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
- Pasadena, CA · Member since 2016 · 2 posts · 3 votes10y
Originally posted by @Clint Galliano:
@Joel Owens, They don't mess with air conditioning...and if I understood correctly from the podcast, allowing tenants to put in window units if they want A/C. I have been listening to the podcasts for the last couple of months and the thing that gets me is when analyzing a property, they tell people to use 40% for repairs & expenses. And not to worry about cash flow unless it is under $1, because you are building wealth. CAPEX doesn't need to be worried about because they rehab the homes and you shouldn't need to do anything to them for a while.
All of these things raise my "Salesman Alert"...I may be a little overly conservative when analyzing a deal, but I want to make sure it pays for itself and brings in a little extra. The principles advised feel like you are being set up for a ride on the sucker train.
Clint, you nailed that one. I heard that too. I am not a salesman anymore. But, when I heard that podcast today stating that if the tenant wants A/C, they can throw a window unit in. I was like, "whuuut?" How can you Morris Investments attract high grade renters with the tenant having to complete that life hack, for summer comfort. Sounds like you would be getting a class D or C- at best.
- Pasadena, CA · Member since 2016 · 2 posts · 3 votes10y
After all of this heavy reading about Morris, many of us that were inspired by his scheme and should have some comparable turnkey operations. It sure sounds like the got to big to fast, due to a monster marketing platform. Can some of you veteran posters provide some providers in low property tax / low insurance / areas with strong property management resume to me. As I have seen here in the thread people are looking transparency and a track record. Because after 2,5,10 years I don't want to be abandoned. I will likely choose a TK because I am are out of state and in my case, I would want to focus on the business part (making deals) rather than rehabbing the property. I need all the help I can get, furthermore, the first deal is "the" deal for most first time investors. Same applies for me. PM me.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Marc Troslen go to turnkey-reviews.com you will see probably 90% of all Turnkey companies in the US on that one site.. along with reviews on many.. you can look at actual product without having to sign up for a squeeze page.. etc etc.. totally free and a good way to start looking for that outfit that will be a right fit for you .. I normally never really talk good or bad about a turn key outfit but this Morris thread was just something I could not longer bite my tongue on... I have seen this train wreck many times in the mid west over my 20 years of lending in the space and owning 350 C and B and a sprinkle of D that I did nto really want.
- Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes10y
not to take over this thread but it seems to have already done in another direction anyway.
Considering your very informative post, where are you seeing that type of opportunity now considering it is long gone in most places?
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes10y
Hi Charles,
I do not want to take away from the topic of the thread. Investing is a complex process and within each asset class cycling is happening at various points in time. Break that down further within each state,county, and city throughout the country.
Opportunity can be defined a ton of different ways and varies person to person. I see some buyers see opportunity with a 10% cash on cash return off a 25% down payment. Others that are developers want a value add play to grow equity and resale on the back end. Availability of product varies with location,asset class, and deal size.
A discussion on the phone is generally needed to drill down on what a specific investor is trying to accomplish.
- 10yDavid BellPro MemberReal Estate Agent · East Brunswick, NJ · Member since 2016 · 129 posts · 63 votes
@Doug Poff Did you ever get any references for buyers or on the PM? Feel free to reply and/or PM me. Thanks
- Investor · Moseley, VA · Member since 2016 · 49 posts · 28 votes10y
@David BellSimilar experience to @Kayla Lyon earlier in this thread. I only received a phone number to the PM and the name of Natalie. I assume this is probably the same PM referenced earlier in this thread. As for references from buyers - no. After reading and considering the information here, I too will take the tact of listening and learning from CM's podcast, but have used my investment dollars elsewhere - just closed on an A-, B+ SFH rental property in Denver; will see how that goes and 'learn-by-doing'.
BTW - Highly recommend this week's BP podcast 191 'Buying Out of State Rentals' - it addresses some of the issues raised here with a great case study interview.
- Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes10y
Haha, I love how this thread is just going on and on :-)
I actually also decides not to invest with Clayton. My main reason was that I could not find any evidence that the properties would appraise at a higher value after the rehab. That means I would not be able to pull all or at least most of my investment back out. If I cannot BRRR, then I would just be stuck with only one property for much too long. Also I did feel a bit pushed and when I said no to the first two properties they sent me I just never heard anything back anymore.
I have shifted my focus already a while back and am now trying to get into a marked that is within a one hour drive from where I life. I think that is just easier and lets me learn how everything works before I start investing out of state.
Thanks everyone that has participated in this thread. There was definitely a lot of valuable information coming out of it for me.
- 10yDavid BellPro MemberReal Estate Agent · East Brunswick, NJ · Member since 2016 · 129 posts · 63 votes
Originally posted by @Simon Stahl:
My main reason was that I could not find any evidence that the properties would appraise at a higher value after the rehab. That means I would not be able to pull all or at least most of my investment back out. If I cannot BRRR, then I would just be stuck with only one property for much too long.
This is the same I was finding. Since I cannot buy in full with cash, no matter how I try to run the numbers it seems like it doesn't work when financing it. And I don't want to be stuck not being able to get my money back out to do the next one and so on.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes10y
Originally posted by @Jay Hinrichs:
@Clint Galliano and in many jurisdictions especially in the south Central air is mandatory for section 8.
your better tenants in these areas simply will not rent a home that does not have central heat and air.. your just going to get the bottom of the barrel tenants... although one person posted above that there are many doctors renting these homes from Morris investors.. I bought rolled out of my chair laughing at that one.. :)
Doctors renting 40k homes...Yup, totally logical.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Doug Poff if you pop on Brie schmidts turn key reviews site she has many podcasts of actual owners Brie does a fantastic job interviewing them and getting into the nuts and bolts of buying turn key.. one of the guest has posted on this thread even... if you like listening to those things I would recommend that.. plus I wrote an e book on the subject that you can down load from the site as well. It seems to be popular with those that have read it.
- Justin, TX · Member since 2016 · 1 post · 0 votes10y
I just got finished talking with them about an hour ago. Though my experience is very limited, it seems to be fairly straight forward and reasonable. They will be sending me some information on houses in the next day or so. I'm excited about it.
- Real Estate Agent · Houma, LA · Member since 2016 · 238 posts · 115 votes10y
As an addition to my previous posts/comments, I also found out that, at minimum, in their personal rentals, tenants have to provide their own stove/range. This was on one of the more recent podcasts. That just seems like it would make the property harder to rent, from my perspective.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Clint Galliano I call this trash flow and slum lording 101 LOL...
take a look at Elite invest in Chicago's and see what their turn key units look like when they are done with them.. they are almost as nice as my new construction.
- Investor · Saint Joseph, MI · Member since 2015 · 93 posts · 50 votes10y
I find it very interesting that the majority of negative opinions here about Morris Invest and Natalie and Bert of OceanPointe are from other turnkey competitors... Who have never purchased their properties nor been on a tour. The other opinions seem to be from people who didn't purchase property either but just couldn't be patient enough to wait for a property to become available. There's a reason the properties are all cash and hard to get - they are great, so they're in high demand.
I have personally purchased over $1.3 MILLION so I believe I'm a LOT more qualified then any of these expert opinions. I purchased property because the previous 4 deals I did, 2 with other turnkeys, were terrible experiences. With OceanPointe, it's been literally life changing. My properties rent out immediately, rehab is quick, cost effective, and done well, management is excellent, ROI's are killer, and I trust this team 100%. These are some of the most loyal, least greedy (I know what they make on every deal), kind, caring and humble people you'll ever do business with.
There are certain weeks where I can see that PM is slow to return calls, especially rent disbursement week (they put investors returns as top priority), or there are some weeks where they are selling a ton of properties - but they always, 100% of the time, deliver.
You will not regret investing with Morris Invest and the PM will be exceptional. His podcasts are very informative, he adds lots of value, he offers a great product that he invests in, and he barely pitches it on each podcast. Not sure what the issue is with a podcaster promoting a product they believe in.
Did anyone stop and think that not providing any appliances cuts down on the majority of your repair bills post buy? In my home, the majority of repairs are for appliances, rarely or never for electrical, furnace, plumbing, roof, etc. I haven't had a repair bill on 15 units for 1 year. Incredible. If this prevented tenants from renting, why does PM have a 6% vacancy rate?
Just checked my bank account - my rent ACH just hit, completely passive and hassle free - and it was massive.
Important to hear from an investor with a lot of my own money in the game, vs competitors looking to draw clients away. Thanks for reading!
- Rental Property Investor · Shorewood, IL · Member since 2016 · 80 posts · 46 votes10y
@Jack Gibson, THANKS for your review. That's actually what the original poster asked...has anyone ever done a deal with MorrisInvest and there were crickets or investors who decided not to deal with them for one reason or another. This is what us new investors need/want to hear...positive reviews that give us details on their investments, not just "they were great..you'll be happy you chose them".
I still have my Oct 24th scheduled call with Clayton and I plan on keeping the appointment. However, I'm also speaking to other TK's in other areas of the country before I pull the trigger on my very first dip into the ocean of REI.
Thanks again for your insights. I hope some others will chime in as well.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@? Give us a report in 3 years .. I simply do not beleive you have never had a maintenance call in one year on 15 units.. LOL. I have no dog in the hunt other than I have owned over 10 million dollars worth of these in 5 markets.. and your story is just not reality... that is more than 350 homes I personally owned.
- Alpharetta, GA · Member since 2016 · 17 posts · 9 votes10y
@Jack Gibson you still didn't address most of the complaints/concerns raised by everyone in the previous 7 pages of this thread. Do you work for Morris Invest? It looks like you're selling a lot of TK properties on the BP marketplace. If all of the concerns raised here weren't valid, why wouldn't @Account Closed have defended himself and his company (its evident he knows about this thread)? Why did it take until page 7 for it to be confirmed that the PM company is in fact OceanPointe (and why don't they have a website)? Shouldn't that info be readily available/given to potential investors? Multiple people who have spoken with Morris Invest had no idea who the PM company was. To me your post sounded like 50% sales pitch and 50% damage control. People stand to lose a lot of money if they put trust in the wrong people so to just blow off all the concerns people have raised here and say this is an amazing, life changing opportunity--thats another red flag.
- Investor · Saint Joseph, MI · Member since 2015 · 93 posts · 50 votes10y
@Stephen Vetek it's pretty simple, I'm too busy building 2 businesses, spending time with my 2 boys, and building my charitable fund to take the time to read and respond to all the comments. I don't work for Morris Invest, so I have no interest in damage control, and I can't speak for him as to why he hasn't responded other than my first thought would be he's too busy actually helping his investors and growing his business to respond to negative comments. But that's just a guess.
As far as what Jay said, all I can say is, I haven't had a maintenance call or repair issue on any of my properties, this year. Period. Maybe your PM companies aren't as good, I don't know. Sounds like you're mega successful so not sure what else to say to that.
Why OceanPointe doesn't have a website, they don't need one to have a successful business. Websites can be a lot of work to update and not everyone wants to devote resources to that.
As an investor I have a lot of my own money as do a lot of my friends, business colleagues, people who I'm very careful to refer because my reputation is important to me - all under OceanPointe management, and we are all thrilled.
- Alpharetta, GA · Member since 2016 · 17 posts · 9 votes10y
@Jack Gibson ok fine you're too busy to respond to all concerns voiced in this thread...but I would argue that with your post you did respond and you responded by blowing them off as invalid or unimportant, right? You can't say you don't have time to respond to everyone's concerns yet you did find the time to declare theres nothing to worry about with this company, rather its an amazing opportunity...something doesn't add up there. As far as Clayton growing a business, this thread has presented the perfect opportunity to do just that, yet he remains silent. Clearly a lot of people here want to believe in his product, so why not defend it? They're not "negative comments" but rather good due dilligence questions and actual "on the ground" reports from potential investors. A property management company that is too successful to have a website? That just sounds a little weird to me considering the business they are in. And what about the properties you're selling on the matketplace? They're not Morris Invest properties? I'm not trying to attack here, these are just objective questions.
- Investor · Saint Joseph, MI · Member since 2015 · 93 posts · 50 votes10y
@Stephen Vetek I appreciate you wanting all your questions answered and to do your due diligence. For the 2nd time, I do not work for nor promote properties for Morris Invest. So it's simply not my job to answer the questions on this thread, I was simply submitting my own investor experience. Thanks, and best of luck with your investments.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jack Gibson you have post on market place were your selling turn key homes your giving one year warrenty and a two year rent guarntee.. on low end homes. this is financial suicide for whoever is promoting this.. it looks like you come from another successful business.. I just offer you words of advice and caution to tread carefully here..
warrenties and 2 year rental gurantees are a really great way to go broke in that asset class..
and as @Chris Clothier mentioned to those with knowledge of the industry TOTAL red flags
google Marquis investments in Utah Chad Duecher and Rick Clatfelter.. they tried this exact same model in KC and INdy.. in the urban core low end properties.. they ended up getting totally fubared with their investors losing millions and them personally getting indicted by the feds..
This simply is not sustainable and or reality for the promotor or sponsor to do this.. UNLESS they are marking the houses up so outrageously that they are putting 10k a home a side to handle the things that come up in 2 long years of having a section 8 tenant..
Not sure if these are your homes personally.. you said above you just bought 1.3 million of them but at the same time your selling them.. curious something is goofy here.
- Investor · Saint Joseph, MI · Member since 2015 · 93 posts · 50 votes10y
@Jay Hinrichs I appreciate your concern. Wow am I sorry I chimed in! I have a portfolio of buy and holds and I also wholesale and flip as well. The ones we offered a 2 year rent guarantee on was only a small subset of 10 homes, all 3 bed/2 full bath that rent instantly and have had almost no turnover. We do not offer that on almost all homes. I was not offering the guarantee, that was offered by an expert like yourself with 20 years in the Indianapolis market.
I did not get on this post to promote my properties or get into a discussion on the sustainability of what I'm doing. I have done my due diligence and anyone that would like can always make a field trip and do their own.
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