This Ex-Shoe Salesman Built A $5.5 Billion Fortune In Aging Apartment Buildings

Forbes

By betting on older buildings in smaller cities, new Forbes 400 member Mitchell Morgan has become the third-largest owner of apartments in the U.S.  Read the full story on Forbes: https://www.forbes.com/sites/giacomotognini/2024/10/02/this-ex-shoe-salesman-built-a-55-billion-fortune-in-aging-apartments/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, this ex-shoe salesman built a $5.5 billion fortune in aging apartment buildings.

00:09It's two hours before the inauguration of his firm Morgan Properties' gleaming new headquarters

00:14in Conchahokan, Pennsylvania, and Mitchell Morgan still hasn't cleared out his old office.

00:19The 70-year-old real estate mogul pulls out a weathered document from 1985,

00:24a bond offering, for his first deal to buy three apartment buildings.

00:29He says, quote,

00:43These days, his Morgan Properties spans more than 95,000 units across 19 states.

00:50About half of those are majority-owned by the firm, with the rest split with outside investors.

00:56It's still enough for Morgan Properties to now rank as the third-largest owner of apartments in the country,

01:02behind fellow billionaire Bob Faith's Graystar and publicly traded MidAmerica apartment communities.

01:08And it's enough for Morgan to land on the 2024 Forbes 400 list of the richest Americans for the first time,

01:15at No. 240, worth $5.5 billion.

01:20Morgan's firm's success has also elevated his profile.

01:24He joined the group backing Josh Harris' $6 billion purchase of the NFL's Washington Commanders last year

01:30and is making a name for himself in Philadelphia's philanthropic scene

01:34as a major donor to Temple University and the Children's Hospital of Pennsylvania.

01:39He's earned his success by investing in older apartment buildings in mid-sized cities

01:44and quickly renovating them to increase rents.

01:46While many investors have poured into the fast-growing metropolises of the Sun Belt,

01:51Morgan has taken the opposite tack, acquiring portfolios in less fashionable places,

01:56such as Redding, Pennsylvania, which is the birthplace of Taylor Swift,

02:00and Rochester, New York, where his firm is the largest landlord

02:04after buying more than 18,000 units for $1.9 billion in 2019.

02:09As the post-COVID boom subsided in cities such as Atlanta and Nashville,

02:14the nation's fastest-rising rents are now found in the likes of Indianapolis, Columbus, and Fayetteville,

02:20all places where Morgan Properties has a presence.

02:23Morgan Properties is privately owned.

02:26He says, quote,

02:27We're buying in markets that people don't want to buy in,

02:30and Wall Street doesn't have to tell us what to do because we don't care what Wall Street says.

02:34We bought a big portfolio in Indiana. We bought a big portfolio in Ohio.

02:39We're the largest owner in Rochester, New York.

02:41The market's great. People are everywhere.

02:45Morgan largely invests in what's known as Class B apartments,

02:49older properties that target tenants with lower incomes than those attracted to luxury buildings.

02:54One complex he owns in Elmwood Park, New Jersey, dates to 1950.

02:59While they might not be as valuable as newly built, top-of-the-line apartments,

03:03Morgan's properties tend to provide more stable cash flow

03:06and suffer fewer swings during recessions,

03:09when tenants are priced out of more expensive buildings, opt to downgrade.

03:13Morgan credits his success to a frugal approach

03:16he honed paying his way through college at Temple University

03:20while working for his father's shoe store.

03:22His father, a World War II vet who had opened several shoe stores,

03:26made enough money to buy a home in 1959.

03:29Four years later, his father went bankrupt for the first time.

03:32It happened again when Morgan was in 11th grade,

03:35forcing the family to sell the house and leaving his father with a single store.

03:40Recalling his family's early hardships and his dad's brush with bankruptcy,

03:44he says, quote,

03:45Never bet the ranch, because my father did.

03:48I buy existing apartments. My life is boring.

03:51We're going to stick to our boring knitting business.

03:54If you want to have something more interesting in life, get a hobby.

03:58For full coverage, check out Giacomo Tagnini's piece on Forbes.com.

04:04This is Kieran Meadows from Forbes. Thanks for tuning in.

04:15Forbes.com

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