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
- Indianapolis, IN · Member since 2018 · 14 posts · 14 votes8y
Originally posted by @Robert Blake:
Not sure what I'm going to do here yet. Obviously the return sounds great, if it can be believed.
It's a load of crap.
- Real Estate Consultant · Whitestown, IN · Member since 2014 · 549 posts · 933 votes8y
I just would like to educate some people about general asset classes in Indianapolis and anywhere probably. Price is dictated by desire as is asset class. This is not exceptionally black and white and there are plenty of opportunities to find exceptions, but with that being said:
D Class rental rates:
1 bedroom - less than $500/mo
2 bedrooms - $600/mo or less
3 bedrooms - $700/mo or less
4 bedrooms - $750/mo or less
C Class rental rates:
1 bedroom - $500-$600/mo
2 bedrooms - $600-$700/mo
3 bedrooms - $700-$850/mo
4 bedrooms - $750-$900/mo
B Class rental rates:
1 bedroom - $600+/mo probably more like $650+
2 bedrooms - $700-$1,000/mo
3 bedrooms - $800-$1,250/mo
4 bedrooms - $900-$1,400/mo
A Class rentals - You won't find many of these at investment prices
2 bedrooms - $1,000-$1,650+/mo
3 bedrooms - $1,250-$3,500+/mo
4 bedrooms - $1,400-$4,500+/mo
The rental pricing available in a market will be a good indicator of the asset class. This is why many property managers start getting selective with 2 bedrooms that rent for less than $650 and 3 bedrooms that rent for less than $750. They also don't pay very well and require a lot of work.
- Boulder, CO · Member since 2016 · 22 posts · 4 votes8y
Originally posted by @Ross Denman:
I just would like to educate some people about general asset classes in Indianapolis and anywhere probably. Price is dictated by desire as is asset class. This is not exceptionally black and white and there are plenty of opportunities to find exceptions, but with that being said:
D Class rental rates:
1 bedroom - less than $500/mo
2 bedrooms - $600/mo or less
3 bedrooms - $700/mo or less
4 bedrooms - $750/mo or less
C Class rental rates:
1 bedroom - $500-$600/mo
2 bedrooms - $600-$700/mo
3 bedrooms - $700-$850/mo
4 bedrooms - $750-$900/mo
B Class rental rates:
1 bedroom - $600+/mo probably more like $650+
2 bedrooms - $700-$1,000/mo
3 bedrooms - $800-$1,250/mo
4 bedrooms - $900-$1,400/mo
A Class rentals - You won't find many of these at investment prices
2 bedrooms - $1,000-$1,650+/mo
3 bedrooms - $1,250-$3,500+/mo
4 bedrooms - $1,400-$4,500+/mo
The rental pricing available in a market will be a good indicator of the asset class. This is why many property managers start getting selective with 2 bedrooms that rent for less than $650 and 3 bedrooms that rent for less than $750. They also don't pay very well and require a lot of work.
@Ross Denman: This is great! Thanks for sharing. Question: Where did you get this data?
- Real Estate Consultant · Whitestown, IN · Member since 2014 · 549 posts · 933 votes8y
Originally posted by @Joshua Zapin:
Originally posted by @Ross Denman:
I just would like to educate some people about general asset classes in Indianapolis and anywhere probably. Price is dictated by desire as is asset class. This is not exceptionally black and white and there are plenty of opportunities to find exceptions, but with that being said:
D Class rental rates:
1 bedroom - less than $500/mo
2 bedrooms - $600/mo or less
3 bedrooms - $700/mo or less
4 bedrooms - $750/mo or less
C Class rental rates:
1 bedroom - $500-$600/mo
2 bedrooms - $600-$700/mo
3 bedrooms - $700-$850/mo
4 bedrooms - $750-$900/mo
B Class rental rates:
1 bedroom - $600+/mo probably more like $650+
2 bedrooms - $700-$1,000/mo
3 bedrooms - $800-$1,250/mo
4 bedrooms - $900-$1,400/mo
A Class rentals - You won't find many of these at investment prices
2 bedrooms - $1,000-$1,650+/mo
3 bedrooms - $1,250-$3,500+/mo
4 bedrooms - $1,400-$4,500+/mo
The rental pricing available in a market will be a good indicator of the asset class. This is why many property managers start getting selective with 2 bedrooms that rent for less than $650 and 3 bedrooms that rent for less than $750. They also don't pay very well and require a lot of work.
@Ross Denman: This is great! Thanks for sharing. Question: Where did you get this data?
@Joshua Zapin I work in PM, invest locally, and I'm deep in the trenches around town every day. The numbers themselves are very subjective, but I imagine that most of the property managers on the boards would categorize things with very similar numbers. There are certainly median numbers that can be researched that will reinforce these numbers or something similar as well as numbers that can be broken down by neighborhoods, school districts, zip codes, etc. You will find the best cash flow is with C to C+ properties, but you have to deal with some headaches. I personally feel that the overall best return is the B- to B properties if purchased at a 10% discount or better.
If you look at properties by the TK providers locally, you will see a lot of numbers in the C to B range and listed as such. There are a lot of MI/OP homes being advertised as B properties but renting at very low figures and in tough neighborhoods. B properties are not in tough areas unless they are downtown (all of downtown can be tough) and they are usually very secure.
It's not rocket science. There is tons of data on Trulia, Zillow, Homesnap, RedFin, etc that can help you identify several risk factors without even seeing the property. Pre-screening with the internet can be a huge time saver when sorting through prospective deals.
- 8yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Ross Denman did a great job of breaking down the various asset classes by rents. Everyone who is considering buying turn key properties should study this. The thing that I see out of state investor struggle with the most is identifying the class of neighborhood. Knowing rents will go a long way towards telling you what a neighborhood class is. If you're looking at a 3Br renting for $600 it's a pretty good clue that this isn't an A class neighborhood.
- Fredericksburg, VA · Member since 2016 · 190 posts · 64 votes8y
It appears Clayton/MorrisInvest are now pursuing funding via a crowd-funding platform (https://www.realtyevest.com/deals). I have not had the best of luck with realtyevest and and trying to exit my investments with them.
- Morrisonville, NY · Member since 2013 · 61 posts · 46 votes8y
@Ken Yeung I live in NY and have been looking at properties in C-class neighborhoods. I'm finding there are areas with decent homes under 50K that don't need a lot of rehab, with potential returns of 12-18%.
- Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes8y
Just adding my two cents here as I have first-hand experience. Take a look at my experience with Morris Invest and investing out of state on my blog and on my BP post here: https://www.biggerpockets.com/forums/92/topics/392...
My property cash flowed for 11 months, then became vacant without notice, and had a squatter in the garage. I'm turning things around right now and have learned a lot. Let me know if you have any questions!
-Tyler
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Richard Patrie:
@Ken Yeung I live in NY and have been looking at properties in C-class neighborhoods. I'm finding there are areas with decent homes under 50K that don't need a lot of rehab, with potential returns of 12-18%.
key word here is potential !! reality is not potential though
- Member since 2017 · 2 posts · 2 votes8y
Not a good experience.
DJan 2018 called Morris Invest and was told they don't accept finance. They did send me a few properties averaging 50k. End of February had about 50k cash and called again. I was shown the same kind of properties as two months ago, this time the price was higher about 40% averaging 65-70k.
Stating my concern that pricing was now increased and a decent cash refinance would out of the question,I was told that unfortunately the appraisal for their properties will be way lower than the sale price. Meaning I would pay 70K and would be appraised on 50K.
...well, they simply raised the prices within two months. But that's business, I accept that.
What I cannot accept is the following....
his reasoning was "all the knowledgeable appraisers have been retired ..... in the area, and the new ones under appraise properties!". Come on now..!
I didn't care for the irrational excuse, I asked for a copy of their standard contract. I wanted to have an idea about the contract since I 've been told that who ever signs a contract for an available property first is the one to gets it; week after week I am still waiting, two months.
Further more, the conversation I had seemed to provide no assurance that the property after renovation would actually be free of needed repairs.
In conclusion, I am disappointed. Clayton Morris image (on you tube) portraits professionalism, ethics, structure, and attention to detail but my personal experience does not come even close to these qualities. I just don't get it.
Anastasios
- Investor · West Islip, NY · Member since 2014 · 48 posts · 44 votes8y
Originally posted by @Anastasios Ioannou:
Not a good experience.
DJan 2018 called Morris Invest and was told they don't accept finance. They did send me a few properties averaging 50k. End of February had about 50k cash and called again. I was shown the same kind of properties as two months ago, this time the price was higher about 40% averaging 65-70k.
Stating my concern that pricing was now increased and a decent cash refinance would out of the question,I was told that unfortunately the appraisal for their properties will be way lower than the sale price. Meaning I would pay 70K and would be appraised on 50K.
...well, they simply raised the prices within two months. But that's business, I accept that.
What I cannot accept is the following....
his reasoning was "all the knowledgeable appraisers have been retired ..... in the area, and the new ones under appraise properties!". Come on now..!
I didn't care for the irrational excuse, I asked for a copy of their standard contract. I wanted to have an idea about the contract since I 've been told that who ever signs a contract for an available property first is the one to gets it; week after week I am still waiting, two months.
Further more, the conversation I had seemed to provide no assurance that the property after renovation would actually be free of needed repairs.
In conclusion, I am disappointed. Clayton Morris image (on you tube) portraits professionalism, ethics, structure, and attention to detail but my personal experience does not come even close to these qualities. I just don't get it.
Anastasios
Do yourself a favor and stay far away from Morris Invest. Read all the negative posts and nightmares that people who have bought from him are having.
- Investor · Redondo Beach, CA · Member since 2017 · 134 posts · 46 votes8y
Hi there,
I'm not trying to be a negative Nelly, but we actually toured with them and passed. Someone posted their experience with Morris here yesterday. I cannot remember her name, only that she is an investor from La Palma, Ca. Do yourself a favor and read it before you invest.
Best wishes,
- Member since 2018 · 10 posts · 14 votes8y
Please run from Morris Invest and Oceanpoint as fast as you can. I bought two properties from them and it has not ended well, and I am hearing my story is actually pretty common.
- Member since 2018 · 1 post · 1 vote8y
Clayton Morris is a complete scam. I would stand clear of his turnkeys, they are a complete nightmare. The properties are in C/D class neighborhoods. They say they can renovate them for super cheap, but they either don't do the renovations at all, or they put a veneer over a run down home that doesn't last. Since the properties are in such low income areas, you are constantly flipping the home to get it ready for new tenants. The tenants do not care at all about the quality of the home. They punch holes in walls, rip off doors, and when they leave in the middle of the night to avoid collection/eviction, they leave behind massive piles of junk, rotten food, and rodents. Not to mention, most of the neighborhoods are so run down, if the home sits empty (especially in winter) you now get to deal with squatters breaking in for shelter. Squatters (if they are kind enough) leave buckets of human waste, drug paraphernalia, and even light bon fires in the middle of the living room, therefore, burning down the house in most cases. If any of this sounds like it is worth it, jump on board the Morris Invest nightmare train.
If you do choose to take your chances, I suggest you do so in the same city you live in, so you can have a complete visual of the property before purchase, and be very hands on in the renovation and management process thereafter.
- Winston Salem, NC · Member since 2014 · 21 posts · 17 votes7y
Wow, am I glad to did my research before buying from MI... BP has been absolutely INVALUABLE during the process of purchasing my first rental. Thank you for everyone who has posted and provided expert advice. I've been on BP for a while now but have always just been a reader, this is only my first time actually posting to say thanks!
Joshua
- Developer · Point Pleasant Beach, NJ · Member since 2015 · 303 posts · 216 votes7y
@Simon Stahl I spoke to someone from Morris invest and thought it sounded pretty shady. The guy is trying to convince everyone why buy and hold is a great strategy yet his whole business is selling investors like you his properties. They also say you will earn 9% a year on the investments but that is a pretty poor return for a single family home. There are much better ways to invest. Just think, he is a long term investor, why would he be selling unless he knew the house isn’t worth what he is selling them for.
Originally posted by @NA NA:
Clayton has started a new gig.
https://financialfreedomacademy.com/
Eliminate money stress for life let him take all of yours then you won't have to worry about any money. Buyer beware
seems about right.... lol
Eliminate Money Stress for LIFEYou look at all of the people in Indy that got screwed now I'm hearing that people in Detroit are getting hammered as well. Also the podcasts are half commercials and then there is the financial freedom academy. He's got way too many irons in the fire and none of them have very good reviews and they're all give me your money and I'll eliminate your financial worries. He should go back to TV and be a preacher!
Action in Indiana courts: suits moving forward, case files available on the court's website: https://public.courts.in.gov/mycase/#/vw/Search (enter Clayton Morris in the search).
Complaints state plaintiffs were deceived and harmed by Morris Invest. Purchase contracts were signed by Clayton Morris. Oceanpoint/Indy Jax was the true seller of the properties and also was later contracted to rent and manage them (or Blue Sky, Boardwalk, etc.). Buyers received the warranty deeds from Oceanpoint/Indy Jax conveying ownership despite contracts being with Clayton Morris and payments made to Morris Invest. There weren't any assignments.
Purchase agreements are available as exhibits and they are the worst contracts imaginable with no owner listed, no assignment, only Clayton's signature even though he was not the property owner or a licensed broker. The selling broker line is blank, seller real estate license # line is blank, legal description: blank, earnest money: $0, financing, inspection, insurance sections all blank (only parts filled out are sections that benefit the seller). Don't see how fraud gets any more fraudulent.
From reading the complaints, plaintiffs allege that Clayton made oral/express contracts and presented marketing materials that promised his company would rehab the properties as included in the sale price but the properties were never rehabbed. Then months later he or his representatives told the plaintiffs that the properties had been rehabbed and rented to tenants when they were actually vacant and collecting fines from the city. Some plaintiffs received "rent checks" from tenants that were fictionalized and were also sent leases that were forged. Morris Invest videos are also referenced in the complaints as oral contracts and attempts to deceive and induce fraud.
One complaint states that the Morris Invest house had actually burned down 4 days PRIOR TO CLOSING and that this wasn't disclosed to the buyer before closing or during the months after the sale. Only when the buyer received a letter with fines from the city saying the burned home would need to be demolished did they learn about the fire. The property managers put in place by Morris had been withholding previous letters from the city and assuring the buyer everything was going according to plan.
Opening up the documents in the case file I saw that on 3/11 a motion to dismiss was granted to Oceanpoint in one of the suits because Oceanpoint doesn't appear on the contract. All other motions to dismiss have been denied or are still pending. The one that was granted states only Oceanpoint is dismissed, not the other defendants (Clayton Morris, Morris Invest plus reps and agents for MI named personally). So it's looking like CM's having a hard time shedding blame with his signature on the contracts and his face in the videos promising turnkey investments that ended up being vacant economically obsolete or literally burned down houses.
I don't know any of these people or have any involvement or inside knowledge, just going off what I have read on here, watched on the Morris Invest youtube channel, and now read in the case files.
The different suits vary by case but allegations include many counts of fraud, fraud in the inducement, breach of contract, promissory-estoppel, quantum meriut and unjust enrichment, business opportunity deception, and offense against property. Jury trials have been requested.
I'm actually surprised there aren't more suits because we know there are several hundred victims (and counting) and I could only find a handful of suits. Perhaps more lawsuits are in the works, or a class action? Perhaps some suits have already been dismissed/settled out of court and these ones will be too? I have no idea. If a criminal case isn't also underway I'll lose all faith in the justice system.
I also looked up the property where the summons/subpoena was sent that was also listed as the main defendant's address: a 6,500ft2 residence in NJ. It is currently listed for sale for $1.5M. It's a nice house, I recognize it from some of the youtube videos. The saga continues...
- Miami, FL · Member since 2016 · 5 posts · 3 votes7y
I just found the complaint below on the Better Business Bureau posted on 3/5/19:
"I will just start by saying we were deceived out of $97,000.00. We purchased 3 rehab homes in Indianapolis through Morris Invest. These homes were not in up and coming areas, as described in their info. These homes were dilapidated and then never rehabbed, which we payed for. I contacted Morris Invest office numerous times and when I got lucky to talk to someone, they just say "Their team is taking care of it". Not another company. Oh but now it's another companies fault. I guess they can't tell us of their shady dealings. I have a statement that clearly says they handle the transaction, the rehab THEN we are passed on to their third party property managers. During this nightmare, they NEVER communicated with us. It was the worst experience with a company that I ever had. Clayton hides behind his blame of his third party company. He says they didn't sell the property and they were not responsible for the rehabs. His info. misrepresents what they say they are not responsible for. His advertising and website makes EVERYONE feel their services are actually through them. They never tell us that they really have nothing to do with any of it, as they now state since hundreds of hard working people have lost their shirt . Clayton had many red flags and he had plenty of time to make things right before things got to this point. I respected him in the beginning, but he is a thief and a coward. We were stuck with 3 homes, falling apart and uninhabitable. Oh but Morris Invest had nothing to do with it...INVESTORS BEWARE!!!"
- 7yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Simmy Thompson Unfortunatley, there are a lot of investors in the same situation as you because of these guys. @Jynell Berkshire is representing several several others in lawsuits against them. She is active on BP so you might want to reach out to her. I'd sorry that you've been another victim of these guys. Good luck.
@Simmy Thompson so sorry to hear what happened. I would definitely contact that attorney. The documentation you have should be very helpful if they don't already have a copy. I hope you are made whole again. All the best going forward.
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