, I almost think that we're obligated to share it.
Clayton Morris: It's funny you say that because when Natalie and I came up with what we call our freedom number, and we call it finding your financial freedom number, we found it because I couldn't pay the mortgage. We found it because we said, “What if we could replicate the two rental properties we have so that rental properties would cover our monthly expenses?” I jumped up out of my seat with a dry erase marker, and Natalie said, “I'm going to go back and do some laundry.” I said, “No. You're not going anywhere. That's it. That's the answer. What if we could reverse engineer the amount of passive income it would take for us to live financially free based on these rental properties?”
I jumped up on the marker board and I wrote down a number. We had to figure out what our expenses were, and we figured it out. Now, to your point, we give that away. I try to talk about … I never was able to talk about that on Fox. As great a job as it was, I had to talk about other stuff that didn't really help people in any appreciable way. Once we started talking, we started giving away this three-page PDF on my website. People would write to us and say, “Oh my God. This thing has changed my life. I'm able to sit down with my wife, my spouse, and we went through this financial freedom cheat sheet, and for the first time, we figured out that we have a goal. We only need six rental properties to live financially free. We don't need a million dollars. We only need $3,568 per month in passive … you know, to live …”
So once … You're right. That sharing … Once you start putting it out there, it all starts to make sense. You really feel like you're helping the collective.
Tom Wheelwright: Absolutely. Absolutely. I remember Robert and Kim Kiyosaki, our friends, their number was like $3,000 a month when they became financially free. They didn't have to have a ton of money in order to be financially free. So whatever your number is … I like the dream. I like, “Okay, what's the dream number?” And then you've got steps. You've got steps in there, and I think that's great.
Now, one of the steps that I know that … We can't get through a WealthAbility™ podcast without talking about taxes. But one of the steps I know that you took a few years ago was you basically came to one of our network CPA firms and … Just, if you would …. We haven't previewed this, folks, so I have no idea what Clayton's going to say here. The lawyer in me … which I'm not a lawyer, but I do tax law. So the lawyer in me says never ask a question you don't know the answer to.
But I have a pretty good idea that the answer will be pretty good. But if you would just share a little bit of that experience because, as Kiyosaki always says, the biggest expense you have is taxes. So that's really the one you ought to focus on. I know you guys had … In a big job like that, you must have been paying an enormous amount of taxes. And then, all of a sudden, you start looking at, okay, is there another way to look at this?
Clayton Morris: Yeah. A couple of points there. A couple of things to unpack. The first thing is that we were doing it wrong when we first started investing in real estate, which is why I make it such a point on my podcast, the Investing in Real Estate Podcast, to bring on you and educate our audience before they buy that first property. You don't want to buy it in your own name. You want to buy it in an LLC.
All of these things we didn't know at the beginning, now we try to help other people do that ahead of time from a tax perspective and otherwise, from a liability perspective, all of those pieces. So we were reading … I don't know how we found you. It was a bunch of years ago now, but we stumbled upon your book, Tax-Free Wealth. We went through it, and holy smokes. Natalie and I are the type of people where we just looked at each other and we said, “We are hiring him.”
We knew that … Why fool around? Here's the way I look at life. You can cheap out on certain things. You can go and, “Oh, I'm going to buy this bed at Ikea,” and it'll probably last three years because it's made of particle board and it'll fall apart. Or I can buy a really good bed from, I don't know, Restoration Hardware or something that's made of actual wood and will last a lifetime. How many of those Ikea beds will you buy before you actually need another one again? You're going to keep buying them over and over again.
I'd rather just work with someone who's going to do it right, and that's where we came to you and started working with you. It was amazing. It absolutely was transformative because what we ended up doing was having your … Your team was like, “Look, you need to move these LLCs over. You need to do this. You have this property here that doesn't make any sense from a tax perspective.” On and on and on it was to move this in the right direction.
Once your team … Last night … This is not me blowing smoke at all. Last night, we were around the table with a family member who flew in from California, and it was six of us all sitting around talking about real estate. She works in a title world. My relatives are there. They're investors in real estate with us and our company, etc. We pulled out our structured diagram from your team.
Tom Wheelwright: That's great.
Clayton Morris: You can explain more what that is, but honestly, the structured diagram shows basically what your company is and how it all works.
Tom Wheelwright: It shows your whole life. We just discovered years ago that pictures say a lot more than words. So we draw a picture both of where a client is at the beginning and then where we see them going, and then eventually where they might go in the long term. So I love it. I actually get this comment a lot. Attorneys love these diagrams because they know what they're supposed to do. But I love you pulled it out at a family gathering. This is fantastic.
Clayton Morris: We did because we wanted to show our friends, because our mother-in-law was asking and saying, “Can you show this to Cathy here?” So we sat down. We showed how all of these LLCs that own our different properties report up to our holding company, the holding company then talks to our trust, and all of these different moving parts, how does our transactional business intersect with the holding company, and all of those pieces. So your team being able to do that and being able to move parts around and help us has been tremendous, and then, of course, saving us just a boatload of money.
What I love about what you guys do is you're proactive. You're anticipating things for clients on a tax basis and then getting ahead of that before it comes back to bite you. That's where … You just don't get that. Most of the time, the CPAs we've worked with have been … They're dealing with things in the reverse. They're just reacting.
Tom Wheelwright: Right. They're historians. They're historians is the problem.
Clayton Morris: Exactly.
Tom Wheelwright: They're always looking backwards, and that's actually … As we're building this network of CPA firms, we have seven in our network already and we just started this in June. As we're building this network of CPA firms, what we're doing is we're training them is that this is what clients are looking for. I was talking to a CPA not too long ago, had lunch with this partner in this big CPA firm, actually, here in Phoenix. And he goes, “We have a tough time recruiting.”
I said, “The reason you have a tough time recruiting is because you don't pay enough, and the reason you don't pay enough is because you don't charge enough. The reason you don't charge enough is because you don't do enough.” I think it's pretty simple. I think it's pretty simple.
Clayton Morris: That must have been a kick to the stomach.
Tom Wheelwright: And he just … He looked at me. “Yeah, yeah, yeah, yeah.” Not everybody's ready for the education. But I do have good news for you. I don't know if you know this, but the second edition of Tax-Free Wealth is out and it has all the updates for the new tax law, the 2017 tax law. So we're very excited about that. Anybody who wants it can go to taxfreewealthbook.com and pick it up, taxfreewealthbook.com. We're very excited about that.
Actually, I'm actually in the middle of recording the audiobook. The audiobook will be out soon. So it's very, very exciting. I have to tell you, Clayton, my favorite testimonial ever was your wife, Natalie.
Clayton Morris: Of course.
Tom Wheelwright: I don't know if you remember this, but she actually said this on a podcast. She goes, “Tom, your book was a great beach read. First of all, I'm thinking, “This woman is nuts because who reads a tax book on the beach?” But then I start thinking about it. I'm going, “That's pretty cool: it's easy enough to read that you could even read it on the beach.”
Clayton Morris: It's true. I mean, yeah, she's crazy. She's very academic, but she … Oh, yeah. Honestly, if I had to pick five books to go on my shelf, my permanent shelf … If someone said, “Hey, if you could only ever hand five books down to somebody that could help change their life, what would they be?” one of them would be Tax-Free Wealth because it really was a lightning bolt.
Tom Wheelwright: Thank you. Thank you. That's very generous. Clayton, tell us, where can our listeners find you? Because I think what you're doing is amazing, and it's so good. There are so many listeners that are just starting out, and to me, when somebody's just starting out, I'm going, “You really ought to talk to Clayton Morris,” because I think you're so good at people who are just beginning and really don't have much idea about what to do and don't have much money. So where do we find you?
Clayton Morris: Well, I think what we do at our company, Morris Invest, is we try to make it real simple for people to invest in real estate, and make it as turnkey and easy as possible. You're still involved in your assets. You're still paying your taxes. You're still dealing with all of those things, setting up your bank accounts and everything. So it's not like you just set it and forget it, like Ron Popeil. But we try to make it as easy as possible on that side of things.
But I would say, if people are just getting started and they're really not sure where to turn in real estate and putting it all together, our podcast, the Investing in Real Estate Podcast with Clayton Morris, is a great way to start. We also have a YouTube channel called Morris, just my last name, Morris Invest. And we have a playlist called Getting Started.
Tom Wheelwright: Oh, awesome.
Clayton Morris: It's like five videos. It's really just like five videos, I believe, where it just walks you through passive income, understanding how to set things up properly, and how to get started in real estate investing. Tom's been a guest on our podcast many times, and just such great wealth of knowledge about real estate investing and how to set things up properly, all of that is in there. So we hope people will check that out.
I want to have you back on the show, man. We gotta get you back on real soon so we can talk about the second edition of Tax-Free Wealth. And now that you have nine months of the tax code digested, what does that look like? So I can't wait to have you back on.
Tom Wheelwright: Absolutely. Thank you, Clayton. Love your story. Love having you on, of course. You and Natalie, just such amazing people. So thank you for … Everybody, just remember that when you really get a sense of investing and what the power is of investing and the ability to actually build wealth while reducing your taxes, you're always going to have way more money and pay way less tax.
Speaker 1: You've been listening to The WealthAbility™ Show with Tom Wheelwright: way more money, way less taxes. To learn more, go to wealthability.com.