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
- Real Estate Broker · Los Angeles, CA · Member since 2016 · 55 posts · 16 votes10y
thanks @Kayla Lyon!
- 10yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Originally posted by @Ken Badziak:
Jesse Danzig it's outsourced as far as I can tell. With whom in not sure yet.
After waiting nearly a month and a half to speak with Clayton but then getting his underling David instead, I haven't received any follow up emails or anything from the group.
Contrast that with the continuous follow up and feedback I'm getting with OhioCashFlow and USAPortfolioRE, I think I know where my next turnkey purchase won't be...
This is a great share for anyone reading on here. Not because of what has not happened, but about what passive investors should expect as bare minimum. The bar really needs to be raised and the only ones that can raise it are those that are actually investing and sharing. I am assuming, hopefully rightly, that you shared your goals and felt they aligned with this company and were expecting feedback and follow-up?
Follow-up, feedback, communication ~ these are all extremely important. How a company does anything is how they do everything and poor communication, un-organization, and an inability to set and keep timely appointments are all signs of how a company runs both internally and how they run their external relationships. No matter how good the marketing schtick is, these are warning signs of how a relationship will progress over time.
I like both USAportfolio and Ohio Cash Flow and I am happy to hear that they are doing a good job of working towards earning your business.
- Investor · Glendora, CA · Member since 2016 · 41 posts · 72 votes10y
Experienced investors (of which I am not one yet) seem to have strong opinions on whether or not to invest in C neighborhoods... Clayton Morris hangs his hat on ONLY C neighborhoods (which, admittedly in my limited experience, seems like it might work best mostly if you're pushing his economies of scale). I'd be curious what you experienced investors @Chris Clothier, @Clayton Mobley, @James Wise, @Jay Hinrichs, @Account Closed feel about his take in his latest podcast.
http://morrisinvest.com/podcast/2016/9/8/ep051-why-c-class-properties-are-my-favorite
Essentially, he talks up C properties, and talks down A properties (and says B properties can be OK). It's a short listen at about 13 minutes.
Is he just trying to sell his business? Or is his (limited, perhaps) experience improperly informing his view of how/where to invest?
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jonathan Watson your correct inexperience in the space and he is simply pitching what he makes money at..
these assets as I have stated since the first day on got on BP 2.5 years ago.. are appropriate in my Humble opinion only for locals that want to scale a low end rental business... have the time to watch them like a hawk.. you will be hard pressed to break even with these if you have to pay 3p management turnover costs etc etc. With a very likely scenario of a total wipe out..
Just ask them to send you a pre rehab photo of one of the homes.... and take a guess where that home came from.. it came from a burnt out landlord that finally gave up... and that's what your home will look like in a few short years.. If you think this inventory comes from little old ladies or subprime borrowers who lost homes.. that ship saled years ago
- 10yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Jonathan Watson Personally, I don't think one can generalize about what class is better. I would never recommend investing in anything lower than a C class, but having said that, you can do very well in A through C class depending on your market and your overall objectives. People choose A class for various reasons (some erroneously). Clayton seems to approach this from strictly a cash flow point of view but if you're looking for better appreciation potential or having a flexible exit strategy (i.e. selling to an owner occupant or an investor),than A class may be the better option for you. I always tell investors to carefully consider what they're criteria and strategy is first. Another significant thing to determine is whether the property/neighborhood is truly C class. This nomenclature gets thrown around loosely and everyone has a different definition. People often pass off D class areas as C class. I've operated in the Indianapolis market for over 6 years now and I'd be hard pressed to find a C class neighborhood with properties selling for $40K. What's more important than price in determining class however is what the rents are in the area. If median rent for a market a market is $800 or $900 but only $600 in a particular area, it's a pretty good indication that it's not a very desirable area and less than C class. I agree with Morris that renters in truly C class neighborhoods are mostly honest working class people but you need to determine what the true class of the neighborhood is. That's not difficult to do.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes10y
Originally posted by @Jonathan Watson:
Experienced investors (of which I am not one yet) seem to have strong opinions on whether or not to invest in C neighborhoods... Clayton Morris hangs his hat on ONLY C neighborhoods (which, admittedly in my limited experience, seems like it might work best mostly if you're pushing his economies of scale). I'd be curious what you experienced investors @Chris Clothier, @Clayton Mobley, @James Wise, @Jay Hinrichs, @Account Closed feel about his take in his latest podcast.
http://morrisinvest.com/podcast/2016/9/8/ep051-why-c-class-properties-are-my-favorite
Essentially, he talks up C properties, and talks down A properties (and says B properties can be OK). It's a short listen at about 13 minutes.
Is he just trying to sell his business? Or is his (limited, perhaps) experience improperly informing his view of how/where to invest?
It is a game of scale with an unlimited amount of variables. If you are going to own a very small sample size then I say you should go with an A or a B class property. There are far less bumps in the road. Think slow rolling hills instead of peaks and valley's.
As for C class properties
- I have some C class properties I have made a killing on.
- I have some C class properties that did OK.
- I have some that have ran me losses and I am still working my way back into the green.
I still buy C class properties and will probably always continue to buy them. However, A & B class properties are much more fun to own. Sometimes C class tenants drain you and your wallet when dealing with them, other times you end up with a cheap property and a long term tenant that works out great. Again, it's all about scale and sometimes the luck of the draw.
There is a street in Cleveland called Behrwald. Holton-Wise owns several properties on that street and we manage even more for our clients. All told we have roughly 25 or so units on that street. The portfolio is made up duplexes and a few single family homes. One of our maintenance technicians even lives in one of our properties on that street.
There are two duplexes in particular that will show you the wide range of the spectrum. They are right across the street from one another. Similar age, quality and purchase price. We even purchased them from the same family at the same time for about the same price. One from the mother and the other from her daughter.
Since we have owned them one of the duplexes we have had two evictions and some hefty repair bills and damages after the tenants we evicted stole the water tanks on the way out. The other building, which is located directly across the street and essentially identical in almost every way has two tenants who we have spoken to 1 time since we have owned it. After we purchased it we contacted them and told them to come to our offices to sign a lease and that was that. We have never seen or heard from them since. They pay every month like clockwork. They do not call about anything....ever. We have had zero repair costs at that property since we purchased it.
Obviously we all want to own the 2nd duplex. None of us want to deal with the 1st one. Here is the rub folks, they are the same! Luck of the draw, can't do anything about it. It could have easily gone the other way on either property and down the road it probably will. We may run a great stretch on the bad property and run into some issues on the good one. Gotta roll with the punches and take the pro's with the con's.
- Investor · Glendora, CA · Member since 2016 · 41 posts · 72 votes10y
Thanks for the feedback, @Mike D'Arrigo, @Jay Hinrichs, @James Wise. I don't doubt Clayton is doing well, but I have feeling he's looking through rose-colored glasses. He hasn't experienced the kinds of market downturns you guys have, and is just talking up the things that have made him money in the last few years.
Great story about the 2 duplexes, James. It's a reminder that even though sometimes we do our best to get the best tenants and the best properties, we can't win every time. Like you said--gotta roll with the punches.
I just want to minimize the punches thrown :)
- 10yClayton MobleyPro MemberBirmingham, AL · Member since 2014 · 875 posts · 947 votes
Hey @Jonathan Watson thanks for the mention, though I think perhaps the best points have already been made by @James Wise @Jay Hinrichs and @Mike D'Arrigo
The truth is, yes, (other) Clayton is primarily playing up the aspect of TK investing that he makes money at right now, and who can blame him - we all believe that what we do is the best strategy or we wouldn't be doing it. That being said, there are a number of reasons not to invest in C properties in the TK market - primarily because TK investors want to be passive and C (or lower-tier) properties can bring a lot of headache. If you live in the area, have the experience and patience to self-manage etc, then it's a different ball game as Jay rightly pointed out, but TK is meant to be simple for the investor. Even if you have a PM managing lower-tier properties, tenant evictions, Section 8 bureaucracy red tape delays, hefty repairs, etc can mean more calls or emails (or even additional leasing fees due to high turnover) - basically the investor has to engage with the investment more often when what they really want is to cut the check and let the TK company take care of it. We invest only in B properties because we learned early on that our client base prioritizes cash flow and consistency over all else. They want passive, reliable, consistent income. A properties can be great for appreciation if you read the market crystal ball correctly, but they aren't great income sources. C properties may show great ROI numbers, but the actual flow may not be enough to offset the hassle. B properties are the most likely to have the best of both worlds.
James made an excellent point about the two duplexes - sometimes you can have a lower-tier property and get super lucky with long-term tenants you never hear a peep from. However, you can't count on it and the odds are stacked against you when you move into less desirable neighborhoods. In the end, the people that can afford to live elsewhere, will. And no matter how many thousands of dollars you put into a distressed property sitting between two other distressed properties, that $5-10k house is never going to be worth much more than that because the people who can afford to buy it at the forced-equity rehabbed price of $50k+ are definitely not looking to live in those areas.
Anyway, just tossing in my two cents. C properties have their place, but if you are looking for a true Turnkey investment, they are not your best bet.
Hope this helps!
Best,
Clatyon
- Investor · Moseley, VA · Member since 2016 · 49 posts · 28 votes10y
Any recent updates to this thread?
I found the podcast in June, loved it and just had the call this week. Spoke to a representative (out of Orlando). He stated they are currently focusing on homes in the Marion County (Indianapolis) area, and sent me a couple of example houses, one single family and one duplex.
Single was buy at $18K, rehab at $20K. Rent at $650, yearly taxes $70. Guaranteed tenant, property management fee of 10%. Whole package at ~ $40K
Double was buy at $16K, rehab at $22K. Rent at $1000 ($500 each). Yearly taxes at $592, PM at 10%.
Rehab consists of electrical, water lines (pecs), roof (if needed) and windows. Apparently due to scale they have enough business to get wholesale prices on supplies - probably making part of their money on the margin.
Bottomline, they try to stick around the $40K all-in price for the investor. Numbers on the surface look straightforward and good.
Homes are definitely in the C to C - area in downtown Indy. Trying to research the actual area further - haven't been to Indy in years.
Clayton mentions other areas in his podcast, so I asked about them but the rep said they are currently only doing business in the Marion County area, with possibilities to expand elsewhere later.
Not worried about the C class neighborhood aspect or distance, as long as the property management team is strong, experienced and LOCAL. The rep stated the PM was someone Clayton had used in the past and was comfortable with.
The follow-up email included the PM's address for registration purposes for any formation of an in-state LLC (not sure that was a recommendation as it was not explicit in the follow-up, but Morris has advocated for this in his podcast). Quick google search on the PM address turned it up apparently as a Pak-Mail store, and dozens of LLC's listed there.
I have requested further information about the PM, with references; as well as references from buyers as I too could not find any 'independent' online reviews.
Any further insight or experience from the BP crowd?
- Corte Madera, CA · Member since 2016 · 24 posts · 44 votes10y
@Doug Poff I highly recommend you visit Clayton's operation in Indianapolis before you buy a property from him. I visited about two months ago and met with his acquisitions manager and property manager--it was an education I'll never forget. In case you're interested I detailed my experience on a different thread entitled "Suprising how little discussion of RE scams here". I would heed the advice already given by @Jay Hinrichs, @Chris Clothier, and others.
- Investor · Glendora, CA · Member since 2016 · 41 posts · 72 votes10y
to @Merritt Whitman's post (it's about 1/2 way down the page).
That's one crazy experience you had, Merritt. I've always liked Clayton because of his appearances on the TWiT podcast network (tech is my career)--but the way that his real estate "empire" is being built seems pretty shaky for any long-term success. I still haven't heard one good report from anyone who's bought from him or talked with him. I can quickly find positive remarks here on BP about @Marco Santarelli's Norada, @Clayton Mobley's Spartan Invest, @Chris Clothier's Memphis Invest, or Mike D'Arrigo's Pinnacle Invest.
But there's nothing at all about Morris Invest. If Clayton's deals were so amazing and people were building a successful portfolio with his firm, we'd hear about it, right?
I'm still willing to give Clayton the benefit of the doubt, but he (or his investment partners) has to defend himself. Those folks I mentioned above actively explain themselves, have reasons for how and why they do things, and have no problem talking and answering any of our questions. In fact, I can get on the phone with anyone at any of those companies. I can easily talk to the PM side and get quick answers about how things are done.
If you're listening, @Account Closed, we'd love to hear you chime in!
- Investor · Fairhaven, MA · Member since 2016 · 100 posts · 88 votes10y
I've really found it useful to hear the continuing discussions on this thread, so wanted to chime in again. Personally, I now listen to Clayton Morris's podcast as part of a broader cross-section of learning about real estate. However, I didn't find that Morris Invest was the right real estate investment partner for me. Viewing things with an abundance mentality - even if I am missing out on a great deal through Morris Invest, I am still finding great deals with other providers.
I certainly wish the best to anyone who is investing through Morris Invest, and hope to hear some success stories!
- South Jersey, NJ · Member since 2014 · 104 posts · 9 votes10y
@Kenneth Dai, who have you been using?
- Web Designer / Investor · Bellevue, WA · Member since 2016 · 2 posts · 7 votes10y
Hi all, my 1st post on BP.
I have little to add since most of my questions have been asked and answered. My call is set with Morris Invest for mid-October. His podcast is what turned me on to REI, especially outside my expensive local market. I've since been listening to BP podcasts, reading up, etc. The comments here have been a harsh reality check on the "no-brainer" enthusiasm from the Morris podcasts.
So mostly, I want to thank both the newbies for their questions and the experienced pros for their advice. For me, this thread has been a case study on how to critically evaluate turnkey investments in C class areas, including how to evaluate TK providers. I am much more prepared for my call, but am now aware of and considering other options.
Finally, I can't help but mention how impressed I am with the BP community. The discussion is at such a high, professional level. It makes me a lot more confident there are experienced pros & newbies alike available for support once I start investing. Everyone's contributions to posts like these really do make an impact (in case you were wondering).
At some point, I'll start adding some value back, but I'm using this gushingly thankful post to get over the hump.
- Investor · Moseley, VA · Member since 2016 · 49 posts · 28 votes10y
@Merritt Whitman Thank you very much for the reply and advice. I will definitely look up your thread. My original post was from work - which apparently only displayed the first page of this thread. Realized last night there was 5 pages of notes to it and as to your advice have now read all of them.
@Jay Hinrichs, @Chris Clothier, and @Clayton Mobley - very informative posts and I particularly found your collective concerns about the long-term (i.e. 2+ years ) considerations eye opening. I am looking to diversify into residential buy and hold, am quite familiar with local professional/commercial REI concerns, but am a total newbie to residential investing. I respect your experience and appreciate your advice and hope to connect up as well to look at other TK opportunities.
@Jonathan Watson thanks for the link! I think this thread does show though that Clayton's podcast has brought a large influx of newbies/amateurs (myself included) into BP and interest into REI in general. This influx is not a bad thing as long we do the due diligence - and the BP community is part of that process. Through my other commercial interests, I had been introduced to BP, but only on youtube and never really viewed it. I was unaware of the community here at large until Clayton's podcast, and had no interest in (distance) residential investing until then. On that score my mind has changed. So whether I eventually do business with him or not, a tip of the hat must go to him for sparking the idea.
- 10yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
@Jonathan Watson - You asked a great question for this thread and have some great responses already from the likes of @Jay Hinrichs, @James Wise, @Clayton Mobley and @Merritt Whitman along with so many other great responders leaving really good input.
I wanted to point out something from a strictly business point of view. When we first started our business, bringing the renovations in-house, starting our own property management company and even starting up a customer service department to call clients every month just to check in - these were all simply business decisions based on building a sustainable business. We knew the only way to be sustainable was to bring all of the ancillary services that we wanted ourselves as passive investors under one roof and owning those processes.
We realized that offering these services meant adding team members, technology and overhead. All of those things cost money. If you have to spend money, as an entrepreneur, you build a company that puts your resources - time and money - to the best use possible.
That means you migrate to buying in smaller areas, trying to buy better homes, renovating homes to a much higher standard and pulling the essential services in-house. Otherwise, a company finds itself having to make a choice. Be good or be profitable. It is difficult to do both and almost impossible if you are not truly a turnkey company.
When you buy homes in challenged areas those homes are more difficult in every aspect of real estate investing (I hate the class a,b,c,d BS classifications because people use those as a way to oversimplify and essentially to lie to unsuspecting clients). Challenged areas and properties are more difficult to renovate properly on the front end. They are more difficult to keep occupied. They are more difficult to turn around for the next tenant. The tenants are absolutely more challenging to manage.
Everything I listed above requires more people and more time to manage effectively. That is the #1 reason why we as a company choose to stay out of those areas. As entrepreneurs, we determined that the best course for us to grow a company and successfully build long-term relationships with clients was to avoid those areas and start upping our game. We chose to be better and knew the only way to do it was not to waste anything - especially not time, people or money!
The true up-side of all of this is decisions we made strictly from a business standpoint end up providing a huge benefit to our clients. They get a better run company providing a higher quality product and service. Just wanted to provide a viewpoint from a strictly business owner perspective.
- Medford, MA · Member since 2008 · 122 posts · 23 votes10y
@Merritt Whitman - Thank you so much for your detailed post, it has been a huge eye opener.
Here is the link to the thread if anyone is interested in Merritt's 'on the ground experience with Morris Invest':
https://www.biggerpockets.com/forums/311/topics/34...
I also have been listening to Clayton's podcasts and really enjoy them but waited months for my scheduled call with I thought would be with Clayton but spoke to a member of his team Dave who I found didn't really have any enthusiasm that Clayton has in his podcasts and he was also really vague about the names of the Rehab Team, Property Managers they use etc. He didn't really share any details on how they made their money from the turn key project and basically said it was through rehab. There was no follow up from my phone call either via email or phone to see if I had any other questions or if I was interested in joining the program.
I also relayed this feedback to Clayton via email but haven't heard back. I for now will continue to be educated from his podcasts but I do not feel confident to invest in his turn key projects.
It would be great if Clayton or Natalie would respond to any of these posts and would instill more confidence in their system.
- Corte Madera, CA · Member since 2016 · 24 posts · 44 votes10y
I think @Mike D'Arrigo makes a great point about "D" properties being passed off as "C" properties in Indianapolis at the 40k price point. To the average layperson, including myself, when you hear the term "C property" I think it equates to just average--nothing fancy but gets the job done--just like a grade of "C" in school. Very basic, not dangerous, decent, "blue collar", as Clayton Morris suggests in his podcasts. I imagine these as similar to the racially integrated neighborhoods that I grew up in in Northeast Philly in the 1970s--row homes that didn't look pretty but kids played outside and their parents didn't have fear. However, take a walk through one of those Morris Invest "C" neighborhoods even in the daytime and tell me if it feels safe or decent. Do you get stares from passerby? Do people come up to you and tell you that you "don't look like your from around here"? Would you feel leery of taking a stroll with your family down to the corner pizza parlour to buy a slice? If so, can one call it a "C" property? Not in my book. The properties labeled "C" that I saw there I would relabel "BNK", for bunk.
- Miami Lakes, FL · Member since 2015 · 133 posts · 83 votes10y
Originally posted by @Dolores Waldron:
@Merritt Whitman - Thank you so much for your detailed post, it has been a huge eye opener.
Here is the link to the thread if anyone is interested in Merritt's 'on the ground experience with Morris Invest':
https://www.biggerpockets.com/forums/311/topics/34...
I also have been listening to Clayton's podcasts and really enjoy them but waited months for my scheduled call with I thought would be with Clayton but spoke to a member of his team Dave who I found didn't really have any enthusiasm that Clayton has in his podcasts and he was also really vague about the names of the Rehab Team, Property Managers they use etc. He didn't really share any details on how they made their money from the turn key project and basically said it was through rehab. There was no follow up from my phone call either via email or phone to see if I had any other questions or if I was interested in joining the program.
I also relayed this feedback to Clayton via email but haven't heard back. I for now will continue to be educated from his podcasts but I do not feel confident to invest in his turn key projects.
It would be great if Clayton or Natalie would respond to any of these posts and would instill more confidence in their system.
Funny; your experience exactly mirrored mine. "All fart and no poop" as my wife likes to say. (I guess that's really a saying in Brasil!) I think the most frustrating thing is to keep listening to the podcasts (which I still do, as there's tons of useful information there) knowing that there's this huge disconnect between Clayton's podcast world and the real world... Which is a good thing, I guess. The more I run the numbers, the less these sub $50k homes make sense.
I would much rather take that $40k and put it into down payments for two $100k homes in better areas, or a good small multi family. Which is exactly what I did.
Anyway, can you repost that link you provided for Merritt's experience with Morris's Invests? The original link is broken.
- Indianapolis, IN · Member since 2016 · 15 posts · 3 votes10y
Originally posted by @Joe Fletcher:
Hi all, my 1st post on BP.
I have little to add since most of my questions have been asked and answered. My call is set with Morris Invest for mid-October. His podcast is what turned me on to REI, especially outside my expensive local market. I've since been listening to BP podcasts, reading up, etc. The comments here have been a harsh reality check on the "no-brainer" enthusiasm from the Morris podcasts.
So mostly, I want to thank both the newbies for their questions and the experienced pros for their advice. For me, this thread has been a case study on how to critically evaluate turnkey investments in C class areas, including how to evaluate TK providers. I am much more prepared for my call, but am now aware of and considering other options.
Finally, I can't help but mention how impressed I am with the BP community. The discussion is at such a high, professional level. It makes me a lot more confident there are experienced pros & newbies alike available for support once I start investing. Everyone's contributions to posts like these really do make an impact (in case you were wondering).
At some point, I'll start adding some value back, but I'm using this gushingly thankful post to get over the hump.
@Joe fletcher.. Dont expect too much from the call if it will be anything like the one I had with Larry. very few details.. sounded very much like he had a script that he had to stick to and then an email afterwards supposedly providing me the details i requested during the call. I later found out from this thread that the same email is sent to everybody else. so pretty much no details in there as well.. good luck! i bowed out
- Medford, MA · Member since 2008 · 122 posts · 23 votes10y
I'm not sure why Meritt's link is not working - I'm copying and pasting his post here:
https://www.biggerpockets.com/forums/311/topics/348263-surprising-how-little-discussion-of-re-scams-here?page=2
His actual post:
" from Corte Madera, California replied 19 days ago
After reading through the other long threads on Morris Invest and this one, I feel compelled to share my experience with Clayton Morris's operation in Indy as it might save some folks time and cash. I'm embarrassed to admit I actually hopped on a plane from San Francisco after work one night last month gleeful at the chance to buy a turnkey for 40k that was worth 50-55k (what Clayton talked to me about as the usual scenario)! If this were true, hell... I could simply buy properties with cash from my HELOC, turn around and do cash-out-refis, pay off the HELOC, rinse and repeat---I would achieve my "freedom number" in no time, and have none of my own money in the deals! Who needs the BRRR method when you could have it turnkey? So I took the red-eye to Indy, and spent a day with Clayton's acquisition manager, Bert Whalen, and Bert's wife, Natalie (the property manager for the whole operation). They were both charming and hospitable--I had a blast talking shop with the big boys/girls! I got to see a slice of the action from the heart of the team, a man whose been doing this for 25 years. I learned he's got 15 or so crews going simultaneously, fixing up mostly "C" properties in Indy--what appeared to be a serious flipping operation. He was closing on a 60 deal transaction with a foreign investor that day--wow--I was pumped to see these places! And then I saw them...
I asked to see properties pre-flip, mid-flip, post-flip, and post-tenant/vacated. The pre-flips were as I expected, total horror shows (ceilings falling in and feces on the floor, pit bulls loose in the back, etc.). The mid-flips looked like they needed quite a bit of work still--it was really hard to tell what they would look like finished. It was the post-flips/post tenant properties where I was truly taken aback. They weren't the fully gutted/rehabbed properties Clayton so often talks about (and has a video of on his Facebook page of) on his podcast with his incredibly reasonable sounding and soothing voice. Where were the new roofs, new kitchens, new floors, new plumbing, new electrical, new HVACs? No where around me. They were cosmetic dust-overs at best. One property I was shown had obvious structural damage on the porch (the cement was buckled in and up). Another post-tenant property had multiple holes in the walls and the entire tub/shower insert was falling out. I was so shocked in fact I was speechless, as the PM toured me around. At one point I decided to take a risk and do a mini-challenge of the "rehab" I was witnessing. We were walking over new flooring in a renovated kitchen when I felt several big holes under my feet. They were so noticeable In fact, I could see the impressions of divets through the new linoleum or whatever it was I was walking on. I asked the PM about the holes, and what she said will always stay with me.
"We do the minimum. We try and preserve the investor's money."
Visions of Slumdog Millionaire shot through my mind. What the hell was I doing there? Is this the kind of property I wanted to invest in? Is this the kind of landlord I wanted to be?
I won't go on with the novel, but he are some other red flags:
1) When I showed up to the acquisition manager's house, his wife was running late as she was coming from two eviction hearings at court that morning.
2) At one point on the tour, a young man dressed in stereotypical ghetto ware approached both the PM and Myself in front of a house (I wasn't sure if he was going to try and sell us drugs or what) and said that we didn't look like we belonged in the neighborhood and "are you guys investors?". We told him yes and he proceeded to give out his number as a potential "bird-dogger" if we were interested. I asked him what he thought of the neighborhood--he told me he wouldn't let his 2yr old daughter come through it.
3) One of the mid-flips we visited turned out to be a robbery in progress (the PM astutely noted that previous work that had been completed was now just about undone by neighborhood thugs--she had to call her construction team to get on the scene)
4) Upon leaving Indy, I told Clayton and his team I was interested in only his B properties (none of which I got to see) and could they send me some to look at. Apparently Bert sent Clayton 2 for me to look at, one of which was "sold" In less than 24 hours, the other of which didn't fit my criteria--I haven't heard from them again and it's been almost a month.
I hope this adds to the conversation and gives pause to other newbie investors such as myself."
- Corte Madera, CA · Member since 2016 · 24 posts · 44 votes10y
@Dolores Waldron Thanks for your comments (+reposting mine) and for sharing your experience too!
@Ken Badziak I appreciated your post--funny stuff! I think you articulate beautifully what I feel about Clayton's podcast as well--there's seems to be this huge disconnect. I find myself continuing to be inspired by his podcasts yet wince when I hear references to his properties. I appreciate his wife's input on the show as well--it gives it a relaxed, disarming feel--one that I bet makes novice investors such as myself want to take the plunge. Perhaps there's a massive disconnect between himself and his team in Indianapolis?
- Investor · Jersey City, NJ · Member since 2015 · 40 posts · 17 votes10y
@Kayla Lyon- I agree with you. I had a phone conversation with Dave and decided to make a trip to Indianapolis to meet the team/see some of their properties before investing with Clayton Morris. My experience was certainly not a pleasant one. Not one person from their team followed up to co-ordinate my visit ( despite me booking my tickets after they initially said yes to their availability). I had to call literally 5 times the day before I arrived there. I finally managed to meet the property manager who showed me 6 or 7 properties. It's been almost two weeks since I've returned and I have still not received any correspondence from them whatsoever. Needless to say I sure wouldn't invest with them given the quality of shabby service. With regards to the class of properties- they are definitely in C to C- neighborhoods. It's so vital to spend a few $$ and meet the team/ see the properties they try and market before jumping in. Totally worth it.
- Corte Madera, CA · Member since 2016 · 24 posts · 44 votes10yShane M. Awesome share--had a near identical experience in regards to post-trip follow up. I'm curious to get your thoughts on the quality of the rehabs themselves--did they meet the expectations you had in your mind after hearing Clayton speak about his properties on the podcasts/seeing his video on Facebook?
- Investor · Jersey City, NJ · Member since 2015 · 40 posts · 17 votes10y
@Merritt Whitman- At best, the rehabs were mediocre and no where close to what Clayton Morris claims them to be. The flooring and paint job at one of the "rehabbed" properties was just not up to my basic standard of expectation. What also struck me as weird were 'for sale by motivated seller' signs outside each of their properties and they wouldn't answer why the signs were placed. I will continue listening to his podcasts but will never invest with him.
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