Story with Morris Invest

25 Replies

We were attracted by the theory of Clayton Morris like so many people did and took action in March this year to buy two houses. It is hard to say anything wrong with the theory or say this is a scam but this investment turned out being nightmare to us.  

The first house was called “Rent Ready” in the communication emails. We thought “Rent Ready” should be almost ready and no rehab is needed so we can find the tenants to collect rents right away. 

The second house was purchased at the price including the rehab costs $9,000. It was promised to take 3 months to rehab, longer than Podcasting, but anyway.

We were introduced to a property management company named Blue Sky opened by Clayton Morris and they took more than two months to send us the management agreement by the excuse of system issue, which delay us from realizing the problem. Long story short, after three months, we realized we can't collect a penny from both two houses so communicated Morris Invest. James Federico we spoke to told us Indy Jax/Ocean Pointe is the one who didn't describe our House 1 ("rent-ready") right and didn't do the rehab job for our House 2. He suggested us to hire another property management company. This suggestion sounds reasonable for us to at least find out the situation of our houses so we did hire a new property manage company to inspect our houses.

The inspection reports sacred us: House 1 ("rent-ready") need a $14,000 to get it ready to rent; House 2 required rehab has nothing done.

We communicated with Morris Invest about the inspection results. They asked us to contact Indy Jax/Ocean Pointe because they collected our payments and should be responsible for our houses. We tried hard to contact Indy Jax/Ocean Pointe but nobody responded. Then we have to go back to Morris Invest, their suggestion was that we can sell the houses or took the loss to rehab by ourselves to start gaining the cash flow. 

What the hell! We did nothing wrong, why we need to take the loss?

The above is the story we worked with Morris Invest, all facts. So guys, be careful. These people looked very nice when you will buy properties from them but they had a face turn when we went after them for solution. 

We believed the suggestion from Morris is ridiculous and have these two ideas for legal consulting, we are Canadian, don't really know US laws, just from some common sense and general knowledge about laws:

  • 1)Indy Jax (Ocean Pointe) only shows up on the deed, no document between them and us, it seems there is no ground we can sue them, right? Clayton Morris is the one who signed the agreement with us, will he be the one we should go after. And he or his team didn’t disclose they are middle until the trouble came.

Considerations: From contract law perspective, House 1 has a severe misunderstanding or deceit involved (“Rent Ready” is not the fact at all), the purchase agreement shouldn’t be valid from the beginning; House 2 wasn’t properly executed, we should have the right to cancel the whole agreement. In this case, we should get all the money back and return the houses to Morris Invest.

  • 2)Clayton Morris play a role as the middle or agent, or the fact shows Clayton Morris acted as an agent. It is apparent that he didn’t do his due diligence to well handle the purchase process and didn’t disclose the sufficient information to us before our purchase.

Considerations: From the agency law perspective, if the agent didn’t complete its due diligence or didn’t disclose their middle role as an agent in the transaction, what responsibility will he take? We are thinking at least we can sue Clayton Morris for the referral fee to compensate our renovation.

Please let us know if you have any suggestion. 

One biggest concern is that we have no idea how much chance we can win and how much the legal fee could be. Can we sue them with some other people to share the fee? 

@Jay Hinrichs has been suggesting that people who have been scammed to reach out to @Colin Zhu, another member in BiggerPockets who is taking legal action against Morris. Good luck to you and I’m sorry this happened to you.

We would say we were stupid from the beginning because Clayton taught great things and he brought family on Podcast, which earns our trust. However, a person good at talking isn't equal to good at doing. We believe his initial may not be bad and but he became greedy when so many people were affected by his podcasts and find him to buy properties.

It is kind of hungry strategy. As said above, we were stupid, the properties were gone too fast, so we kind of jumped to the properties we like right away. You should never pay the full amount if the rehab is not properly done. This is a painful lesson. 

We once negotiated with Morris Invest for the return of referral fee since they didn't do their due diligence and manage a very poor sale process. They earned countless referral fees maybe million (just guess, hundreds of investors, how much each house?). It seems they don't think they did anything wrong and have zero willingness to compensate us. We just have no idea where their confidence comes from.

Your situation seem interesting to me. From what I know a couple of months back MI supposedly broke up with Oceanpointe and formed their own management company which was Blue Sky. Both these MI & BS were said to be owned by Clayton Morris. He posted his fallout with OP on his website. Yet he still blames them for not delivering his promise? Blue Sky failed and closed within several months but that is his failure. If he blames OP for incorrectly describing the property as "rent ready" then who does he blame for his claims of providing "turn-key" investments? Current line on MI website "We find, fix, fill and manage great properties while you see amazing returns on your investment." MI is supposed to do all this, not another 3rd party.

@Jeffrey C. - I hate that you are going through this as passive, out-of-country investors.  First, don't be too hard on yourselves, but this one line in your initial post is what investors have to stop saying.

"It is hard to say anything wrong with the theory or say this is a scam but this investment turned out being nightmare to us." 

It has been months now that investors have been complaining about the lack of transparency, the failure of their investments, the fact that what is being said on the CM podcasts are completely different than the experience on the ground and it is documented that rather than assisting people that bought based on his recommendation and bought directly from him, he is laying the blame at the feet of others and claiming to be a victim himself.

That has been going on for a very long time and now you tell a story of having bought two properties in March with the exact same issues that were being complained about last year.

At this point, it is a choice by this company to operate this way.  It is a choice to take money from someone knowing that the property may never be renovated and most likely never actually offered for rent.  This is not a case of "growing too fast - too much demand - or getting duped by your partners" all of which are excuses made by investors for this company.

They are choosing to take advantage of unsuspecting investors.

I have written so many times about the phrase "rent ready".  It was made up by landlords to describe a property that has had the minimal - and I mean ABSOLUTE MINIMAL - amount of work done to it in order to get a renter.  Is it habitable?  Maybe.  But is there someone, somewhere desperate for housing that will take it for a minimal rent?  yes.

That is what rent ready really means.  It describes a property that is most likely in need of some repair, has deferred basic maintenance and yet still can get occupied by someone who can fog a mirror.  Forget any background checks on an occupant.  That phrase describes a property that is in no way a good investment for an out of state investor.

My suggestion at this point is to either hire another company to complete the work or dump the properties.  You need to identify the cost of each scenario and see which one causes you to incur the smallest loss.  Hopefully, you can find a scenario where you can actually make money.  I would also follow the advice of other investors on here and take the time to report this to the authorities.  This now becomes an international issue since you are a foreign investor.  I would ask or the help of the Canadian authorities to represent you.  

I had the exact same experience. Got hooked on Morris' podcasts and videos. He talked about spending more time with family via passive income earned from real estate. An excellent salesmen, encouraging people to just "dive in there, become a real estate investor." I believe that biggerpockets has taken down the youtube video they did with Morris. I can't locate it. I bought a home in January and a few months later, after getting very little communication and vague updates, I discovered that the home is uninhabitable and a complete disaster. Lesson learned the hard way. Morris takes zero responsibility for this, and continues to peddle the scam. He blames Oceanpoint, even though on his website he advertises that he will take care of everything. I'm out $48K. I know that personally I'm basically screwed, but I'd like to find a way to warn others and/or shut his scam down. Some people have given him a lifetime of savings with nothing in return. I really don't know how he can even look at himself in the mirror.   

Originally posted by @Rick Ursery :

I had the exact same experience. Got hooked on Morris' podcasts and videos. He talked about spending more time with family via passive income earned from real estate. An excellent salesmen, encouraging people to just "dive in there, become a real estate investor." I believe that biggerpockets has taken down the youtube video they did with Morris. I can't locate it. I bought a home in January and a few months later, after getting very little communication and vague updates, I discovered that the home is uninhabitable and a complete disaster. Lesson learned the hard way. Morris takes zero responsibility for this, and continues to peddle the scam. He blames Oceanpoint, even though on his website he advertises that he will take care of everything. I'm out $48K. I know that personally I'm basically screwed, but I'd like to find a way to warn others and/or shut his scam down. Some people have given him a lifetime of savings with nothing in return. I really don't know how he can even look at himself in the mirror.   

WEll from what I understand him and his wife are in Europe for the summer...  

when you never take responsibility for your actions and blame others that is I think is sociopathic behavior its all about how they have been harmed..  this is one for the record books and you being Canadian its ever more than  48k with the exchange rate.

Yes, Son D.

MI acted like they are a very good turnkey company, a vendor and always bragged they have a very good team etc. When the problem comes, they just tried to drop all burdens, and suddenly it turns out they are in the middle, only charge referral fee. 

Thank you Chris Clothier.

Those are my speculation from the communications with MI. But you are right. It can be a scam if CM knew the problems but still tried to sell the properties to people. 

I was considering setting up a call with MI until I found this during my research.  Thanks to all for sharing and posting your experiences.  Has anyone worked with other turnkey companies that have a good reputation?  

When buying a property out of state, investors should always hire a 3rd party inspector to inspect prior to closing. This will prevent this situation from happening 100% of the time.

@Jeffrey C. Sorry to hear that. Morris rips essentially everyone off in some way or another. Always get an inspection and appraisal when starting. That’ll Mitigate a lot of your risk

The kind of funny thing is he thinks he can continue his "business" after all this.  I guess he's back from his summer vacation and is trying to reboot this BS -- not the failed property management company.  He's picking up his weekly youtube schedule -- of course there's no mention of his company doing thousands of rehabs.  Removed all videos where he says this crap back when it all went south.  It quickly went from he's done thousands of rehabs to he refers you to Oceanpointe.  For a while there he tried to "shift" his focus to "his Detroit" market. You'll also notice he's been trying to bury his apology post on his blog by posting new articles every day since then.  Doesn't want to pull the page but i guess he figures he can bury it under other content...

I actually had a call with this company, but did a little research and found too many negative reviews.  I'm sorry some of you had a horrible experience with this company.  

I appears Clayton Morris Indirectly responded to the Ocean Pointe ordeal in his LIVE video YouTube today. See link

https://youtu.be/B6SkfORuaAA?t=3902