Morris Invest Case Study

Morris Invest Case Study

APO, AE · Member since 2016 · 35 posts · 44 votes

I want to apologize ahead of time for the long post but there are a lot of members asking questions about @Clayton Morris , with Morris Invest ( morrisinvest.com ) and not much information out there. I wanted to provide a case study on my time with the company and hopefully provide an unbiased “face based” documentation of my dealings with the organization.

In early July 2016 I heard about Clayton Morris, through his BiggerPockets Interview, which led me to the Morris Invest Podcast. I had bought a duplex a few months before and while it was a positive experience, traditional bank financing took forever so I decided to use cash for my next purchase. I spent a few weeks on vacation, listening to every Morris Invest podcast and over 30 of the BiggerPockets podcasts and decided I was going to buy another rental house.

When I got home from my vacation I looked on the Morris Invest website and couldn't find an available phone interview with Clayton for almost 3 months. I looked again a few days later and low and behold, a spot had opened up the next day. I immediately schedule the phone consult and impatiently waited.

I didn't end up talking to Clayton but I did get to talk to Dave (Client Specialist). He was courteous and intelligent and walked me through the process. I didn't get pressured to do anything and after our conversation I felt comfortable moving forward. Dave explained that he would send me details on a property and the first to claim the property would have the right to purchase.

The next day,I received a picture of a house in Indianapolis, with a sale price of $20k, projected renovations of $20k and projected rental price of $700 per month. I spent 24 hours trying to conduct my due diligence but by the time I was done, the property had already been sold to someone else. Two days later I received an email for a a $30k duplex with $30k projected rehab cost and projected rents of $1,300. I jumped on this deal and immediately go the house under contract.

The purchase only took a few days and by July 17, the house was mine. I was immediately handed over to Nicole, the Operations Manager, to start the rehab. She explained that 50% of the rehab was due up front, 25% after the crew was complete with half of the rehab, and the final 25% once it was complete. At first, email contact with Nicole happened very quickly, but as the renovations started it took longer and longer to receive a reply. I was able to get a scope of work (after a few requests), paid 50% of the rehab cost and everything seems to be going smoothly.

Aug 19 - I received my first set of pictures of the rehab and things look good. They crew built new kitchens, bathrooms, electrical, and replaced the flooring and new interior paint. I still haven't receive my deed or any official documentation that shows that I own the house other than a contract and purchase agreement. I also payed another 25% to continue the rehab.

Sep 24 - Received my second set of pictures showing the new plumbing and more of the interior. Everything looks good so I ask for some exterior photos and more information on the status of my deed and paperwork and am told the house should be ready in the next few days.

Sep 30 - have still not heard back from Nicole with the final pics of the rehab, status of the paperwork, and if we are ready for tenants.

So far, we have had a few hiccups and communication is getting slower and slower. We are over two months in and I do not know if the house is ready for tenants and I only have email contact information so I am in “wait mode”.

I will keep this forum up to date as I continue through the process so people can use it as a case study for Morris Invest. Please let me know if you have any questions.

15Reply
1,609 views

Most Popular Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y

@Sean Gannon  in addition some of the statements MOrris makes are just so out there as to wonder if he has ever really invested before.. some pearls.

1. low end tenants are much eaiser ot manage than A class tenants they are just happy to have a place to live.

2. Since they are just thankful for a place to live they take real good care of the home and stay for years.

3. many of the homes he sells are rented to doctors and nurses  LOL

4. homes are completely rehabbed... well that one has been debunked 20 times on BP its a joke.

Caveat Emptor to the tenth power.

See this reply in the discussion

184 Replies

Jump to latestLatest
  • Realtor · Kensington, MD · Member since 2016 · 6 posts · 2 votes
    9y

    Any updates?

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Account Closed  there is an old saying you get what you pay for.

    when you basically buy the cheapest home in a major metro area.. what and who do you think your tenants are going to be ???  and if you life depends ( financial life) on your tenants.. ????

  • Castle Rock, CO · Member since 2017 · 2 posts · 3 votes
    9y

    Agreed, would love to hear an update @Ian E.! :)

  • APO, AE · Member since 2016 · 35 posts · 44 votes
    9y

    So far so good. I have had tenants in both side since the beginning of the year and received all payments with no issues. I am comping up to the 10 month point with both sides so I am curious to see if they will be resigning and get a feel for the condition of the property.

  • Rental Property Investor · Pasadena, CA · Member since 2016 · 9 posts · 6 votes
    9y

    Thanks for the updates @Ian E. ! Researching Morris Invest as a newbie and appreciate all feedback on their experiences using this TurnKey service.

  • Investor · Bay Area, CA · Member since 2015 · 47 posts · 19 votes
    9y

    @Ian E. thanks for the update... looking forward to more updates.

  • Corona, CA · Member since 2016 · 48 posts · 100 votes
    9y

    things took a serious turn for the worse for my Morris Invest property. I was sued by the Health and Safety department of Marion County without any notice or warning that things were amiss. I was sent a laundry list of major problems with the property including sewer and plumbing issues of flooding. I fear this will be so expensive my entire investment will be lost. 

  • Ottawa, Ontario · Member since 2016 · 42 posts · 13 votes
    9y

    That's terrible @Brian Freeman.  I'm sorry to hear that you got sued.  Did you get in touch with the property management company and ask them why you weren't kept in the loop?

  • Lender · Scottsdale, AZ · Member since 2016 · 37 posts · 9 votes
    9y

    Sorry to hear that Brian, how many properties did you purchase with Morris Invest?

  • Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    9y
    Originally posted by @Brian Freeman:

    things took a serious turn for the worse for my Morris Invest property. I was sued by the Health and Safety department of Marion County without any notice or warning that things were amiss. I was sent a laundry list of major problems with the property including sewer and plumbing issues of flooding. I fear this will be so expensive my entire investment will be lost. 

     Do you feel that this is tied to the work (or lack thereof) done during the rehab portion? Has the company provided you any support for this?

  • Corona, CA · Member since 2016 · 48 posts · 100 votes
    9y

    I am going to try to stay cautiously optimistic here. Clayton Morris reached out to me personally and reassured me that they will be taking care of the issues with the city inspector and the Court hearing. Still don’t know why I wasn’t kept more in the loop once issues arose. Maybe it’s because they are really trying to keep investors out of the messes that inevitably arise during property management. 

  • Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    9y

    Not familiar with your market... but doesn't a city suing someone usually come AFTER repeated requests to fix something and or fines? I'd like to think that the city would of at least sent you something before a law suit...

  • Corona, CA · Member since 2016 · 48 posts · 100 votes
    9y

    Their letter and lawsuit from Marion County Indiana were just days apart. Seems like a money grab by the city akin to parking enforcement. 

  • Residential Real Estate Broker · Indianapolis, IN · Member since 2009 · 477 posts · 304 votes
    9y

    @Brian Freeman Typically the city doesn't sue you. They file orders against the house, and then if you neglect to repair or do not repair in adequate amount of time they will fine you with nuisance charges. After the repairs are completed you can go back to the city to appeal the nuisance fines, and generally they will lower them to 30-50% of original amounts. 

    Now maybe they have a court date setup, but this is their "HEY, GET WITH THE PROGRAM!" alert.. Not where they lay a bunch of fines on you..

  • Corona, CA · Member since 2016 · 48 posts · 100 votes
    9y

    I was served with a summons and complaint in civil court with an order to appear. They are seeking monetary damages and an injunction. 

  • Residential Real Estate Broker · Indianapolis, IN · Member since 2009 · 477 posts · 304 votes
    8y

    @Brian Freeman This is the first I have ever heard of this type of behavior.. Well, I did have a 5 unit building an investor of mine bought, and the city was hardcore that it needed to go back to being a 5 unit.. We did it, and they reduced all the fines if not negated them.

    Just tell them you were unaware and explain the situation to them.

    This is a great reason why I recommend that owners keep city notifications coming to them directly. So they know if something is going awry. I get that you are paying a PM to handle this stuff, but you need to be aware too.

  • Hoboken, NJ · Member since 2017 · 7 posts · 1 vote
    8y

    @Brian Freeman

    Sorry to hear that, Brian. 

    Are you using Oceanpointe as your PM? I hear nothing but bad things about them, not sure why MI is still recommending/choosing them for its investors.

  • Corona, CA · Member since 2016 · 48 posts · 100 votes
    8y

    Originally posted by @Gary L.:

    @Brian Freeman

    Sorry to hear that, Brian. 

    Are you using Oceanpointe as your PM? I hear nothing but bad things about them, not sure why MI is still recommending/choosing them for its investors.

     Yes I am using Oceanpointe. Communication has been very slow but they have pushed rent money in to my account every month so I haven’t had the itch to switch. When I got fined by the City for trash in the front yard they paid for it. 

  • Salt Lake City, UT · Member since 2017 · 3 posts · 0 votes
    8y

    @Ian E. Did your tenet resign the lease? Did you find out how condition of the property? 

  • Salt Lake City, UT · Member since 2017 · 3 posts · 0 votes
    8y
    Originally posted by @Ian E.:

    So far so good. I have had tenants in both side since the beginning of the year and received all payments with no issues. I am comping up to the 10 month point with both sides so I am curious to see if they will be resigning and get a feel for the condition of the property.

  • Salt Lake City, UT · Member since 2017 · 3 posts · 0 votes
    8y
     @Ian E.:

    Any updates? Did they resign did you get an idea for the property condition after year one? 

  • Queens Village, NY · Member since 2017 · 2 posts · 11 votes
    8y

    Hi Ian, Im looking to use Morris Invest now. Any update? Goodluck brother.

  • San Francisco, CA · Member since 2018 · 2 posts · 6 votes
    8y

    Just wanted to contribute our experience with Morris Invest. We had enjoyed their videos and podcasts, so were eager to talk to them about purchasing property. There isn't much information on their website, so they give you no choice but to schedule a call for more information. I had reservations about them after reading the posts by @Ian E. and @Tyler Jahnke and @Gregory Washington and @Brian Freeman

    We had our initial 30 minute call with Larry, their representative on 1/3/18. We was friendly and answered our list of questions below.

    Q: How long has your company been in the turnkey property business?

    A: 2-3 years

    Q: In what states/areas are your properties located?

    A: Indianapolis, IN - Detroit, MI - Jacksonville, FL

    Q: Are the properties you sell below, at or above the market value?

    A: They are at or below market value.

    Q: Will the renovation be finished when we purchase the property or do we need to wait for the contractors to do the rehab before renting it out?

    A: You will buy the property and the rehab is planned but not started. There will be a 6-12 weeks to do the rehab.

    Q: Can we get a complete record of the property purchase documents and what the rehab costs were?

    A: Yes, you will get an itemized list of the repairs and photos of the before and after the rehab.

    Q: If anything goes wrong down the line with the work, can we contact the rehab contractor?

    A: There is a guarantee for 1 year for defects and materials.

    Q: What is the usual turn-around time needed for the purchase of a property?

    A: There are three phases. The first is the purchase agreement - each property is sold to first client who returns signed Purchase Agreement. You will then be put in contact with the title company and schedule the closing. Need to have LLC and bank account ready to put up the money for property. They will pull out cost of property and leave the cost of construction. Then they will pull out the cost of rehab in stages as they finish. They will then put you in touch with an insurance company and property management company.

    Q: Can we come and do a walk-through of the property before buying?

    A: No, it is too hard do arrange because the properties sell quickly. If you want to see the property before the close or after the rehab, they will do it.

    Q: Will the property be rented or do we need to work with a property management company to get a renter?

    A: After the rehab the property will be advertised by the property management company. You have to use the property management company they set you up with - at least initially. Since it is on a year-to-year basis, you can switch to another PM later.

    Q: Can we get a property inspection from a neutral third party before purchasing?

    A: Not good to do, as it's a lot of extra work and time.

    We did not like some of the answers we got. It appears that MI is not really "turnkey", since you have to wait weeks for the rehab construction before you can even place a tenant. Plus they discourage you from looking at the property. We decided to not invest with them.

    There is another turnkey provider in the same city that has a better approach, and is truly turnkey with finished properties that have a tenant in place. A couple of the members here at BiggerPockets recommended them and we were very impressed with their professional website, business model, and all of the information they provide. We will definitely invest with them instead of MI.

  • Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Lane Kawaoka:

    You know I'm just not a fan of these lower lever rentals that are under 70k. What makes real estate so great is the ability to leverage and no lender will want to touch these properties unless charge you a huge origination fee. In the end it will not be worth the effort.

    I have always bought turnkeys above 85k that rent for at least 900. Why because that's me.

    If someone wants a POS 50k property for 35-40k let me know. I want it gone.

    Boom! 

    Truth! 

    I am with you my friend, the lower level rental marketplace is just not efficient, you get a golden goose here and there, but on a global level, you cannot scale effectively, too much baggage to deal with, resulting in very low returns and very high tenant turnover = loss

  • Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Rita Wasley:

    Just wanted to contribute our experience with Morris Invest. We had enjoyed their videos and podcasts, so were eager to talk to them about purchasing property. There isn't much information on their website, so they give you no choice but to schedule a call for more information. I had reservations about them after reading the posts by @Ian E. and @Tyler Jahnke and @Gregory Washington and @Brian Freeman

    We had our initial 30 minute call with Larry, their representative on 1/3/18. We was friendly and answered our list of questions below.

    Q: How long has your company been in the turnkey property business?

    A: 2-3 years

    Q: In what states/areas are your properties located?

    A: Indianapolis, IN - Detroit, MI - Jacksonville, FL

    Q: Are the properties you sell below, at or above the market value?

    A: They are at or below market value.

    Q: Will the renovation be finished when we purchase the property or do we need to wait for the contractors to do the rehab before renting it out?

    A: You will buy the property and the rehab is planned but not started. There will be a 6-12 weeks to do the rehab.

    Q: Can we get a complete record of the property purchase documents and what the rehab costs were?

    A: Yes, you will get an itemized list of the repairs and photos of the before and after the rehab.

    Q: If anything goes wrong down the line with the work, can we contact the rehab contractor?

    A: There is a guarantee for 1 year for defects and materials.

    Q: What is the usual turn-around time needed for the purchase of a property?

    A: There are three phases. The first is the purchase agreement - each property is sold to first client who returns signed Purchase Agreement. You will then be put in contact with the title company and schedule the closing. Need to have LLC and bank account ready to put up the money for property. They will pull out cost of property and leave the cost of construction. Then they will pull out the cost of rehab in stages as they finish. They will then put you in touch with an insurance company and property management company.

    Q: Can we come and do a walk-through of the property before buying?

    A: No, it is too hard do arrange because the properties sell quickly. If you want to see the property before the close or after the rehab, they will do it.

    Q: Will the property be rented or do we need to work with a property management company to get a renter?

    A: After the rehab the property will be advertised by the property management company. You have to use the property management company they set you up with - at least initially. Since it is on a year-to-year basis, you can switch to another PM later.

    Q: Can we get a property inspection from a neutral third party before purchasing?

    A: Not good to do, as it's a lot of extra work and time.

    We did not like some of the answers we got. It appears that MI is not really "turnkey", since you have to wait weeks for the rehab construction before you can even place a tenant. Plus they discourage you from looking at the property. We decided to not invest with them.

    There is another turnkey provider in the same city that has a better approach, and is truly turnkey with finished properties that have a tenant in place. A couple of the members here at BiggerPockets recommended them and we were very impressed with their professional website, business model, and all of the information they provide. We will definitely invest with them instead of MI.

     Rita, thanks, this only furthers my purpose in RE business, you are either a true TK provider for clients with a true purpose to build long-term wealth for clients or you are a short-term player that is interested in a quick buck not the consistent results.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.