Morris invest - any insights?
Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
Morris invest - any insights?
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Clayton MobleyPro Member
Birmingham, AL · Member since 2014 · 875 posts · 947 votesAs 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
414 Replies
- 9yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Just a quick question for clarification...
Did you mean to say (and more to the point, were you told) that Morris Invest does 80 properties per month in Indianapolis, 15 deals a month in Detroit and 10 deals a month in Jacksonville?
- Lender · Sunnyvale, CA · Member since 2017 · 22 posts · 17 votes9y
@Chris Clothier, I was told by Larry that the total number of properties that Morris can produce to the investors are 80 properties per month in Indianapolis, 15 deals a month in Detroit and 10 deals a month in Jacksonville. He said the business growing really fast and they have team who are continuously looking for opportunity to get houses for rehab and adding more crew on the team. The Detroit and Jacksonville are the new divisions they're trying to diversify to grow further. Then I followed up with a statement to clarify that with 80 properties /month, that's almost 1000 properties a year alone in Indianapolis, with this rate then Morris will dominate Indianapolis market, then Larry said "Yup, that's why we diversify in other areas (referring to Detroit and Jacksonville)".
- Investor · Glendora, CA · Member since 2016 · 41 posts · 72 votes9y
@Chris Clothier In the latest BP podcast you said you guys do 17 deals a week right now. That would be 884 deals a year. You've been ramping up to this level for a long time now... do you think Morris Invest can feasibly get to 1000 deals a year in less than a couple years?
I wanted to figure out how long they've been operating as a register company, so I tried to find the official company name for Morris Invest... either as an LLC or C/S-Corp, but no luck. Anyone else with more experience in researching businesses able to find that info. By my own judging it really look like they only took off after appearing on the BP podcast and promoting it on other tech podcasts. So, that makes it... about 18 months of real marketing and sales (he appeared on the 12/2/2015 podcast)?
I find it hard to believe. But, I could be wrong.
- 9yHarvey LevinPro MemberProperty Manager · Indianapolis, IN · Member since 2012 · 205 posts · 157 votes
- Investor · Indianapolis, IN · Member since 2014 · 61 posts · 28 votes9y
Haughville...
- 9yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
@Agus Hartono & @Jonathan Watson - I typed out this long response with reasoning and trying to educate and realized that investors are going to selectively believe whatever they want to believe. It is how predatory companies sell their goods. The numbers you were told Agus are laughable when taken with all of the other comments from people who have spoken with the company and visited their actual operations.
Are they actually doing over 950 properties a year in Indianapolis? Who knows? My years of experience tell me no, but the other companies or investors in Indy can testify if there are even that many of these properties to sell at this price point. Indy is a small town so the managers, investors and other tk companies in the city know what the volume is and maybe they can share.
I don't know the company and hope they are doing business on the up and up, but the stories and experiences shared continue to be very poor. They stay in business because investors sometimes are looking to be told what they need to hear to believe and buy.
I do know that it takes a huge, talented team (over 77 team members on our side), a lot of experience and millions...MILLIONS of dollars to pull off doing our volume of 650-750 properties a year and we are extremely efficient at what we do. Considering the owners story he only started investing a few years ago, I think what is being said could just be marketing hype.
It could be that the owner of the company has no idea what is actually being told to investors since it sounds like everyone working for him is remote. That doesn't excuse the hype, but who knows if he is even aware.
- 9yHarvey LevinPro MemberProperty Manager · Indianapolis, IN · Member since 2012 · 205 posts · 157 votes
@Phil DuChamp Exactly I guess it depends on the definition because I have seen some they advertise as B that are very clearly C areas LOL
@Chris Clothier As a over 35 year investor in Indy I can say that my experience indicates that in the current market there is no way for one company to capture that many good opportunities in one year in this market
@Ross Denman we are also a Property Manger in Indy and have had the same experiences as you have had with their buyers. Some we have had to turn down managing due to condition. I am sure they have some good properties but we have not seen them
- Real Estate Investor · Livermore, CA · Member since 2016 · 2 posts · 1 vote9y
I work for Morris invest and I have also purchased properties from the company! I am a happy customer and Employee ! We basically have a pool of buyers waiting to pull the trigger on what type of property they are looking for. We include the rehab in the purchase price and yes it is a cash sale. Most properties are either SFH or Duplexes mostly in Indy, but also have some in Michigan , Florida and Ohio. Prices range from 37-65k and I love the podcast as well!! once escrow closes(10 days from signing contract) rehab depending on how intense it is typically takes about 1-2 months and then the property management goes in and finds you tenants then you start receiving $$
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Chris Clothier well bud you and I are the old dogs... NO WAY NO HOW is this company pushing out 80 turn keys a month in Indy it simply is physically impossible there is not enough man power for one company to do this.. a brisk company in a market is 10 to 15 a month sometimes 20 to 30 in a given market. 80 I am not buying it.. .. I am quite active in Indy and I have funded the top producers in Indy going on 15 years now..
And another team I fund there who has in-house management is also getting Morris fall out.. mainly they won't take them because of location and houses are just plain not up to par. At least that's the reports I get..
- Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes9y
Originally posted by @Juan Gonzalez:
I work for Morris invest and I have also purchased properties from the company! I am a happy customer and Employee ! We basically have a pool of buyers waiting to pull the trigger on what type of property they are looking for. We include the rehab in the purchase price and yes it is a cash sale. Most properties are either SFH or Duplexes mostly in Indy, but also have some in Michigan , Florida and Ohio. Prices range from 37-65k and I love the podcast as well!! once escrow closes(10 days from signing contract) rehab depending on how intense it is typically takes about 1-2 months and then the property management goes in and finds you tenants then you start receiving $$
Congrats on your purchases. Some here have not reported the success of closing and "starting to receive $$" that you have. So is your company closing 80 deals per month in Indy as someone suggested ? Seems to me that with the "1-2 month rehab" that would suggest you have 160-240 properties owned or under contract at one time ? Surely that kind of movement in the sub $50k but more likely sub 30K market you would see prices rising in a market such as Indy and you would not be able to keep up that kind of inventory. Agree ?
- Real Estate Investor · Livermore, CA · Member since 2016 · 2 posts · 1 vote9y
I do not work in the numbers department so I am not 100% sure on that answer and do not want to give false info. I work with the investors and the contracts. I would also think that in this market we would see prices rising with so many investors moving into the market. But I see smoking hot deals all day every day that are very low and we get about 15-30 new properties a week same prices! Im blown away when I see these deals and would love to buy once a week!! I do know that multiple people are always interested in multiple properties and how we do it is if you say your interested whoever signs the agreement first gets the property because demand is so high we cant hold houses due to people dragging their feet! If anyone is interested in purchasing a property I would get an LLC first in the state you plan on purchasing in.
- Flipper/Rehabber · Crown Point, IN · Member since 2009 · 482 posts · 216 votes9y
I refuse to believe Morris is doing 80 properties a month. Are you serious? Do you have any idea what type of manpower that would take? Let's break it down.....just a little bit, so this post isn't 5 miles long. This is based on my experience. Ok. Someone has to find the houses for sale. So there's a ton of marketing involved. Someone putting up bandit signs, someone sending out post cards and/or letters each month, someone searching the internet for properties. Someone taking phone calls. Someone evaluating the properties on paper and then on the internet. That's called Due Diligence. Appointments have to be set up. Someone has to schedule all of this. Then someone has to physically go look at the properties. Someone looks at the properties. Then more D.D. has to be done. Someone has to make the decision if it's a good buy. Someone has to estimate the rehab costs. Someone has to do a scope of work (if they're going to buy it). Someone has to write up a purchase contract. Someone has to get it signed and submit a deposit. They're doing this 80 times a month, every month. Seriously? Here's the kicker. We probably look at 9-11 properties before we find something that's worth purchasing for one reason or another. So let's say Morris is much better than us. Ok, they look at only 8 properties for every one they buy. Folks, that means they look at 640 houses a month, every month! Let's say they blow my company away and for every 3 properties they look at, they buy one. That's still 240 properties to go see every month, or 8 houses a day, every single day of the month, including weekends. That's 2880 properties a year. My contractor would need 4 or 5 full time employees, just to do the costs estimates and nothing else. Selling 80 properties a month would literally require an army of people times 2! This was a very short version of everything that would need to be accomplished each month. I'll let you decide.
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Scott Steffek well I guess you could do it if you had Zero quality control... on what you purchase but even at that you have competition at the lower end in INdy.. Alpine is stiff competition for these assets as well as other investors.. and Alpine has been in the market going on 15 plus years I funded deals for them back in 04...
I have had the pleasure of a walk through of Chris's operation in Memphis and I think it was said on his recent pod cast they do about 15 to 17 homes a week.. But that is in 3 or more markets.. and He has 2 large buildings entire fully vertically integrated staff who is VERY good at what they do.. and it shows.. From the feedback we have seen on this thread I seriously doubt the infrastructure is there to do this kind of volume.. and if the buyers are paying for the asset NOT the turn key company.. IE they are all paying cash then trusting Morris to get the rehab done over time.. and the original poster on this it took the company 3 to 4 months to rehab with a 9k budget.. a 9k rehab is a 1 to 2 week job period.. there simply is not enough rehab crews to do this work for one company consistently.. And or your just getting a bunch of unlicensed basically unskilled day laborers slinging paint.
- Phoenix, AZ · Member since 2016 · 61 posts · 105 votes9y
@Jay Hinrichs Hey Jay - I have RE investments in Indy and I just got a flyer in the mail from a Bob Hinrichs about doing REI in the Indy area. Is that you or a relation?
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Brian M. nope although very uncommon on west coast to find those with the exact spelling of my last name.. its more common in that area of the country.. no relationship.
although Chris at Memphis Invest had a Jay Hinrichs working for him.. and some would confuse me with that Jay Hinrichs... I got accused of secretly being MI marketing director by a few consperiecy theorists.
- Flipper/Rehabber · Crown Point, IN · Member since 2009 · 482 posts · 216 votes9y
Jay,
I'm glad you touched on quality control. I never mentioned that in my post. How could there possibly be quality involved at those numbers? The quality in the rehabs and the also the quality of the homes being purchased would almost have to be compromised.
- 9yJames WachobBusiness MemberReal Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 888 votes
@Jay Hinrichs there is only room for ONE Jay Hinrichs !
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@James Wachob just tell it like I see it.. and having funded 20 to 30 turn key companies in a career that started in 2001.. I do have a little more than a passing knowledge of how the inventory plays out in certain markets and how man power needs are met or not met. 80 homes a month bought rehabbed and sold.. would take an ARMY.. Much like your operation or Chris's Huge professional offices staffed with better than average to top notch folks in the industry.. and whats even better is you can go on line and see your office or Chris's office pictures of the staff etc etc.. I don't see anything like that here.. we just saw one little house trying to get rehabbed and taking 3 to 4 months to do it.
- 9yJames WachobBusiness MemberReal Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 888 votes
@Jay Hinrichs I totally agree. Most investors want to know that they are working with an established firm. The key is to find a great team! Ideally you would find a company that has everything under one roof. Acquisitions team, renovation crews (fully licensed and insured), Property Management, and a Real Estate Investment Brokerage in case you ever decide to sell.
By teaming up with a solid firm you can mitigate your risk and have some "boots on the ground" that have your best interest in mind.
- Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes9y
I'll add one more element to the incredulity of this 80 properties/mo claim. For a property management company to absorb that many more SFR they too would need to have some incredible structure in place for absorbing the additional properties - from constantly adding staff to marketing to maintaining. MI doesn't even have PM in house, so where are all these new properties going to get managed?
- CO · Member since 2014 · 12 posts · 9 votes9y
So to sum it up, Morris Invest is excellent at marketing. Their operations is very questionable at best. Yet, with all the shady information about them floating around here on BP, people are still getting on a waiting list to potentially do business with them. Maybe instead of learning how to invest in real estate, I should look into marketing.
- Pflugerville, TX · Member since 2017 · 2 posts · 5 votes9y
I spoke with a rep from Morris Invest a few months ago after listening to most of Claytons podcasts and liking what I heard. We are new to RE investing but have decided to move forward with our first property. I too had the question about why cash only but realize it is because of how quickly they can turn the properties. They purchase the properties but don't do the rehab until they have a buyer who then covers the cost of the rehab in the purchase price. With cash buyers escrow can close in just a couple of weeks. The process has been unbelievably smooth so far. The property is in Jacksonville and only needs minor rehab. We committed two weeks ago and escrow closes Tuesday. They set us up with an insurance agent that specializes in investment properties, they set us up with the LLC and the property manager. We will see how the actual rental process goes.
Also, we found their properties go extremely quickly. We actually lost one because we were at a concert and didn't respond for a
few hours after being shown a property and it went to someone else. They just don't need to wait for someone to get financing.
I will update in a few months once the property is rehabbed and rented. So far I would highly recommend Morris Invest.
- Investor · San Jose, CA · Member since 2017 · 343 posts · 102 votes9y
@Ann Burrows - I wish you could have done some research but train has left now. Good luck with your journey.
BTW next time if you miss some property , PM me I can show you few similar properties in any market.
"Education is what you get by learning from others. Experience is what you get by not learning from others."
Good Luck Investing
Vivek
PS: I don't sell but can share many deals I get in email on daily basis.
- Peabody, MA · Member since 2016 · 46 posts · 4 votes9y
I have been doing research on Morris Invest and these reviews make me feel even more confident in his company. Problem is that I need to finance. Does anyone know a private lender that will loan me 40k on good terms for this Turnkey deal? This will be my first property.
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