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Show Summary
In this conversation, John shares his journey in real estate investing, emphasizing a gradual approach to building wealth through rental properties. He discusses his investment philosophy, which focuses on making consistent, smaller investments rather than seeking quick profits. John highlights the importance of community engagement and social responsibility in his work as a landlord, sharing how he helps tenants in need. He also addresses the challenges of managing properties and the strategies he employs to scale his portfolio while maintaining a positive impact on the community.
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Investor Fuel Show Transcript:
John Morgan (00:00)
my story, what I’d like to, um, explain is you don’t need to get rich overnight.I think I feel like, and what I tell people is it’s more of a get rich slowly scheme. So I’ve been doing this for 10 years, but really without using my money. And I don’t want to flex here, but if you want any numbers on, you know, the profits on it, but it’s, it goes up exponentially. mean, rents go up three to five years, rents really go up. The equity builds up. ⁓ The net worth builds up. The cashflow builds up.
And of course, along the way, you build systems and in places and it gets easier as far as managing them.
Quentin Edmonds (02:13)
Hello everyone. Welcome to the real estate pros podcast. I am your host Q Edmonds and today for me This is a very very exciting episode and I’m gonna tell you why if you’ve been watching me for a good little minute You know, I say the reason why I’m excited is because I get to look and interview people and look through things from their lens from their perspective That’s what excites me because everybody has a perspective. Everybody has a different lenswhen it comes to real estate. And for me, it’s special today because this person has a special lens. And I’m not sure if he realizes it or not, but I realize it because everything he’s told me lets me know that this is special. And I am so excited because I want him to talk about his journey in his own words. And I know it’s gonna give you a ton of value. And so please allow me to introduce you guys to Mr. John Morgan.
Mr. John, how you doing today,
John Morgan (03:09)
I’m doing great. Thanks for having me.Quentin Edmonds (03:11)
No, man, thank you for being here. Happy to have you here. And listen, John, I want to dive in. And this is what I want to do. I want you to just tell us what your main focus is these days, like what you got going on in real estate. I want you to give us a little bit of an origin story, if you don’t mind, of how you got into it. And then tell us what markets you’re operating in. And so, John, sir, you got the floor, man. Take us through your journey in real estate.John Morgan (03:36)
Sure. So I live in the Dallas Fort Worth area in Grand Prairie, Texas, and I’m married. I’m 54 years old. My wife’s 50. I still have a W-2. My wife retired about four years ago based off our real estate mailbox money coming in. I got two kids, 22-year-old. She’s graduating tomorrow from Dallas Baptist University and a 20-year-old son. So I got involved 10 years ago kind of by accident in a real estate.And I’ve been investing for 10 years, basically just buying two houses a year on average. There was one year I bought a bunch of cheaper homes at a state, but my whole portfolio right now consists of 31 single-family rentals. I’ve got 18 in the Dallas-Fort Worth area, and I’ve got the remaining amount are in Arkansas and Missouri. So that’s basically…
my situation. The way I got involved on it was we used to travel up to Barance, Missouri. ⁓ It’s a tourist town with the kids. And I ended up making an offer on a house. I did zero due diligence. I didn’t want to be a landlord. I was scared to be a landlord. I’m not handy. So I didn’t want to be a landlord and deal with stuff. But I thought, what if I buy this house out of state? It was already turnkey. It had furniture, had a property manager. ⁓
and I can let somebody else deal with all the headaches. So that’s basically how I got involved in real estate.
And it’s sort of my journey evolved from being more of a Dave Ramsey guy where you have to have everything paid off. And that’s when I started. And to be honest with you, I only had 25,000 in the bank. I didn’t really have any money to afford this house. I made this stupid offer over an email to the listing agent and they wanted 137,000, hit the market that day. She said, he’s not taking any less. So,
told my wife, said, hey, let’s lob ⁓ out 128,000 for fun. And I did that. And I said to cash to close in two weeks. had, like I said, I only had 25,000 in the bank. I was making 40 grand a year with my W-2. Like we didn’t have much money. Anyway, make a long story short, they accepted. I had to find the cash somehow and bought my first rental and got my feet wet. And it’s sort of more from there, from turning to like a Dave Ramsey guy with cash, you know, having that house paid off, I’d borrowed money from a…
home equity line of credit, 401k loans. I took some money out of our Roth IRAs. And over time, I read the book, Rich Dad Poor Dad by Robert Kiyosaki and my whole philosophy changed. So I bought that house and another one. They’re both short-term rentals, cabins in this little touristy town. And my return on investment was only about 5%. When I calculate all my expenses with property management fees and
taxes and insurance and things break in. I was like, we’re only making 5%. This is terrible. I’d be better off in the stock market or something else. But I read the book, Rich Dad Poor Dad, and he says, no, no, you use other people’s money. You leverage, you do this, you do that. And that basically opened up a whole new ⁓ avenue for me by taking those two properties and doing a cash out refi to buy more properties with 20 % down. So I wasn’t able to kind of get my wife on board.
She’s still not on board. So she didn’t want me using any of our own money. ⁓ and stop me if, if you want me to, you know, slow down or whatever, but, ⁓ versus using our own money to buy real estate. had to sort of get creative, ⁓ with the two properties that I had that I ended up paying cash for, you know, I, I used all the income from it to pay off my home equity line of credit, to pay off my 401k. And then I started doing cash out refis on one of them to buy three more houses.
Uh, and I sort of buying those houses and it were close to where I live within 30 minutes in the Dallas Fort Worth area, 20 % down on this one, 20 % down on that one, 20 % on that one. And to tell you the truth, these are just base hits. These are just, uh, I got them off the MLS. I made kind of low ball offers. Uh, they got accepted and I really wasn’t crushing it, but
my story, what I’d like to, um, explain is you don’t need to get rich overnight.
I think I feel like, and what I tell people is it’s more of a get rich slowly scheme. So I’ve been doing this for 10 years, but really without using my money. And I don’t want to flex here, but if you want any numbers on, you know, the profits on it, but it’s, it goes up exponentially. mean, rents go up three to five years, rents really go up. The equity builds up. ⁓ The net worth builds up. The cashflow builds up.
And of course, along the way, you build systems and in places and it gets easier as far as managing them.
self-manage my 31 properties to accept that very first short term rent. I do have a property manager there, but I self-manage the 30. But I found by using the equity when that was built up in these, I would take that equity out and harvest it. Basically, instead of sitting on debt equity, I would take that money and do a cash out refi. So I was able to.
scale up and get 14, I believe 14 houses for free just using the equity built up in these rentals that I used ⁓ basically from the original amount from my home equity line of credit and my 401k. I’ve also done, and I’m not saying I recommend the strategies and the way I’ve done it. know, a lot of people think it’s probably too risky and maybe Dave Ramsey method is fine and just
pay cash for a house and save for five years and just slowly do it. ⁓ But I was able to buy 14 houses from, I believe, five or six cash out refis. So I would just ⁓ do a cash out refi on a property. For example, the first one I paid 130,000 for. I did a cash out refi a few years later and the bank gave me 140,000 back. and I didn’t do any work to that. I did zero. I think I fixed a couple of things, a hot water heater and a ⁓ HVAC.
but I got all my money back. I was like, wow, this is great. Tax-free. And I used that money. Actually, I got little extra. I got more than I paid. I was all in for 130 and I got 140,000 back. So what I did is I paid cash for another house. And then I fixed it up a little bit and used like 0 % interest for a year credit card loans and things like that. Again, my wife didn’t want me using any of our own money. And then I went to a bank and I put a renter in there and they gave me 80 % of the value. So I basically got all my money back.
And then I’d lobbed out a cash offer to the next house off the MLS. And I told these, I told the listing agents, I always go with the listing agents. feel like they, I feel like they gave me, they gave me some good intel on the sellers. And I know they represent the sellers. They’re not supposed to tell me anything, but can’t hurt for me to say, Hey, what’s their situation? How motivated are they? What kind of offers have they received? You know what I mean? And they’re not supposed to tell me anything, but before you know it, they’re telling me, they went through a divorce and they,
They want to close quick or we had an offer of X amount last week. So I’m thinking I’ll come in with X amount plus five thousand, you know what mean? ⁓ so I was able to, ⁓ buy the next house. and I’d make my offer saying I will pay you cash, but I got to, I do kind of do a cash out refi on this other one that I have paid off. It’s going to take my bank two or three weeks, but I can close on your house in three or four weeks cash. You’re cool with that. And I was able to buy several houses that way. Then I pay them cash and then.
Later on, I go to my bank and I say, want to do a cash out refi on this one and they will give me 80 % back. And I do the same thing. I go to another house, another listing agent and say, hey, I can offer you cash, but I can’t close until about three or four weeks. I got to pull cash out of my other rentals. So I was able to get some pretty good deals off the MLS ⁓ doing that. ⁓
bought a house with a 401k loan. thought this is really risky, but I would say it’s a crack shack in Fort Worth. I paid 48,000 for it, had a tenant involved and it was nasty. It was disgusting. It was roach infested. There was rats running around. I bought it sight unseen. I thought it was probably worth 80, 80 to a hundred thousand, but I wasn’t able to see the inside. This guy was just selling some of his ⁓ portfolio. ⁓
I kind of fixed it up and I put a renter in there and I was making before you know it a few years later, again, it doesn’t happen overnight, but three or four years later, I’m profiting like 1200 bucks a month off it. But that’s great. It’s paid off. I paid off my 401k with all the cashflow. anytime I buy these properties and I have some kind of a loan, like a 401k loan or occasionally a consumer line of credit from a bank or 0 % interest for your credit card loan, I’d pay it off.
So that house, I had it paid off, I was making 1200 a month, but I thought, geez, this is dead equity just sitting there doing nothing for me. I wonder if I could get more money out of that one. Again, my wife wouldn’t let me use our money, so I thought I’ll just do a cash out refi on this one. So about three years ago, I did a cash out refi on that one. And what did I do with the cash? I bought three more houses. So in those three houses combined, I just totaled up the amount last night. It’s 47,000 a year.
profit net off that one crack shack I bought for 50,000 with a 401k loan and I paid that thing off within it was a five year 401k loan. I paid it off in like four years. So that’s like, that’s great. That’s a huge return. I’m getting all my money back every single year. And now I’ve got four houses. I kept the original one. I have a mortgage on it. It’s only making 200 a month. You know, versus the 1200 I was making a month, but I took the equity bought three more.
Three more houses down 20%, 20%, 20, you know. So that’s the way I’ve kind of scaled up my business without really using my money. And I used all the cashflow and profits off my rentals and I put it right back into the debt that I was trying to pay off the short-term loans and stuff like that. So I was surviving off my W-2, my wife, she was working for a little while. She retired about four years ago.
Because I told her, I’m like, our rental incomes like double what you’re making. Like, why don’t you just retire early? And I’m in the situation where I wouldn’t mind retiring early myself, but math doesn’t lie. Like you can just pencil these numbers. I’m talking back of the napkin math off. Here’s a purchase price. Here’s how much my profits will be. It’s going to probably appreciate three to 5 % over a year if it’s a growing market. This isn’t rocket science. Like don’t have any background on finances or
real estate or anything else like that. And I didn’t have a network of people. I didn’t know anything the first three or four years. I didn’t know bigger pockets in these podcasts existed. I’m just fumbling around. Should I try a class B neighborhood? Everybody says you should buy properties in a good school district, low crime. And to tell you the truth, that was my first residential single family house. My appreciation was the lowest. My profits was the lowest off this house. I thought it’s a beautiful brick house.
And my wife loved that house and then I started buying homes in, I would say, class C, C plus neighborhoods like the blue collar working class, cheaper, lower rents, and my profits were a lot higher.
My monthly cash flow is a lot higher and I’m paying a lot less for the homes, but my property taxes are lower. The school districts weren’t as good. Well, people weren’t moving to these for the school districts. They’re moving there. They just need a cheap place to live or be near their family. And
These people, I found out later, turnovers crush profits, as you know. You have a turnover within three or four years, that just eats up. You got to paint and sometimes new floors and repair. But I found these Class C, C Plus class neighborhoods, these people stay forever. They won’t ever be able to qualify for a house or afford to buy house. So they’re great. And I tell these people when they move in, and most of these houses I bought were actually came with tenants.
So I found a lot of tired landlords. You can pick them out easy on the MLS. You look on Zillow and you see these houses with, I don’t know, dirty dishes in the sink and they’re not professionally photos. You know, hey, that’s a tired landlord. or she’s not gonna be able to sell to a family because you got to kick these people out. They just want to sell and get rid of it. And so I bought a lot of properties like that. But the first thing I tell these folks, hey, if you want to stay here, you can live here forever.
I bought it off this guy. I do have a mortgage. Your rent’s going to go up a little bit. Also, what’s wrong with your house? I’ll upgrade your house. I’ll fix things. But I make it clear that this is your house. If you want to paint the rooms, if you want to do those things, ⁓ I’ll help you out. But rent’s going to have to come up, usually. Here’s market rent, but here’s where I’m willing to meet you. I feel like if I keep these people $150, $200 below market rent, they’ve been there forever. Some of these people have been there 10, 15 years before I even bought it. And they know that they can stay there as long as they want.
I won’t have any turnovers. So that’s kind of been my strategy. And like I said, I’m giving advice, say, oh, go take out a 401k loan or go take out. I did a cash out refi on my primary to buy, I don’t know, house number probably four or five and six. I took out maybe 80 grand out of my primary house to buy three more rentals, 20 % down on this one, 20 % down on that one. Is it risky? Yeah, the interest rate at the time was kind of low. And I looked at it like, well, in 10 years,
those three houses will be worth a fortune. My cashflow immediately kind of covered my mortgage that went up X amount. ⁓ And now here 10 years later, that was eight years ago. Those homes or those houses are just killing it. So that’s kind of been my strategy along the way in a nutshell. Well, kind of a long story, but so feel free to dive deeper on anything or ask any other questions.
Quentin Edmonds (19:08)
Man, no, I thank you. Like you have given so many great examples of taking what you have and building on what you have. You I heard, you know, your wife kept saying, listen, we’re going to use our money. So you found a way to just let your investments keep investing for the next investment, investing for the next investment. I mean, you have built something that’s absolutely great. The way that you have went about doing things is great. The systems that you fit in place, I can, I think it’sproven itself to be true and improving itself to be successful. And so I thank you for sharing. think you have given a ton of nuggets and a ton of different things for people to think about. ⁓ I want to ask you, ⁓ what’s the next real goal for you? Like, do you have a goal in mind that you’re aiming for? Like, what’s next for you?
John Morgan (19:56)
So my next goal is right now the cash flow is plenty. I don’t really need any more ⁓ of that. what I have in the last four years, I started doing these co-living rent by the room houses. I kind of fell into it. I bought a house. I was going to rehab it. And it did come with tenants. And when I bought it, the seller was going to have the tenants out by then.They were two of them were not able to get out. They’re older, living off fixed income. One was formerly homeless. I didn’t realize this until I closed. He literally said, Hey, do you mind if these people, can you give them a few weeks kind of thing? And I said, yeah, no problem. So I started rehabbing the house and I told these older people, said, Hey, you’re gonna, you’re gonna need to leave. I’m going to rent this out to a family. Anyway, uh, make a long story short. I ended up renting it to them. I ran it by the room. I found other people I put on Facebook marketplace rent by the room.
rooms for like 600, 500, think that was 550 a month. And I ended up finding people that were either had their formerly homeless, they’re living off social security or disability and things like that. And I really enjoy helping those folks out. And I ended up buying two more houses in the last three years, helping the low income folks get around. And they are so thankful. I plant flowers every spring, I put Christmas lights up.
I try to, I feel like I’m giving back to the community a little bit more. To me, I feel like I used to do, I used to work at a food pantry and you’re just boxing up food and you’re giving it to people. You walk into their car and you talk chit chat to them for maybe five minutes. But this, feel like I’m interacting with these people. It’s a lifelong thing. ⁓ One lady, she was formerly homeless. mean, just hearing their stories, living in tents under freeways and getting robbed and mugged and all this other stuff. She texts me every day and she’s so thankful that I have a.
You know, she has a place, a safe roof over her head. And to me, I feel like in a way I would, I enjoy that kind of investing more. I’m helping other people. So I feel like in the next two to five years, I have started doing some section eight. I have started investing out of state and to Arkansas and Missouri and really low income places. And I’m giving these people nice homes. I fix them up, put them on section eight. And I try to be, try to be really good when things break, I fix things right away. All these people that I
bought these houses from they’re like, wow, our previous landlords never did anything. So they’re sort of slumlords. So I feel like I’m, I’m giving back. Am I making a profit off this? Yes. But could I make a bigger profit? No, but I’d rather help out the community. So that’s kind of been my, my, my, maybe my future goals. I feel like it’s rewarding helping me help these other other people out and giving them good cheap places to live. As you know, housing costs is just astronomical.
And I’ve dealt with the city in Fort Worth. They don’t like that I’m renting by the room. And I’m telling them, like, these are great people just because you might have mental illness, just because you might have schizophrenia or anxiety or you’re formerly whatever your background is and it doesn’t make that doesn’t make them bad people. I make sure they don’t do drugs in the house. I make sure they get along. They share the the the chores and they cut the grass for me and I’ll plant the flowers every spring and they water them for me. And it’s like one.
family for them. said, doesn’t make them a bad person. And I’ve literally had two cities out here that say that’s what homeless shelters are for. And I said, they have a lot of these people have anxiety, they have a pet and they want to keep their pet with them. The homeless shelters I’ve looked into it, they can’t, they have to check in and check out and they can’t have pets. I’m like, if they don’t have their little dog or whatever, I give them a place to live for five or 600 bucks a month. It includes their wifi, their heating and air conditioning, essentially a heat and air and they get along and gives them a sense of community.
But I find out here in the Dallas area, they don’t care about it. But I’m like, hey, I’m just trying to help people out. So I’ll fight tooth and nail. And I told these people I will fight tooth and nail. And I’ve even told the city people, I said, I’ll go to court and give me a jury and I’m going to I’m going to save these people. I have a nicest looking house in the block. And they do say that. They say you have a beautiful house. You fixed up the outside. You’ve I’ve remodeled these houses where I have these rent by the rooms. But I sort of enjoy that aspect of it.
⁓ And as well as the section eight, there is a need for a lot of my section eight are single moms and they maybe high school dropout or they work at Walmart and they have kids and they don’t have a dad given any child support. So I do enjoy helping those folks out and section eight has been very good with them and I’ll give them a nice clean safe place. So that’s kind of where I’m drifting in the next, in the future. Maybe I’ll get a property manager to manage some of these to keep my wife on board. She doesn’t like the, you know, the inner, the
the interruption sometimes we’re on a date or something and like last week we were on a date and we’re somebody had a water leak in a wall or something they sent me a video so I just took I just copied that video and I sent it to handyman took me maybe three minutes and she was irritated because she knew something was going on and I’m like I just I’m back with you but little interruptions like that so maybe I’ll you know gravitate towards or I have a property manager kind of overrun things
Quentin Edmonds (24:24)
Yeah, yeah, yeah.John Morgan (24:47)
But I enjoy interacting with the tenants. say, don’t have a relationship with your tenants. I enjoy it and I’ll help them out in hard times. just credited a lady’s 500 bucks. She was behind on rent. She said she wasn’t going to do Christmas for her kids. She’s going to pay me a thousand dollars a week. She’s working three jobs. I said, relax. Let’s talk in January. just credited to your, I do on my payments online on a portal called apartments.com. said, I just credited you 500 bucks. You’re having Christmas on me.We’ll talk in January. So I enjoy helping the folks that are just like struggling. I don’t want to be some greedy guy that’s doing it, but my systems in place provide, provide that. And what I tell people is, Hey, you can do it. Just start small. Don’t swing for the fences. Base hits do eventually produce runs and you’re in your strategies may change over time. Like my did mine was to have 10 paid off houses. And like 15 years was my goal. Like to have by the time I retire, want 10 houses that’ll give me 10,000 a month.
and I’ll be good. And then over time, I’m like, I kind of like this. I enjoy this and try new things. But anyway, that’s kind of my goals from here on out.
Quentin Edmonds (25:50)
Man, Mr. John, man, this has been absolutely great. You don’t even understand. this has been a phenomenal podcast. I sincerely love what you’re doing. I love your mindset. I love your get rich slowly mindset. I love that you tapped into Dave Ramsey financial piece. think that has definitely helped you out so much and you just put his things in place. I love how you base hits.That’s you know, I just love everything that you’re doing helping your community Given that I just think this was a phenomenal episode and I just think you’re a phenomenal person So thank you so much for gifting us with your presence me and my wife We have a saying when we say your presence is a presence And today your presence has truly been a presence to this podcast. So I appreciate you being here today,
John Morgan (26:41)
yes, sir. Glad to help. Glad I can. Hopefully I can help somebody else.Quentin Edmonds (26:44)
You definitely did sir. Listen, if someone wanted to reach out to you, collaborate with you, learn more about what you’re doing. Do you have contact information? Do you want people to get in contact with you? Where do you stay with them?John Morgan (26:56)
sure. And feel free. My email, I’ll just give my email. I don’t have a business or anything, but I’ll give my email and if anybody has any questions, they can just email me and I’m happy to chat with them. But it’s my name, John Morgan, J-O-H-N-M-O-R-G-A-N-1.J-M at gmail.com. So if anybody has any questions, you want to get in contact with me.I’m happy to help and I enjoy helping others. I enjoy mentoring and giving back because I didn’t have that growing up. And sometimes someone needs me to just run numbers or give them a second opinion or look for red flags on a certain deal because I didn’t have that. And I’ve made a few mistakes along the way. Of course you learn from it, but if anybody wants to reach out, I’d be happy to give them any kind of advice.
Quentin Edmonds (27:38)
for free. But listen, you heard him. Listen, reach out to Mr. John. He’s there for you. Mr. John, thank you so much for your time. Thank you so much for your story. Thank you so much for your perspective. Today was really, really great for me and great for our audience. So thank you so much for being here. I appreciate you.John Morgan (27:55)
you’re welcome. Thank you.Quentin Edmonds (27:56)
Absolutely. So listen y’all y’all got the value for mr. John. You can’t tell me this episode was not valuable So please go ahead and make sure you are subscribed that way you continue to to come in When we bring up incredible people just like mr. John. So again, thank you. Mr. John and everyone else We will see you on the next time
