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
- Woodland Park, NJ · Member since 2017 · 22 posts · 12 votes8y
Originally posted by @Julie S.:
The properties Morris Invest sells in Indy are owned by Oceanpointe Investments hence the reason there's not a change in property management. So he's either an owner or has a business arrangement with them.
Julie--if this is true, it makes sense as to why MI would remain with a PM that has so many complaints against them. If I were Clayton, I would have replaced them a long time ago.
Take a look at the sales records for some of these MI properties that have been mentioned in various threads. One of these houses sold for $2,500 (presumably to MI), who then proceeded to do a $9k rehab and sell it to an investor for $50k. It's obvious investors are getting the shaft here, and there is no market to sell these houses for anywhere near $50k (ie seriously negative equity right of the bat). With MI owning the GC/rehab business and the PM business they are clearly the only ones making money here (with some serious conflicts of interest as well).
I do have a question for the Indy experts here though. If I wanted to buy one of these $2.5k houses and rehab myself - who are the sellers? Are these all hedge funds / institutional investors that bought this junk for $2.5k eight years ago, collected $50k in rent, and are now walking away from a trashed place with a fat ROI?
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes8y
Originally posted by @Rob Malda:
Take a look at the sales records for some of these MI properties that have been mentioned in various threads. One of these houses sold for $2,500 (presumably to MI), who then proceeded to do a $9k rehab and sell it to an investor for $50k. It's obvious investors are getting the shaft here, and there is no market to sell these houses for anywhere near $50k (ie seriously negative equity right of the bat). With MI owning the GC/rehab business and the PM business they are clearly the only ones making money here (with some serious conflicts of interest as well).
I do have a question for the Indy experts here though. If I wanted to buy one of these $2.5k houses and rehab myself - who are the sellers? Are these all hedge funds / institutional investors that bought this junk for $2.5k eight years ago, collected $50k in rent, and are now walking away from a trashed place with a fat ROI?
We have neighborhoods here in Cleveland where the dilapidated houses can go for as little as $2.5k as well. In my experience those types of neighborhoods are damn near impossible to turn a profit. Especially if one is paying for 3rd party management. Even in neighborhoods where the bottom price point of the roughed up houses are 10x more in the $25,000-$30,000 range it's still difficult to consistently keep them stable.
- Investor · Springtown, TX · Member since 2017 · 8 posts · 5 votes8y
Originally posted by @Richard Patrie:
I think the real issue is that they've grown too fast. They don't have the cycles to handle the load. They need to hire more people or cut back on what they sell. Clayton has been good at getting back to me, but I need to initiate the interaction. I bought one house as a trial balloon. The podcasts are very good, and I may apply that knowledge to properties closer to me. I can pick up homes in my area for around 20K, rehab and spend as much as I would with them.
Hi Richard,
Would you be willing to share your contact information to get a hold of Clayton? I am in a similar situation where I have plenty of untied ends and not getting anywhere with repeated emails and calls to the office staff. Last effort would be to try and escalate if you say he gets back to you, it is worth a try.
- Brooklyn, NY · Member since 2016 · 6 posts · 1 vote8y
Any new updates on Morris Invest? I set up a call with them and they are already sending me listings that are in the 40k-50k range, but still on the fence on making a purchase with them.
- Stuart, FL · Member since 2016 · 15 posts · 10 votes8y
The initial process went well. It was rented quickly and I started to get my checks each month. The only problem I’ve had is the lack of communication. Phone calls and emails are left with no reply. The excuse I got was that some people require more handholding. the only question I had was if it was still rented or not. I don’t think that is an unreasonable question. It should have been an easy reply. Three weeks and several emails and phones calls later we finally got a call. I think that was mainly because I contacted Clayton directly and voiced my concern. Over all everything works. I am still considering another property with Morris Invest even with the current hiccup. Everything else has gone smooth.
- Houston, TX · Member since 2017 · 10 posts · 7 votes8y
I wanted to invest with MI but I needed more information. I'd had my original phone call with James of Boston and I asked if he could provide me with some references as well as explain to me how they handled people that were disgruntled. He never came through on either. Still, I emailed him with more questions but those emails have not been answered in the past two or three weeks. I talked it over with my dad and we both decided that if they weren't responsive up front, they'd be less so once they got my money. Also reading the experience here on BP helped me decide.
- Morrisonville, NY · Member since 2013 · 61 posts · 46 votes8y
After 3 months, there are still outstanding issues. The property isn't rented. It failed HUD inspection because the PM didn't have the furnace or hot water heater installed, and the pipes were froze. I fear this whole venture was a tremendous mistake. I am now looking at C-class neighborhoods near me and finding better houses for the same price.
- Managing Broker / Investor · Indianapolis, IN · Member since 2015 · 350 posts · 362 votes8y
Important information about Oceanpointe Investments LLC
- Investor · Louisville, KY · Member since 2017 · 23 posts · 20 votes8y
It's to bad things are not looking good for MI, I love the Youtube video's they provide. BUT!!!!!!! Lets be honest sometimes when it's to good to be true............ There is a reason for concern.
BP is here to provide so many valuable tools, USE THEM! Some other "turn key providers" tired to get me the same way, HEY here is this PROFORMA, INDY, Great returns !!! 125K asking price, B+ area!!!! Then I looked around on Zillow and every house is foreclosed, selling for nothing, and the place being sold for 125k was just bought for 40K had paint, carpet, and a HVAC installed and is now worth 3x. Come on.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Ashley Brun:
Any new updates on Morris Invest? I set up a call with them and they are already sending me listings that are in the 40k-50k range, but still on the fence on making a purchase with them.
are you still considering them with all the feedback this is just not one customer with issues this is one of the worse violations of a trust ( morris) that i have witnessed in 2 decades of working this stuff... morris is a maketer like a RE broker he is not a turn key sellers... and the houses well what those are saying this is not competitors these are actual clients how they could sell one more home or anyone who has read any of this stuff on this company and still did business with them.. well then i guess they get what they deserve they were for warned
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Linzay Kelly:
I wanted to invest with MI but I needed more information. I'd had my original phone call with James of Boston and I asked if he could provide me with some references as well as explain to me how they handled people that were disgruntled. He never came through on either. Still, I emailed him with more questions but those emails have not been answered in the past two or three weeks. I talked it over with my dad and we both decided that if they weren't responsive up front, they'd be less so once they got my money. Also reading the experience here on BP helped me decide.
wise choice it is looks like a duck quakes like a duck its a duck LOL.. worse situation I have ever seen investors put in.
- 8yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
Originally posted by @Ashley Brun:
Any new updates on Morris Invest? I set up a call with them and they are already sending me listings that are in the 40k-50k range, but still on the fence on making a purchase with them.
Have you looked at all of the threads on MI here on BP? If you had, I don't think you would be on the fence.
- Chicago, IL · Member since 2017 · 13 posts · 0 votes8y
I had my meeting with Morris Invest today and I have nothing to add except that I was also sent over a price list of the remodel needs. I'm new to this so I don't know if what I'm looking at is reasonable or not. I just bought and am house-hacking a duplex in Chicago. It's my 3rd month doing this. This would be my 2nd rental purchase (3rd 'door').
The first house they sent me was $49500 with a rental rate of $750. They sent the full address and on zillow the neighboring houses are in the $42k-48k value range (pretty much every house on that street and the one behind it, with a handful of $35k properties). The $750 rental rate seems to be in line with the area too.
Not sure what I'm going to do here yet. Obviously the return sounds great, if it can be believed.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Todd Burton @Robert Blake @Ross Denman Robert Ross and Todd are local Pm's that are dealing with the aftermath of this train wreck you may want to get a second opinion.. and if you have read these threads and still think this is a reputable company then I don't really know what to say..
Just sayin...
- Managing Broker / Investor · Indianapolis, IN · Member since 2015 · 350 posts · 362 votes8y
Check out this post by @Rita Wasley: https://www.biggerpockets.com/forums/92/topics/361...
Huge red Flags in a Q&A with Morris Invest!
Q: Can we come and do a walk-through of the property before buying?
A: No, it is too hard do arrange because the properties sell quickly. If you want to see the property before the close or after the rehab, they will do it.
MY COMMENT: I WOULD NEVER BUY ANYTHING FROM SOMEONE WHO HAS A REASON I CANNOT SEE THE PRODUCT....ESPECIALLY A PROPERTY!
Q: Will the property be rented or do we need to work with a property management company to get a renter?
A: After the rehab the property will be advertised by the property management company. You have to use the property management company they set you up with - at least initially. Since it is on a year-to-year basis, you can switch to another PM later.
MY COMMENT: REQUIRING YOU TO USE THEIR SPECIFIC MANAGER COULD BE CONSIDERED A TYING AGREEMENT AND MAY BE ILLEGAL. AT THE LEAST IT IS CERTAINLY UNETHICAL.
Q: Can we get a property inspection from a neutral third party before purchasing?
A: Not good to do, as it's a lot of extra work and time.
MY COMMENT: NOT GOOD TO DO?!? IT IS ABSOLUTELY ZERO EXTRA TIME OR WORK FOR THEM. IT'S NOT GOOD FOR THEM BECAUSE IT REVEALS THE TRUTH.
Good luck.
- Real Estate Consultant · Whitestown, IN · Member since 2014 · 549 posts · 933 votes8y
@Todd Burton I love that you just put it out there...
Here's a final challenge for anyone still on the fence regarding Morris Invest/Oceanpointe. Find a website for Oceanpointe. What property management software are they running? Find a rental listing for any of their properties. I don't believe that I have ever seen one. Why is their most common office address a mailbox? Can their tenants pay online? Is there an office they can go to pay rent and get a receipt? If you have a hard time getting in touch with them, do you think that the tenants are having the same problems... How long do you think your tenants will stay if they can't get in touch with the property management company? Vacancies and tenant turnover kills ROI!
One of their clients who came over called them "Bush League" and I found it kind of funny. They seem to be lacking credibility on several different fronts. I really hate talking bad about people, but I hate seeing people getting screwed even more.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Ross Denman I think this quote pretty much sums up anyone who has read these threads and still jumps on here and says they are going to talk to this company and do we think they should move forward.
"INSTANITY IS DOING THE SAME THING AND HOPING OR EXPECTING A DIFFERENT OUTCOME "
ITS JUST INSANITY AT THIS POINT IN MY MIND WHAT HAS HAPPENED AND THE FACT THAT ANYONE WOULD STILL CONSIDER THIS A VIABLE COMPANY INVESTMENT.. JUST INSANE .. THATS MY PERSONAL OPINION BASED ON A FEW DECADES OF WORKING IN THE ASSET CLASS AND INDUSTRY.. NEVER QUITE SEEN ANYTHING LIKE THIS.. WELL I HAVE SOME OF THE US MARKETERS THAT WENT TO AUSTRALIA DID THE SAME THING SOLD HOUSES THAT NEVER GOT TOUCHED OR REHAB WAS PATHETIC.. BUT THATS ANOTHER STORY.
Thank You for all of the comments.
I have been listening to Morris Invest for over a month, and I had phone conversation with James about a month ago. I told him that I am a new investor who like the buy and hold RE in Indianapolis with ROI about 10%. He sent me couple of properties, for the first three weeks, I got deals almost everyday. Lately I don't get posting recently. Perhaps I am thinking that they are not have any inventory as this point now.
I am naive on a lot of due diligence regarding buy-and-hold property. What pitfalls should I be consider for buying a out-of-state property?
- 8yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Ken Yeung So are you saying that if they did have inventory that you would buy from them? Just read this thread or the many similar ones on MI and you have all the information you need. This is a textbook lesson on what pitfalls to avoid. Everyone that you can think of has been discussed on here.
@Jay Hinrichs I've been shaking my head for weeks now wondering the same thing. How many more red flags do people need? The only think that I can think is that they don't bother to check on BP before the make the leap and then come on here looking for everyone to help them with their mess. Unfortunatley, with this asset class there is no fixing it.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Mike D'Arrigo Mike its really the trifecta.. Pitchman Morris with his HUGE pod cast following / rich dad dreamer of what your freedeom number is/ and then hook up with guys that are on the ground that are evidently not ready for prime time and probably if all the allegations are correct frankly engaged in a rehab scheme..
But to your point even if everything was done correctly this is still a very tough asset class to buy and hold long term for out of state investors.. just is.. and for Morris to make the statements he has made about the asset class.. ( while its his opinion I suppose) he could not be more dead wrong and its obvious he is a new comer at this who has led a lot of nice people into some really serious financial situations.
I still don't get how two experienced bp podcaster interviewers don't get more insightful information during the interviews to help paint the proper investor expectations picture. Any noob listening would have concluded this is a golden opp with zero pitfalls...what could possibly go wrong as all I need to do to set my freedom number and I am set for life. There was very little critical thinking happening across the board I am afraid. The effort to entertain over inform cost some investors this time around. The two extra hype sessions was unnecessary and then preventable we can understand. Or at least counter balance info with like a Mike D Arrigo interview perhaps.
- Indianapolis, IN · Member since 2018 · 14 posts · 14 votes8y
Anyone with a brain in their heads should have seen this coming a year ago. You do not buy 30 run down houses a month in D areas of Indy, rehab them and keep tenants in them paying rent. In all likelihood (at this point we have numerous reported cases) OceanPointe has not even been rehabbing a lot of these properties, and has been paying the "rent" out of their own pockets this entire time. I think there's a name for that, it starts with a P and rhymes with PONZI SCHEME.
The vast majority of Morris Invest's clients are going to be motivated sellers in a few months and wind up selling this crap for the same 5-20k that OceanPointe bought it for in the first place.
I almost feel bad for them.
Stay in California next time.
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