Morris invest - any insights?
Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
Hi there
I came across morrisinvest.com the other day after listening to Claytons podcast. The whole idea sounds really reasonable, but I still would like to cover all my bases. Does anyone have any experience with them? Good experiences? Bad experiences? I can not find any reviews of them online except the testimonials on their own side. I guess that is because they are pretty new.
Thanks
Simon
As the CEO of a turnkey outfit in Birmingham and an experienced buy-and-hold investor, I have to agree with basically all of @Jay Hinrichs' points. If a company is selling rehabbed properties for $40k, then they bought them for around 5-10k, meaning these are C class properties at best. More likely you have some seriously distressed D properties in undesirable neighborhoods, because the sale price has to include a profit margin for these guys, the original seller and the rehab crew. So, no matter how nice the properties look now, no one that can afford to live elsewhere will pay to live in those neighborhoods. You could rehab something to look like the White House and never rent it for a decent amount because the amount of crime in the area (not to mention the condition of the surrounding properties) will deter anyone who has the financial ability to be even remotely choosy about where they live.
Which leads us to the issue of equity. I see a lot of people talking here about buying below market to get some built-in equity right off the bat, but equity only truly exists when you sell the property - until then it's just 'expected' value. It doesn't matter how much money has gone into a property if you can't sell it. Put 30, 40, even 50k into a distressed property, it won't matter because no one will pay 40-60k to live in the type of neighborhood where you can buy a 5k property to fix up. If you hold a property for a few decades and the area magically gentrifies into the next hot neighborhood, then great, but that's a miiiiighty big bet to make. Appreciation isn't even guaranteed in A and B class areas, so relying on the possibility of appreciation in lower-tier neighborhoods is very risky.
And regarding the issue of financing, I think that bears a little more scrutiny. Yes, cash is faster and easier, and it does seem that a lot of new investors looking for the next hot deal are keeping this new outfit busy....but when the question 'why do you not work with financing?' receives the answer 'because it's faster and also we don't want to deal with bank red tape like appraisals', I think it's time to dig deeper. Appraisals are important for a number of reason, not least of which because they ensure that the investors knows the value of what they are buying - at least on paper (see my comment above about 'expected' equity on properties with no real resale value). I would hope that this company is encouraging prospective clients to engage the services of a third party appraiser, rather than brushing off the necessity of an appraisal as an unnecessary annoyance.
On the one hand, I'd like to say this is a new outfit that just has more business than they expected. Real estate investing - and turnkey and wholesaling in particular - gets a bad wrap sometimes so we all tend to be a little bit 'on the lookout' for scammers, which is unfortunate. So I'd really like to hope that these guys are as legit as some of the posts here indicate because I like to think that we, as an industry, are learning to separate the wheat from the chaff, leaving only the well-intentioned professionals. Indy can be a great market, and a wholesale-cum-turnkey operation is an inventive model, so I'd like to think these guys are just a little avant-garde. However, I've also seen a lot of posts mentioning how difficult it is to contact them, or to schedule even a simple call in a normal time frame. The fact that the site has little information and that one person wasn't even sure if the guy on the phone was the guy from podcasts gives me pause. A few people have mentioned that it 'seems maybe too good to be true' and, in my experience, that usually means it is. It sounds a little like these guys just want people with cash on hand who will pull the trigger without a lot of questions or checking-in. Whether this is by design or because they are overwhelmed by their own success remains to be seen.
HOWEVER, for those that have spoken to the company and felt that they were on the level, I would say follow your gut but be very sure you take responsibility for doing your own due diligence. Ask them to show you exactly what their ROI numbers are. Ask for a real-world example of their returns on a property similar to the one you are considering. Not with an estimated 40% expense rate, but with the actual expenses incurred for the last year (or however long they've been operating). Don't lump all the costs together, ask for specific expense rates, occupancy, maintenance, move out costs, etc. They should be willing and able to provide these hard figures and they should be happy to walk you through how they add up. Questions from first time investors should never be met with 'tuning out' as one person put it with regard to their mention of financing. Even if they are really busy, an investor with questions, who wants to be educated about their decision, is not an inconvenience and shouldn't be treated as such. If you get the information and the treatment that you deserve and feel confident in the product, then go for it!
Sorry for the ramble ;) Having just read this whole thread, it seemed Jay was a little on his own out there and another experienced perspective might be useful. Take it as you will, and good luck to all in whatever investment niche you choose!
All the best,
Clayton
I am from the UK. My parents have 3 rental properties in the UK and were looking for another one. I told them about Clayton’s properties in Indiana. We were about to go for it, but I couldn’t shake the feeling that it seemed to good to be true. I am so glad I found this thread.
There’s a lot of information in this thread. I made a summary for my own benefit and I am posting it in case it helps anyone else:
SUMMARY
PROS
There are four reviews from people who have invested with Clayton. (Jeremy Buttell, Matthew Stellas, Jack Gibson Jeremy Buttell and Alex Peralta)
Key points form reviews:
CONS
The property management company is Ocean Pointe, which has been featured on TV news for poor service. (However the reviews posted in the Pros above suggest that Ocean Pointe are excellent)
There are two reviews from people who went to the properties in Indianapolis, but then decided not to buy. (Merritt Whitman, Shane.M)
On the podcast Clayton frequently says that as the properties are fully rehabbed, he generally has virtually no maintenance related problems for 10 years.
Both Merritt’s and Shane’s experience of viewing the properties don’t match with this. They were shown that the properties aren’t fully rehabbed, but just cosmetically improved. This means the risk of problems in the property is far higher than Clayton suggests.
There is a lot of feedback from people who have not used Clayton but have had experience in Indianapolis.
Their key points:
OVERALL:
The only advantage to these properties is their cash flow (from the rent). They don’t offer the usual property benefits of increasing in value or providing leverage (but to be fair, Clayton does advertise them as “Buy and Hold for Life”).
Reviews of people who have invested suggest that the cash flow provided is as Clayton promises. However, these reviewers haven’t had the property long enough to give a long term view.
Risks of damage, breakdowns and vacancies could also eat up into the cash flow provided.
After reading this thread, I am going to think about going for it. The cash flow is still very tempting. But I don’t think Clayton’s podcast has done a good job of communicating the risks, especially if you get a bad tenant who will probably eat up all of the cash flow (Clayton’s podcast really down plays this, especially with his comments about C class tenants being relatively hassle free). I guess this risk would be high for someone like me living in the UK, because it's not really possible to see the property before buying it.
I didn’t realize there were other turn key companies, so I think I am going to look into them first.
This is what scares me about Clayton's properties-He speaks of zero liabilities!
Don't get me wrong I love his Podcast BUT this sounds like a salesmen to me(trust me I know, I've been a salesmen for 18 years lol)
On his podcast he speaks of these Indy homes as investor gold but never lists any potential future problems-High Maintenance, CapX, D/F neighborhoods, bad tenants, etc.... Even generally speaking he should be talking about these on his Podcast. Are these really good long term investments? Who knows?
Also I did speak with someone from BP on the phone who bought a Clayton property back in March 2016 who said he's had no issues so far and while communication was poor he would buy another one again. So I guess time will tell what these properties(and landlords) will be like in 5-10 years.
I found it odd on his latest FB post he hits on four things to be weary of in a TK provider. One of them is "if they don't take financing...". I was certainly told that they strongly prefer cash...
Lots of good information here. Really dug Suvir's posts. He has to be one of the best information diggers I have ever seen and he is not in the US. Kudos!
Amazing summary of information from this thread @Madhu Sharma! Really appreciating the detailed work you put into it.
I have invested with Morris Invest, recently closed on a property, and am working through the rehab phase. At this point I am undecided if I'll look for my next investment with them or look elsewhere.
If anyone here is interested in an account of my experience with Morris Invest you can follow along on my journey here:
https://www.biggerpockets.com/forums/92/topics/392...
@Suvir Salins @Simon Stahl @Roxana Ruiz @James Hiller @Kenneth Dai @Kathy King @Steven Piazza @Jami Morton @Kenneth Cowan @Jonathan Watson @Chris Erwin @Andre S.
Happy Holidays!
-Tyler
Quick little update.
We explored Morris Invest and had a call with Larry Blessman. Ask for a FULL pro-forma on an available property and got a response in 3 days. Then sent this email on January 26th (8 days ago).
Thanks Larry,
Can you send us a list of all currently available properties??
Thanks,
Marty
Have yet to hear back...
Needless to say, we have crossed them off the list.
On a side note, have been very impressed with the approach by Memphis Invest and have a call scheduled with Norada.
Did anyone ever try this? How did it go?
i had a call scheduled with Dave from Clayton's team at 5:00pm CST Friday. After being bombarded with emails leading upto the appointment time, letting me know that my appointment starts in an hour, then 30 mins, then in 10 mins etc. I was expecting the meeting to be on time. I waited 15 mins and then decided to head home as I was still at work. Anyways I got a call around 5:30pm when Dave called me saying that he was running behind on his calls. Unfortunately, i was driving and didnt want to discuss things without being able to take notes. I asked if there is way we can reschedule. Dave said he would be able to call me next day Saturday 11am CST. I confirmed the time twice and it seemed like all was good. Next morning i was ready with my computer and notepad to discuss the details and see what they had to offers. Guess what...nobody called...I even tried to call the number Dave had called me from (Florida #) and left a VM about how we were supposed to have a call. Did not hear back as of yet.
Whats interesting is that there is ABSOLUTELY no contact information on the website to get in touch with them. all you do is just "book a call"
I had my doubts with this business model anyways, but just wanted to hear what they had to say. Now i am sure to stay away. Seems like they are pretty busy with other "clients" to not even attempt to get in touch.
I like the podcast, and will continue to listen to it, but as far as investing goes, i am not touching morris invest with a ten foot pole.
Thanks
--
Farhan
Local Indy investor here that knows most of the turnkey operators here in town who carry a good name and stand by their product. Happy to share my insights with you...feel free to reach out via PM or e-mail me. Welcome to Indy!
Clay. Do you have any other recommendations for a turn key company in indy. Im researching morris invest but they are getting blasted on BP. I was suppose to fly out in a couple of weeks now im hesitant
I spoke with Clayton Morris last week. He was really forthcoming and answered all my questions. He is clearly really passionate about this business.
Here's what I found out:
- He operates exclusively in Indianapolis
- He's selling/rehabbing around 15 properties per month
- From what I could gather, he prefers cash because it's faster and doesn't have all the bank-financed red-tape (inspections, appraisals, etc)
- He makes money by essentially being a wholesaler -- his team identifies the property and he sells it to investors. At that point he brings in his crew for the rehab. When the rehab is completed you take ownership and he recommends a Property Management company -- you can choose to use them or not.
A few hours after we finished our conversation Clayton sent me a duplex that was available. I asked if he had an SFR available and he sent that over to me as well. I ran the numbers on the SFR which came out to between 12%-20% return depending on expenses. When running numbers Clayton recommends taking out 40% of the monthly rent for expenses, which nets 12%.
I also asked if I could see a blank Purchase Agreement and the Property Manager's information; both of which he provided straight away. The PA is the standard Indiana Realtor's Agreement.
I spoke with the Property Manager (Natalie) today and her and the company are amazing. They focus on one area of Indianapolis called Center Township where they manage 300+ properties. They are a full-service Property Management company, taking care of everything. Natalie followed-up via email with all the forms they use for investors and tenants.
I have one last thing I need to figure out and that's how the purchase price compares with other comps in the area. I'd like to buy a property somewhat below-market so I have some extra equity going in. But if I'm getting 12%-20%, maybe day-of-purchase equity isn't the most important thing??? Looking for some thoughts on that one.
At this point I couldn't be more impressed with the operation. Once I figure out the comps I'll most likely make a move.
If you have any questions feel free to ask and I'll answer them if I can.
Thanks,
Robert.
Robert. Did you buy from Morris Invest. If so how did it go. Also what is the property management company name.
Local Indy investor here that knows most of the turnkey operators here in town who carry a good name and stand by their product. Happy to share my insights with you...feel free to reach out via PM or e-mail me. Welcome to Indy!
Clay. Do you have any other recommendations for a turn key company in indy. Im researching morris invest but they are getting blasted on BP. I was suppose to fly out in a couple of weeks now im hesitant
I'd recommend talking to Norada. I've used them and the experience was great.
After reading this thread, it makes sense why Clayton tells his listeners to avoid forums on his podcast.
Same here, @Todd Krzeminski. I bought a turnkey in Franklin, IN (about 15-20 miles south of indy) through Norada, and it's cash flowing about $250/mo on it.
I'm already my own boss with my own business and employees, so making real estate a full time gig is not going to happen. That's why I go turnkey.
Right now, though, I'd say the deals that were around even last year just aren't there right now. I'm biding my time, and saving my money until there are some real deals to be had.
Sent you an e-mail...
Hi all,
A quick "update": After a lot of research into Morris Invest and a few other turnkey providers, for a number of reasons my husband and I decided to go with @Clayton Mobley and Spartan Invest as our turnkey provider based in Birmingham, AL and couldn't be happier! We recently closed on our first rental with them and are already cash-flowing, and have a second under contract to close in the next few weeks. I made the trip to Bham to meet the entire team and see several of their projects before putting any under contract. The whole process and experience have been nothing but transparent and positive and I can't recommend Spartan enough. Their team is top notch and really strive to take care of their clients.
@Kayla Lyon Thanks so much for the shout out! We couldn't be happier you decided to trust us with your investment, and we look forward to a bright future with you guys!
Hi everyone,
I know this thread is no longer active, but in case this is helpful for anyone:
I had an intake call yesterday with Morris Invest and spoke to someone named "Haley." This call was pre-scheduled and was specifically designed for the company to tell me more about what they offer and whether I would invest with them.
in sum, they currently offer two investment programs: The first is a "cash in" program where an investor pays approximately 44-48K in cash to purchase one of the properties owned by Morris in Indiana. After the closing, for NO additional fee, Morris would rehab the property, place a tenant, and get a property manager in place. These types of properties were expected to cash flow about $200 a month after expenses.
The second program was a "self-directed" program where an investor would need a currently-existing self-directed IRA, or Morris would work with the investor to roll over funds from a 401k into such an IRA. Then, the IRA would purchase an 80K property from Morris for 35K down (to be paid by the IRA) and 45K non-recourse mortgage, to be arranged by Morris. The property would already have been rehabbed, have a tenant and property manager, and be cash-flowing before the investor closed. These types of properties were expected to cash flow about $300 a month after expenses.
Haley was pleasant, but frankly knew very little about how the investments would work. Some of the questions she was unable to answer included:
What fee, if any, does Morris take from all this?
Are there points charged on the non-recourse loan that Morris would arrange for me?
After closing, would there be a contract me and the property manager? Could I switch to a different property manger?
etc.
I also tried to understand why my IRA, which has more than 44-48K in it, could not buy the cash-in properties in Indiana, and she kept on replying, "Your IRA can't buy the cash-in properties in Indiana because there is no non-recourse funding for those properties" -- which means she clearly was confusing ownership structure (i.e. whether title is taken by me or by my IRA) and financing (i.e., whether a mortgage is placed on the property).
I did not end up investing with them and would not feel comfortable putting my money in a company where its employees don't know some of these very basic things.
Hope this helps!
BB Liu from NYC /Westchester County
BB Liu,
I find it extremely difficult to believe that anyone in Indianapolis is finding "decent" properties between $44-$48k AND not charging a dime for rehabs or property management. That's insane! Well, ok, if you're buying in the deepest part of the hood maybe it's not. I'm by no means an expert on the Indy market, but I live close enough. I apologize if I sound like I'm upset with you, because I'm not. I'm upset that people are out there pushing this stuff. If there's no charge for rehabbing or management, what are you getting for that ridiculously low price? An area that most likely has high crime and tenants that don't pay their rent. But let's just say I'm completely wrong. Let's say this is a good deal in a good neighborhood. Ok, let's do the numbers. I calculated a $200 monthly cash flow and at a purchase price of $45k, and a rent of $600. The rest of the numbers don't matter. If you're getting $200 a month cash flow, that's only a 5.33% cash on cash return. In my book, that's a major gamble and I wouldn't touch it with a 10 foot pole.
Let's look at the second example. If you buy at $80k and get $300 a month cash flow, that comes out to a 4.5% cash on cash return. That 4.5% doesn't even include the costs of the mortgage. Add in just an additional $100 a month for a mortgage and you're CCR is now a whopping 2.5%! I don't know why anyone would even think about buying into something like that. I also calculated a 30 year, $45k loan at only 3% interest. The monthly payment is $189.72. So if you add in the mortgage, your cash on cash return is .26%. Yes, it's only .26%.
I can't tell you what we do or I'll get flagged for soliciting. But we can get out of state investors far better deals and we do everything for you. PM me for more information. Best of luck to all of you.
@BB Liu Sounds like more research is needed. Our market is Indiana. It is possible to buy and fix up a house at that price just depends on the price you buy and the extent of the rehab. Location & Neighborhoods should be considered. Maybe ask them for a few investor contacts that are currently investing with them, ask them some questions to see how their investments are performing and other questions you might have regarding the company.
@Scott Steffek: Hi Scott, thanks for the detailed feedback. I appreciate it. I also realized from reading your response that I should clarify something: I had written that with respect to their "cash in" program, Morris told me that for NO additional fee, they would rehab the property, place a tenant, and get a property manager in place. I want to add now, that once the property manager begins work, I would need to pay a monthly fee equal to 8% of gross rent. (The same 8% fee would also apply in Morris' "self-directed" program.) The expected net returns of approx $200-$300 per month were after taking into account expenses that would include the property management fee.
BB Liu,
The property management fee was taken into consideration. It really doesn't matter what it is. If you take the cash flow per month, you can "reverse" the rest of the expenses. So, the cash on cash return still comes out to the numbers I quoted. It may sound complicated, but it's actually easy to figure out. My property manager charges 75% of one months rent, to place a tenant. I'm very concerned that Morris doesn't charge an upfront fee. Here's why. Charging 75% of a months rent may sound steep, but you get what you pay for. My property manager runs criminal background checks, credit reports, reference checks and makes a substantial amount of calls to past landlords etc. They obviously incur costs doing this. So in order to place a "quality" tenant, we feel all of the above must be done. If it's not done, you're taking a massive risk with the tenant that's being placed in your property. I could be wrong, but I doubt that the property management company is going to run all of these background checks and spend all of that time, for free. It just doesn't make sense. Anyone can place a tenant. But to place a responsible tenant that will pay on time and keep your property in good condition, takes all kinds of checks and phone calls. Even though in these examples the cash on cash return is extremely low, remember this: You can have the best cash on cash return known to man, but what good is it if the tenant doesn't pay, trashes your property and leaves in the middle of the night? Just some food for thought. Best of luck to you.
I work in PM in Indianapolis and I have gotten dozens of calls from dissatisfied clients from Morris Invests Property Manager over the last 6 months. I'm not one to bad mouth anybody, so you can research who they are on your own. I have physically visited several of their properties. Many of the locations are just lower than where I would prefer my clients to invest, but they are not in complete hell holes. I was not very impressed with the level of rehabs or the property management. I don't believe that they are a "predatory" TK company like some others in Indianapolis, but I do think that they may be somewhat inexperienced and take some shortcuts that may be passed on to their clients. I am a much bigger fan of team building and keeping the equity as opposed to using TK providers for this very reason, but it all depends on your resources.
As far as Morris Invest goes, one of my clients who came over from them has purchased investment properties in other cities through them and done very well. I don't think that Morris Invest is a bad outfit, I just think that they may have good teams and bad teams in different markets. As always, do as much due diligence as possible.
I had a chance to finally talking with Larry Blessman from Morris Invest today. Here is the summary of the call:
He mentions that he has been with Morris for 9 months and the business is growing fast. Currently Morris provides services in Indianapolis - IN (about 80 properties/month), Detroit - MI (15 properties /month), and Jacksonville - FL (10 properties/month). The flipper team is owned by Morris, rather than sub contractor.
The property Manager in Indianapolis manages all of Morris properties and have so far about 540 properties. I have asked the PM name but hasn't been provided yet. I also asked for itemized expenses for sample properties (such as the Property tax, repair, PM fee, etc) to calculate the ROI.
For the purchase process, you will be sent out a prospective house, then you will put the money at the escrow, the the money will be used for the house rehab that can take about 9 weeks, then after that the house will closed and turned into the PM to get the tenant, where it will take several more weeks before producing the cash flow.
Itemized of rehab can be requested.
The house when it's done will be under the market or at the market.
When I asked about the Appraiser report, he said that usually Morris doesn't work with the appraiser report due to its unknown schedule.
He also suggested to setup an appointment for me to visit his team in Indianapolis to improve the confidence, and later promise to set me up a call with Clayton directly.
In overall he seems to be professional and respectful. After the meeting, he sent me email with his phone contact and also several picture of 1 of the house (1238 N Sheffield Ave) showing before and after rehab, also with several links to customer testimonial videos.
The house he sells in the C class is in the range of $40K - $50K. B class is available with higher price range.
At this moment, I am going to investigate further and waiting for my call with Clayton to clarify some of my pending questions.