Morris Invest: How to Replace a $70,000 a Year Salary with Real Estate Investments


How can I replace $70,000
a year in annual income with rental properties? That is the subject
of today’s video. Hi, everyone. I’m Clayton Morris, the
president of Morris Invest. Let’s dive into it. So how do we replace
$70,000 a year in annual income
with passive income, with rental property income,
from tenants every month providing cash flow from
the properties that we own? You might think that that
sounds like a tall order, but it’s not. And I’m going to show you how
simple it can be to actually replace that annual income. You know, a little
story about me. That’s in fact
how I got started. I was frustrated. Sitting down with
my wife one night, I said– we were
frustrated with our bills. And I said, how come at
the end of the month, we still have more bills
to pay, and we don’t have enough paycheck to cover it? Aren’t we doing well? What are we doing wrong? Well, the problem was that
we weren’t putting the money to work for us to start
creating cash flow in our lives and creating passive income. So I’ve put together– and
it was really the foundation of my freedom cheat sheet. It’s the number that
changed everything for me. And by the way, that link? You can download a free PDF. It’s, like, three pages long. Sit down with your husband
or wife and go through it. It’s totally free. The link is right
below this video, and it will walk
you through step by step with some numbers
and figures on exactly how to figure out how many
houses it will take for you to cover that annual income. But I want to tackle the
$70,000 question specifically. Most of the houses that I buy,
and that my company rehabs and sells, are in that
$40,000 to $45,000 range. OK, single-family homes,
two bedroom, one bath, three bedroom, one
bath, and some duplexes. OK, now, duplexes are door
on each side, typically, and two bedrooms on each side
or three bedrooms on each side. Those are the types of
properties that I buy. Now, I buy them low
and I fix them up and I place a great
tenant in the property. Each of those properties
will cash flow about $700. Let’s just say, for
round numbers, $700. OK, now think about it. How much is $70,000 a year? How much are you
probably making per week? Well, let’s bring
out the calculator. So $70,000 a year. Let’s divide that by 52 weeks. That’s about $1,346
a week that you are earning from your paycheck. OK, $1,346 a week. So now let’s figure
out how many houses it would take us
to replace $70,000 a year in passive income. $70,000, right, it’s
a simple formula. If each of our houses is
bringing in $700 a month, that’s a simple formula, right? $700 times 12 gives us $8,400. OK, now let’s take that $70,000
and let’s divide it by $8,400. That’s eight houses. That is 8.3 properties, eight
houses, bringing in $700 a month. Now imagine if you’re
buying a $40,000 house, if you had to bring
a little bit of money to put down as a down
payment or deposit, you were able to reach out and
get private financing or seller financing on a
property, then you’re able to accrue these
properties very quickly. Now, some of the things I
didn’t talk about in this video, and I can dive a
little deeper now, that we always want to take out
money for vacancy and repairs on our numbers, right? So that $8,400 a year, let’s
multiply that now times 0.6. So we’re going to remove 40% for
vacancy, repairs, and expenses. This is just to be totally
conservative with your numbers. So let’s take that $8,400 and
let’s multiply that times 0.6. So we’re bringing in about
$5,040 per property per year. OK, so now let’s
take that $5,000 and divide it by $70,000. So this will be a totally
conservative number, but this will help
us really make sure that we’re totally covered,
should something go wrong. Maybe we have a vacancy
for a few weeks or a month or two in one of our properties. This will take
that into account. So $70,000, let’s
divide that by $5,040. That gives us 13.8 properties. So let’s round that
up– 14 properties. 14 properties would
bring you about $70,000 a year in net income. That would replace
that $70,000 paycheck that you’re making every year. Then, in other videos
in this series, I’m going to go through
exactly how to find properties, how to acquire properties. But just for the
sake of this video, I wanted you to start to
put your mind in a place where you can begin to
reverse-engineer that number. For a lot of people,
you don’t think that you’re going to be able
to create passive income or bring in that
much cash every year. Hogwash. I do it. Hundreds of thousands
of other investors out there do it every day. They do it exactly
the way that I do it. Some buy residential properties. Some buy commercial properties. It doesn’t matter. It can be done. That’s what I do. I’m Clayton Morris. I hope you found this video
helpful, at least inspiring. And again, we have a whole bunch
of other videos in this series. Please click on the other
links in these videos, and you can watch more about
how to find properties, get private financing. We’re going to be having
a ton of videos here. Thanks so much
everyone for watching, and don’t forget to
click on the link below this video to download
my freedom cheat sheet. We’ll see you next time.

100 thoughts on “Morris Invest: How to Replace a $70,000 a Year Salary with Real Estate Investments

  • Mr. Morris, thank you for a great video! I watched several of yours now, I’m just getting into Realty investments, and I wondered where you were finding property for40 K? I live in Houston, and I can’t find a thing under 120 K that isn’t in a slum. Could you elaborate? Thank you so much!

  • You put in a reduction for repairs/vacancies….you left out insurance and property taxes. I found that took about 2 months out of the gross rent….so lop 17-20% off for those two alone.

    Also, if you start with little or nothing down in a property (yes, it's possible), a huge amount of your gross rent is going to pay the mortgage. Most areas (yes, again there are exceptions if you have a hot rental market), you'll be doing good to NET a hundred or two a month off the gross. Now in 15-20 years, the numbers do work…..after the mortgage is gone…so it can make good retirement income, but don't quit your day job.

  • I'm new to this channel and enjoying the content. Are there any videos on how to do this with financing? My savings is okay, but I'd have to save for another 2 years to get 45k. I'd like to do this and set myself free and see a financial light at the end of the tunnel and not wait 2 years to do it. Any way possible to finance and utilize a turnkey and make a profit?

  • single 7 rentals no mortgages I dont make enough to live on. so depressed I find it hard to get motivated and get out of bed I dont know what to do

  • I love your videos, I invest in the midwest. Exceptional deals for low prices, however there sometimes is some major repairs but great deals. Totally agree……..

  • Lets say those 40K properties exist. They are still not covering your 70K yearly paycheck. You totally ignored the interest rates and minimum of payback. If you Followe what he says you are broke within 1-2 years. 1-2 Tenants not paying and you cannot pay the bank s intrests…. Sorry but this video makes people throw away their lifes!

  • 40k for a home? Really? Where? What planet? I'll build a rocket ship. Just give me coordinates. Ofcourse passive income is an incredible way to build wealth. Be realistic though.

  • What about costs of financing? Is that $700 "cash flow" after the financing payment or do you pay cash for the property?

  • Are you in Indianapolis area? I own 3 houses one I live in and other 2 I'm slowly renovating. I'm thinking about renting the one I live in when Im done renovation's. Great video.

  • This example is unrealistic. There was no mortgage payment taken into account after determining your NOI using the 40% discount to revenue. You’re assuming 14 houses * 40,000$ = $560,000 in cash is needed up front to pay up front to replace a $70,000 income which is unrealistic for the vast majority of people. Please make the example again using the scenario that applies to most, rather than the one that applies to the small minority.

  • Just born in the wrong country, it seems. In a Tier 1/Tier 2 city in India, a 2BHK middle-class family flat would cost around 55000 – 110000 USD, rentals expected would be like 250-500 USD, annual income of people who would buy/rent such properties will be around 11000 – 25000 USD (someone with around 7-8 years of work ex with a professional degree like CA/MBA/ Btech).

  • A question I see that you factor in the 40% for a vacancy, damage, and etc. what about the mortgage I'm paying on this property. For example, I pay $40,000 for a house and rent it out for the $700.00 like you said but my mortgage is $400.00 a month. I am actually only getting paid 300 for one property. Does that not factor that I may have to get more property.

  • well my friend, if you can find me 40k properties anywhere, let me know – I will buy them in a heart beat…..hahahhah. Instead of the nonsense above, you could get the 1000 per month from this passive income and live in another country as a king and enjoy life.

  • Literally could not buy a dog house in California for $40k. Even after the housing bubble prices were still double what he is talking about.

  • You buy at approx. 45k. After refurbishing say 60k. You rent it out at 700$/month. That's a gross anual return of 14%. Where I live, these days you're doing a great job at 4%. Including leverage you're looking at 7% tops. But hey, good for you! 🙂

  • Oh you rent money pays back the bank it's not like you profit in the money it's not like you can all live off of the money until it's paid for plus interest this paid up front

  • Exactly. How the heck do you buy a single house 3 bed 1 bath with 40k? A1 bed 1 bath condo here cost 50k minimum in my city. A class properties are 500k+. B class properties are 400k+. C class single house is 300k+. …

  • Only 14 properties, haha easy haha, then dont worry about paying taxes, insurance, water, gardening because it all come with the property! This is amazing $60k x 14 = $840,000 to make $70,000 – taxes and insurance =$60,000 there are much better things to do with $840,000 if you happen to have that laying around like everyone does!

  • You can make this easier by buying 4plexes if your market has them. 14 properties x 2 units = 28 total units if you buy doubles. With a fourplex its half that number or 7 properties. Pro Tip: You can use FHA loans to buy your first property. You only have to put 3.5% down, your credit score does not have to be high, and as long as you LIVE IN ONE OF THE UNITS you can rent the other units out. Mortgage companies will even use that potential income to help you qualify for the loan. FHA only requires you live there for a year before not having the property as your primary residence. So, after a year, you can move out, and rent the last unit. The second property will take about a year to save for, but after that things should start snowballing.

  • I'm going to retire in 5 years. I don't need to make 70k. I'm perfectly happy with 40-50k which is only about 3-4 4plexes. If I ever need extra money I'll just do a freelance job here and there, or drive uber or something.

  • Do NOT follow this guys advice. Buying single family homes or duplexes is a surefire way to screw yourself over. Buy properties with 12 or more units. You're much more safeguarded against vacancies, and they are easier to sell when you cash out because you're not selling 10+ individual houses. If someone moves out of a duplex or single family home, you're paying out of pocket. This is stupid.

  • Nice informative video. Thank you for sharing the plan by the numbers. I am attempting to buy a house and add in couple of rooms by finishing the attic or basement, and make it a student rental. While this meets a lot of the principles you teach or share on your other informative videos (which are superb, by the way), the issue I run into is city ordinances. In many instances, city ordinance does not allow more than 4 non related members to be housed under the same lease. How to get around this issue ? (assume I have a 4 bed 2 bath, and wanted to add 2 more rooms and bathrooms, allowing up to 6 people to rent to)?
    Thank you in advance for any insights.

  • in Toronto, a single detached house (~3 bedrooms, ~2 washrooms, 1 car garage) would cost you $600,000. If i'm making $70k a year, i would just sit in a corner and laugh myself to sleep. Toronto real estate is ridiculous.

  • Morris Invest
    Out of your $700 a Month Rental Charge – You still have to pay for your loan amount + Taxes + Insurance + Maintenance costs. You are not clearing $700 Bucks a month each property.

  • Great video, I too am an investor with a portfolio of houses costing in the same range, however after rehabs youre closer to 55 to 65k. You must not be BRRR with a cash flow of 700 per unit? After taxes, insurance, mortgage and vacancy/repairs? I'd love to see your process or calculator. Thanks again

  • Morris, would you care to go grab lunch with me. 25 year old Rutgers business college grad looking to have a conversation with you .

  • Does anyone know if the 40% we deduct for expenses includes the actual mortgage expense or is he talking about owning the houses outright then deducting the 40%?

  • I’m 34 I own 4 residential and 1 retail property paid off 134,000 dollars a year. Retired. I pay about 25 thousand dollars per year in taxes. Leaves me with about 104 thousand dollars clear money. I’ve traveled all around the world. Now what do I do. I’ve done it all.

  • Purchased a house for $10k down. Lived there 13 years. Paid it off. Bought a foreclosure for 65k (regular mortgage). Rehab was about 20k (saved up and paid for in cash). Moved and rented out the first house. Then bought a 40k house in a nearby town direct from the owner. Painted inside and rented it out. Just inheireted a house and I'm now refreshing it alone and with cash. I'll rent it out when done. The only mortgage I have it my own and it's under 55k. When I finish painting and updating the inheireted property, I'll be saving all my rent money to buy the next property with cash. I've been cash flow positive for quite awhile. To those who say it can't be done or that everything has to be seriously leveraged or BRRR, I'm doing it. It can be done. I've had 1 HELOC of $50k.

  • how is it possible to gross $700 per unit per month unless you are going into the high end market? Where I am, grossing just 300 on a unit is incredible. realistically, it's a lot lower than that.

  • Fluffing up the example. A good free cash flow deal produces $200-500 a month which means you need a lot of properties

  • I may be missing something but the math isn't adding up with what you describe. That is, you talk about financing and you talk about a 700 cashflow. But, unless you significantly overcharge, there is no way you are cashflowing 700 a month on a 40k property WITH financing. I'd imagine with financing and .4 for expenses, you're probably only going to cashflow 100-200 a month per property. What did I miss?

  • Who is managing these properties? Secondly, I would guess these people aren't exactly high credit score types otherwise they would be buying. All i see is headaches, destroyed properties, late rents and getting stiffed.

  • Your math is wrong. For 52 weeks at the stereotypical math of 4 week per month that equates to 13 months and not the 12 months you have shown so it would actually take less than what you're suggesting to reach those numbers. Also off topic it's worth noting that when replacing a working salary with a passive salary most banks would factor out 25% when it comes to investment properties as income for an "expense" which is not money that you can use to work out a loan so it drops your "freed" money to 52 grand after the 25% is factored out and you would have to have a flow of 93 grand a year to have the bank consider 70 grand as annual income for a loan on let's say a much larger dream house.

  • What is this? 1980? Or are you in a 3rd world country? A piece of crap mobile home on a lot around here, if you could find one, goes for 200k. A low end house is high 200s to low 300s. Not much available under 400k and almost nothing under 300k.

  • Lol 40-45k here in WA more like 400-450k with about $200 left over after mortgage for rental. What u suggest to do here???

  • Cart before horse. 1st go house hunting in ANY AREA OF INTEREST FOR RENTALS ! Then shop for home purchases. Also 1St look for Trailor Park Rentals these homes compete with all home rentals in any area they exist. Many investors have been buying up all the Parks in metro areas and control them 1st in areas fixup & raise rent; then buy up adjacent conventional homes. These investors Stabilize area markets that's good for business for everyone !

  • Hey Clayton I have two 2 bed/ 1 bath Turnkey houses for 36k now under agreement. C area.One has tenant paying 750/month. The other is vacant and could rent for 800. Needs clean up and paint. These are side by side too. I get them all the time. I think you said you have one in PA. Lets team up!

  • I like the reverse engineering idea, which really helps in trying to figure out what an individual's freedom number needs to be. Thanks Clayton!

  • Doing the math you'd need about 700k-800k to buy those properties since you didn't account for the payments you will owe for a loan

  • A lot of people are complaining that this is a no mortgage scenario. He's giving us the fundamental numbers. True, most of us don't own enough to do it all at once, but even if you start with a mortgage for your first property, as you acquire more (with mortgages) you end off paying off the first properties faster and faster. He's not saying you can do this in one year and quit your day job, but, this is a feasible 8-10 year plan. I think you could assume a purchase, in the range he dictates, of about 1 house every 10 months. Provided your fix it costs are part of that 40k cost. With an 8k start you could do it. Slow and steady. And again, the Midwest is where real estate values are not insanely inflated.

  • If you cash flow 200 free and clear for each property you need 27 property's to bring 5400/monthX/12=64k and change a year..his numbers are way off..the fact he is talking about 40 to 50k investments

  • I wish that rentals in my area in northern Michigan had such cash flow. A nicely equipped $100,000 home in this area rents for about $700 a month. Property investors doing the BRRR in this area can make about $100 per month per home. It takes a lot of properties for that cash flow in this region:(

  • Hey Clayton, I have about 700 credit score about $2000 in savings and I really want to get into rental properties sooner rather than later. Would you recommend me to reach out to your team? Any wisdom you can share would be appreciated

  • How do you make millions per year with rentals? You’d have to own hundreds of homes and the average person could never get hundreds loans for hundreds of houses.

  • You may wanna look at the Better Business Bureau complaints about this "Real Estate investment" before deciding on doing it. Not looking good buddy.

  • How do you account for the amount you have to pay the bank monthly for these properties (im figuring you didnt pay cash for all these properties)? Seems like you'd only consider the NET amount you were getting monthly for those properties. i want to do this but want to ensure im considering all related expenses so that its a TRUE replacement of my income. comments?

  • This video is a complete fairytale. He omitting sooooo much data and expense its unreal. While investing in real estate IS a great idea, you might as well be getting these numbers from the tooth fairy.

  • Something is wrong with this math!!! 40 percent of 700 is 280 bucks, that's not even enough to pay back the HELOC !! Property taxes homeowners insurance and your HELOC it's probably going to run you a lot more than 40% of 700!!!

  • Especially if you're paying a property manager 10% on top of everything else, you have your homeowners insurance your HELOC your taxes and then your property manager then you got to put money aside for repairs and vacancy.if you're only bringing in $700 that's going to come to a lot more than 40% buddy… I like to see how much your homeowners insurance is and your HELOC is also I think you need to add in the rehab cost of the property we are getting your ROI…don't get me wrong I like what you're doing giving information is always great idea but I think the strategy is mathematically flawed!

  • It takes 14 properties to suppport that $70,000 yearly salary, but how much money it takes to acquire those 14 properties plus each property requieres different amounts of maintenance…is not that easy…when you loose a tenant it takes months before you can get a good tenant in addition to improve the apt that they just left it in bad shape….there is more between the lines

  • great stuff ive been watching alot of Claytons videos. Im about to try for a heloc i have about $250-$300k potential line with my primary residence paid off. I also own a condo and co own an investment 2 family both not fully paid off yet. but my area is super high priced as im on the coast so i may look into Morris deals for getting the best price range.

  • Here in tx house is about 800 to 1000 renta it’s imposible 700 $ cash flow I find a house pay 30000 we fix and rent for 950 and don’t get 700$ in cash flow . Tax, 10%repair 10 % vacancy ect and no have 700$ how it’s it posible ?

  • Hello Mr. Morris,

    Quick question are property manager monthly fees included in the 40% as well? Also with the 60% what do remove and how much do you keep technically for you?

    I'll be done with my masters program in August and will be debt free (no loan) and I'm researching real estate investments and I'm motivated. I'm just educating myself now. Keep up the good work!

  • Hello Clayton and Natalie,
    I heard and watched a lot of the videos you put up, and i am inspired and influenced by your strategies. I got hold of a house, worked hard to pool money and get it rehabbed and rented it. Now i want to pull money out of it but most banks are not ready to lend to a new business as my LLC is new and have no tax returns or the house is owned by an LLC and they are not ready to lend me. it would be great if i could talk to you and get your advise on pulling money out of this house and go for my next deal

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