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 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!!!"
So sorry to hear this. More reading here: https://www.biggerpockets.com/forums/311/topics/689433-clayton-morris-morris-invest-house-of-cards-starting-to-fall
@Will Zena, @Patrick Shawn Faherty @Mike D'Arrigo
I am sorry folks if my post read as though I was an investor with Morris Invest. However, I am not. My husband and I run our own thing in the Midwest and we do not use turn-key companies because I am type A and I like to close with equity.
The point of my post was to show was stated on the better business bureau's website hence it is quotation marks :)
I did learn a ton from their podcast and purchased the books Loopholes of Real Estate and Tax Free Wealth because of them.
The Morris family left the country: http://natalimorris.com/out-of-office-reply/
WOW! Is all I have to say and I just read a couple paragraphs so far. Everyone should check this reading material out.
The Morris family left the country: http://natalimorris.com/out-of-office-reply/
I wonder if the place they went has extradition to the USA? I'm glad she is so supportive of her husband, but I do think he has at least some level of culpability. I don't ever recall him mentioning any partner beside Natali. Perhaps he did, but he was definitely the front-man.
Her fans sure are supportive so far per the comments on the bottom of her blog.
The Morris family left the country: http://natalimorris.com/out-of-office-reply/
I wonder if the place they went has extradition to the USA? I'm glad she is so supportive of her husband, but I do think he has at least some level of culpability. I don't ever recall him mentioning any partner beside Natali. Perhaps he did, but he was definitely the front-man.
Her fans sure are supportive so far per the comments on the bottom of her blog.
Your right. I always listened to the podcast since I was a newbie and had calls/emails with them. Nothing was ever mentioned about partners.
Wow is right. The reason the guy can't sleep at night and feels ill is because he knows he screwed up. I bought a house from him in Detroit, and not Oceanpointe in Indy. So the whole "blame the dead guy" excuse doesn't fly. It was my first step into real estate, and I got screwed with repairs that were never made, and lead paint removal. Total disaster. From Nov 2017-Dec 2018 I had nothing but problems with the property. Fast forward to now, and another 10K in the toilet, I am finally cash flowing. I plan to sell the property, but will wait until I recoup some of my losses. I spoke to Clayton. He called me. To be honest, I didn't think he was a bad guy, just a bad businessman. I think he grew too large, too fast, and didn't have the infrastructure in place. I think the guy got overwhelmed, and things fell through the cracks. The folks working for him were definitely slugs. If anything, it has been a learning experience. Since then I've purchased 8 properties in my local area, and it has been relatively smooth sailing. I did get a lot of good info from his podcasts, and he had the concepts down, he just couldn't execute them en masse. Chalk it up as a life lesson.