Morris Invest Review (after 8 months of ownership)

185 Replies

I have written this review to give any prospective Morris Invest clients an idea of what they are getting into.My experience has been decidedly negative.

BLUF (Bottom Line Up Front):

Unfortunately in my experience, I did not receive what Morris advertises.  Instead of timely repairs, quick renter fulfillment, a solid house in a descent neighborhood, and quick cash flow, I got:

1.  To pay $8K over the appraised value of the house.

2.  It took 2 months to get repairs done and rent-ready.

3.  I have not been able to confirm if repairs were actually made to the home, even after arranging for a visit to the property.  Morris/Oceanpointe have only sent some photos, but nothing that would prove a specific before-and-after repair was done.

4.  It took several more months to get both units rented out.  After buying the house in mid-April, it was over 6 months before I received a direct deposit for both units.

5.  Terrible communication with Oceanpointe property management.  I would figure that these folks are in business to make money, but their lack of responsiveness makes me think otherwise.  As one example, I am still waiting to hear back on when the renters actually occupied the units.  I emailed them nearly 3 months ago and have not heard back, even after repeated requests about every 2 or 3 weeks.

6.  The neighborhood and house are not the quality I was expecting, at least not according to the image that Morris paints in his videos and podcasts.

Short YouTube summary video:

https://youtu.be/CS3nIE_45mk

The detailed story:

I started researching REI a couple years ago, with a lot of help from Brandon Turner's free webinars and reading here on BP. I stumbled on Morris Invest in the fall of 2016 on YouTube and started watching his videos, and of course the ROI for his deals sounded pretty good and got me interested. My wife and I finally decided to dive in last April and bought a duplex, through Morris, in Indianapolis; it was our first rental property purchase. The house needed about $9,500 in repairs according to the info we got (the cost of which were included in the total price of the home).I never actually talked to Morris; the process was initiated with Larry in Colorado via emails and phone calls and then I got handed off to various people to sign a purchase agreement and close on the house 10 days later on April 17th.  I paid $55,000 for it, with the expected monthly rent pegged at $550 per side for an $1100 total (gross).  After taxes and fees I was hoping to net around $800 to $900 per month.  Communications with the various folks to close on the house were mostly through email instead of phone, and went pretty smoothly.

After buying the house I expected work to get going on it in short order. After all, I just forked over $55K.It took a couple of weeks for them to get started, and was done sometime around the middle to the end of June. The only reason that I found out was because I had to email the property manager (Oceanpointe); they never volunteered any info to me about the status of the house. It actually got very frustrating to deal with them due to the lack of communication. Before purchasing, I expected to get updates on the house, but that didn't happen. This all came to a head in mid-June when I replied to Morris in one of his weekly emails (that usually link you to his newest REI podcast or webinar) telling him to finish working on my property and get renters in it instead of pushing another webinar. I got a couple of emails the next day; one from Morris, saying they were on top of things and getting the house finished up and marketed. He also, a day or two later, sent me an audio file explaining the process more fully. At least I finally got some info on the status of the property. I was told a month later, on July 13th, that a hold had been placed on the property for one of the units.  I expected that the tenant would be moving in August 1st and that I would expect to see my first rent check by the end of that month, but I didn’t get my first deposit (minus the $150 placement fee, so a total of $450) until the end of September.  So when did the tenant actually move in????  (More on this later.)

In late September I traveled home to New Jersey to visit family and on the way back, I set up my flight to stop in Indianapolis for a long layover so I could do a walkthrough of my property.  I also set up an appointment to have an appraiser to be at the house at the same time.  I set all of this up with Oceanpointe a month in advance to make sure that someone would be at the house.  I did not tell them about the appraiser though; I wanted it to be a “no-notice inspection” if you will.  I got to the house a little early which gave me a chance to check out the neighborhood.  According to Morris’s videos and claims, he sells properties in “great neighborhoods; hard working individuals…well-maintained houses":

https://www.youtube.com/watch?v=W7rC2Dl3gs4&t=83s

To put it bluntly, that’s not the neighborhood my house was located in.  The neighborhood, and my house, is pretty rough.  Here are links to videos of the outside of the house that I filmed that afternoon:

Part 1: https://youtu.be/B0w9uoZtKUM

Part 2: https://youtu.be/ODZcfZc9uuQ

The appraiser arrived at the house as scheduled; actually a father and son team, and after introductions they got started on the outside of the house.  As they were doing their thing, I got a call from Josh at Oceanpointe saying that his car had broken down on the way over and he was coordinating to get an Uber ride.  He did that and arrived about a half hour or so late.  Of course, the appraiser was itching to get into the house so he could get done because he had another appointment.  And I had a flight to catch (although, I had plenty of time at this point, and besides, it just so happened that President Trump was flying into Indy during my layover which shut the airport down anyway https://www.indystar.com/story/news/politics/2017/09/27/trumps-indianapolis-speech-live-updates/702836001/).

Josh from Oceanpointe walked up to us and I introduced myself to him, as well as the appraiser (which he didn't know would be there). I expected Josh to proceed to open the house so we could all go in, but instead he stood there and with a straight face told us that he WASN'T EXPECTING US TO ACTUALLY WANT TO GO IN THE HOUSE AND THEREFORE DIDN'T BRING THE KEYS WITH HIM. You read that right. I know that I'm a newbie on REI, but I would think that the term "walk through", which I had specifically used as the subject of the email and in the body of said email, is pretty straightforward. Nope. There was nothing I could do; the appraisers had to go to their next house and I had to catch a flight. Josh and the appraisers did agree to try and set something up in the next week or two, and with that the appraisers left. I stayed and talked with Josh for another 20 minutes or so, at which time a landscaping crew showed up to clean up the yard. My guess is that they were supposed to be there before I arrived so that at least the yard would look descent. Anyway, I learned in my conversation with Josh that Oceanpointe actually has a secondary team that works specifically with poor people to place them in the rental properties they manage that are in the bad parts of town like mine. And investors; i.e. me, don't do walkthroughs on their properties and that it actually wasn't the best to be showing up at the property the way that I had. Awesome. In the end, I didn't really lose a lot of money on this boondoggle because a direct flight from Newark to Phoenix (where I live) was about the same as doing the 2 separate flights through Indy, so mostly just a time killer.

Just a week later (early October) I emailed Oceanpointe about the payment and invoice I had received the previous week (actually the day before I traveled to Indy); namely: when did the tenant move in?  That was on October the 3rd.  I never got a response, so I emailed again two weeks later.  I got a response saying they’d check.  Never heard anything back.  Also, I had been notified in early September that a hold deposit had been placed on the other unit, so I was expecting to see rental income from that side start rolling in.  That started just a month ago at the end of November, so at this point at the end of 2017, both sides are rented out.  On a bright note, each side of the duplex has rented for $600, so that my income each month is $1080 from Oceanpointe.  However, I’m still waiting to hear back on when each unit was actually occupied.  I have emailed a couple of different people at Oceanpointe, but no one has responded to this simple question.

The appraiser I had worked with in September did get the opportunity to get in the house and I got their report back in late November.  It was not good.  As stated previously, the house looked rough on the outside, and it’s not any better on the inside.  One of the reasons I wanted to do the walk through in person was to verify that the work that Morris said he’d do was actually done.  From the pictures that I got, I’m not so sure.  For example, I was told that both water heaters were replaced, but it looks to me like only one of them was.  At any rate, the house appraised for $46,500, well below the amount I paid for it.  This is contrary to what Morris promises.  He claims to sell you a house at or below market value (see his podcast, Episode 136, around the 8:30 mark), with all the repairs done, but that’s not what I got.  Not by a long shot.  I got a rough looking house in a bad neighborhood (by admission of both the appraiser and Josh at Oceanpointe).  In short: I’m now a slumlord.  I’m not necessarily opposed to that, but the house I bought, and the neighborhood it’s in, is not what Morris advertises nor what I was expecting to get.

Clayton Morris has a lot of slick videos on YouTube and well-done podcasts. No doubt that's a large part of what's propelled his success. It's especially appealing for newbies who want to get into REI. Here's a good example:

https://www.youtube.com/watch?v=2XL-DQQxf94

Unfortunately in my experience, I did not receive what Morris advertises.  Instead of timely repairs, quick renter fulfillment, a solid house in a descent neighborhood, and quick cash flow, I got:

1.  To pay $8K over the appraised value of the house.

2.  It took 2 months to get repairs done and rent-ready.

3.  I have not been able to confirm if repairs were actually made to the home, even after arranging for a visit to the property.  Morris/Oceanpointe have only sent some photos, but nothing that would prove a specific before-and-after repair was done.

4.  It took several more months to get both units rented out.After buying the house in mid-April, it was over 6 months before I received a direct deposit for both units.

5.  Terrible communication with Oceanpointe property management.  I would figure that these folks are in business to make money, but their lack of responsiveness makes me think otherwise.  As one example, I am still waiting to hear back on when the renters actually occupied the units.  I emailed them nearly 3 months ago and have not heard back, even after repeated requests about every 2 or 3 weeks.

6.  The neighborhood and house are not the quality I was expecting, at least not according to the image that Morris paints in his videos and podcasts.

So overall, this has been an awful first impression of Morris Invest, and I will not be doing business with him again.  I would recommend that anyone considering buying one of his properties should think twice.  If possible, you should have a friend, family member, or trusted agent actually stop by a property you’re thinking of buying from him to verify what you are really getting.

Finally, here’s a summary of my revenue and expenses for this year.  Note that although I got an invoice for December 23rd, I haven’t actually gotten any money deposited yet so it probably won’t show up until January.

Expenses:

LLC Formation: 97

Property Purchase: 55,000

Short Term Property Insurance: 274

Annual Property Insurance: 790

Indianapolis Visit: 340

Appraisal: 600

Property Taxes (Semi-annual): 750

Total: 57,851

Revenue: 1890 (not including the 1080 I should have gotten this December, but didn't)

So, if I don’t include my costs for the Indy visit and appraisal I’ve laid out $56,911.  Profit should have been $2,970, but the $1080 I should have received for December hasn’t actually shown up yet.  Either way, it took a long time to get both units rented out, so for just this year my profit is pretty bad for what I paid.  Obviously 2018 could look much better now that I have up front costs out of the way and the tenants stick around and don’t trash the place.  I’m not holding my breath on that.  To their credit, Oceanpointe did get $600 for each unit instead of $550, so that is helpful.  But I lost several months of rental income this year waiting for those units to get filled.  Added to the fact that the house doesn’t live up to what Morris advertises, I won’t be using his company again.  It’s a shame, because my wife and I looked forward to buying more properties through him in the future.  In the long term, there is a possibility that I can make some money on this house, but time will tell.

Updated 16 days ago

Update 11MAY2018: Morris Invest bought my property back this week, for full price minus some taxes. I'm incredibly relieved. At the end of the day I still made some money, and learned an enormous amount. I'll continue to pursue REI, but most likely do it local where I am in full control of the property and tenants. I do hope that anyone who has read this post, and all the replies, has found it useful and might learn from my mistakes.

Updated 4 months ago

Update on 22JAN: Just an update after a few weeks. I did get a call from Clayton around the new year and he actually offered to simply buy back the property from me for what I paid for it. It was tempting, but my wife and I decided that as long as things got repaired we want to stick with it. The reality is that we bought this property to get into real estate and start learning. Yes, maybe this will be a hard lesson, but at this point we are getting regular rent checks each month (just got an invoice for January's check yesterday). Comms with Oceanpointe have also improved so we will see how this goes.

Updated 5 months ago

Clayton Morris has reached out via phone and we are now working through the issues that I have with the property. I appreciate that he has taken the time to do so and look forward to getting things resolved.

Look on your HUD / settlement statement and see who the actual seller was.. was it morris or oceanpointe or some other flipper or wholesaler..

9500 will not turn key a duplex not even close..

I would sell that property as soon as its stabilized.. the low end duplex in INDY are for the most part all in the HOOD and are not sustainable over time.. I have had clients basically lose their entire investment on those.

MOrris as it turns out is a marketing company he is not a turn key company.. nothing wrong with that but I think he should up his game and pick better vendors the ones he has in INdy this story is repeated over and over..

Plus the cheapest property in any MSA like these are .. are going to be tough long haul deals.

and your PM's car breaks down that's a classic..   thank you for the detailed post..

when Morris came on the scene and I saw his description of these areas I made my personal opinions known on other posts.. Remember he is new to this.. I have been funding deals in these areas for 2 decades and nothing changes.. low end is low end.. and you now realize what you have

thanks for the videos.. they confirm what I already suspected..

@Todd Fry Thanks for the review and sorry to hear about all of the challenges you've experienced with Morris Invest and their property managers.  Good on you for taking initiative to swing by the property and check up on it.  The silver lining is that you only purchased one property and not many.

@Mindy Jensen @Joshua Dorkin  It is sad that BP allowed Morris Invest to appear on two BP podcasts and gain alot of visibility and customers for his company and in return on several of Morris Invest's own videos he has spoken very badly about BP and it's members and spoken of them in a derogatory form.

After several repeated complaints about the experience alot of the BP members have had with this company the owners should be willing to come back on a BP Podcasts and answer the difficult questions that our members are asking. Not a fluff episode where he gets to put a spin on all the answers and make it look like everything is fine. Im afraid that is what would happen as he has over a decade experience in broadcasting and it is going to be very difficult to shed light on the real facts.

At minimum those BP podcast episodes should be removed from the site and Itunes for at this point the visibility and access to BP members is putting them at risk.

Very interesting.

Thank you for posting.

I echo the above post. It would be good to know the frequency of experiences like this with MI as well as other turnkeys.

Unfortunately, a familiar story. We have first hand experience playing clean up crew. Nothing hurts an investor when I tell them we need to re-rehab a unit.

@Todd Fry I am truly sorry for your experience. The first thing I would do is hire an independent inspector/contractor/property manager for $50-$75 to go to the house and go over the scope of work they provided you and verify what was actually done or not done. Anything that was not done I would not let them do at this point you should just receive a refund for those funds.

Second I would look for a new property management company starting today! You cannot leave your property with this company.

I hate to read through these Morris Invest reviews because Clayton is the one who convinced me to get into real estate with his podcast. And, I found my way to BiggerPockets through him. I found out about him on a Twit podcast, started listening to his podcasts, and then found his BiggerPockets podcast. I talked with him over the phone when he was still doing that himself. But I was leery of investing out of state on my first house so I never pulled the trigger.

I still listen to his podcasts because there still is some good information on there. It’s not as good as the BiggerPockets podcasts but it fills some gaps. But, you can tell they are also learning as they go too.

This just goes to show you always need to do your diligence with companies, even those in the podcasts. There is ample reviews of Morris on here so hopefully anyone can find those if they’re thinking of going with them.

Before I chose a company to work with I talked to multiple references I found on BP (not through the company) and then went and visited them in person. I think you should always do these things.

Also on another note, this is just another reason to stick with a good PM company if you find them. They’re difficult to find and will make or break your investment

I would have never expected this stuff coming from Morris Invest after watching all those youtube videos. I am baffled. Thank you Todd for sharing your experience with all of us.  

I had an I initial call with MI invest last week and mentioned some of the bad reviews about them I have seen on BP. The MI guy I was talking to, Dave, assured me that Clayton sticks to his word and will make a deal right if things go sideways.

Do you intend to approach MI about somehow making things better for you?

I do not know anything about this company positive or negative.

I will say this. We are long nationally in the cycle on residential. Investors that are looking at high cash flow and returns and being promised or told the properties are in great areas for 50k plus price are drinking some serious kool-ade right now.

About 5 to 6 years ago close to the bottom of the residential recovery you could buy low price properties in A to B areas. I have some friends that bought 10 in Roswell, GA on B+ areas. They would buy for 50,000 cash and put in 10,000 and all in for 60,000 get 900 a month rent. Those properties are now selling for about 130,000 and have rents of about 1,300 a month.

Listen to Chris Clothiers show sometime. You cannot do a ground up rehab and make everything new on an old house to resale for 50k. Not anyplace that I know of. Those are patch jobs mainly. Some properties that sell in better areas for 80k,90k and up etc. there might be room to do that.

If rent is 600 a door for 1,200 then you can expect ongoing costs of about 50 to 60% each year in eviction, damages, lost rent, etc. for those types of tenants and areas. 

At best that is 7,200 a year pre-tax cash flow at 50% expenses. That is showing around a 13% annual return BUT if you have any big ticket items go out that can wipe out years of expected cash flow. Rough areas over time generally keep the same value or lose value.

Property management is one of the lowest returns on time for anyone to perform. It is not this huge money maker like people think. It is a very rough job for people especially in those areas and types of tenants. What kind of property management fee are you paying on those properties? It should be very high for the area and type of tenants being managed. If it isn't that could explain why your experience has not been that great. The great property managers would tend to take an easy 7% fee in a high end nice area to manage over a rough area 11% fee that sucks the life out of them on a daily basis dealing with constant problems and lower end quality tenants life issues.

I have seen over time before people start out at  a higher price point but much better areas for lower initial rents. The most amazing thing happens............ : ) Over time the investor thinking they were going to get monster cash flow on a cheap property in a questionable area has massive losses and little to no cash flow. They then if lucky sell for break even or a loss. Meanwhile the place with initial smaller cash flow and higher price the rent growth for the area has started to do well and the appreciation on the property has been good so the overall return was greater over time with less headache.

So looking at an example I would rather buy a 200k house in a new subdivision that rents for 1,500 a month putting 40k down for a mortgage of 160,000. Buying early in phase zero to 1 that house over  a few years can be worth 250k to 280k in value. The rent growth can move up to 1,600 or 1,700 a month payment. Being everything is new with a warranty you generally are not worrying about massive repairs like with some dumpy old house that has been lipsticked and who knows what big ticket items are fixing to go out.

People can keep buying these low end older houses with questionable tenants but all the multi-millionaires I know do not focus on this stuff AT ALL. They do not have to as they know many other ways with good returns and less headache.

Over the many years on bigger pockets people still buy this low end stuff over, and over, and over. I guess the lure of huge returns and smoke and mirrors  is just too much to resist for some. Talk is cheap. Especially on low end assets like this investors MUST go check out a property before they buy. If a company is telling them it will be gone,gone,gone so act now that is a huge danger sign and must not be ignored. These lower price point houses there is another one to sell every day practically across the country. Finding another one of those to buy is easy but replacing your hard earned cash is not.

I have had lower end tenants before. It is not something I am interested in ever doing again. The stress it can place on your life just is not worth it. For me it was just the headache of dealing with that type of asset for the return it threw off was not worth it.

@Joel Owens   I was one who recognized what happened in metro Atlanta and 5 years ago I bought 54 homes for the exact numbers you describe.. I am a little sad we sold them to a hedge fund.. but we made a better than 50% return in 18 months so not all bad.

Excellent post spot on..  these folks that want to invest 40 to 50k would be so much better buying a performing note.. than the asset.. much safer much more consistent returns.  but you will have some that actually do well. 100% of them won't fail.. the issue here is as it turns out Morris is a marketer.. just like many of the other marketers on BP site.. he is going through a learning curve about ground partners .. unfortunately his teams in INdy are not ready for prime time it appears..

looking at the U Tube videos there is no  way this duplex was rehabbed.. windows are rotted out.. evidence of rot in the roof overhangs.. foundation looks pretty messed up.. garbage everywhere..

I bet this property was bought little or nothing was done and this guy bought into the HEY you got to grab this now because we sell 50 a week and if you don't buy it it will be gone... used car tactics.. there is no shortage of this inventory.. and the marketing that makes it sound like these are A class rentals for D class prices is just amazing anyone believes that .. but they are targeting first time buyers who frankly just don't know what they don't know and are running on his TV star power... Just like folks fork over 40k to do a Rich dad seminar or go to any of the other high profile TV stars Guru shops.

there are remedies here but this buyer will have to search them out.. 

@Joel Owens   I couldn't agree with you more.  Every home I own except for 1 is 200k or more.  I have easy tenants, I always get rent, I've never had to evict, and they have appreciated tens of thousands of dollars each.  I know I CAN get more cash flow investing in a different asset class, but I'm happy with my much surer-thing investment.  Just because it pencils out on paper, doesn't mean it will in rea

@Todd Fry

I'm sorry you had such a bad experience with this! And I agree with @Jay Hinrichs . I would try to sell in the next 6 mos to reduce your risk.

I do want to thank you for sharing though, as well as everyone on BP. I had been talking to James from MI, and thanks to BP, I asked him to take me off his mailings. He asked why, I told him I just didn't trust MI, or Oceanpointe. At least not now, but maybe in the future after they were a proven vendor. I will admit MI has great videos, which ultimately led me me to BP. I'm trying to buy 6-7 properties and dodged a bullet with those guys.

Alex

Man, this story is tragic, and the videos really tell the tale. I'm so sorry about your experience. As a long-time fan of Clayton's many podcasts (not just his real estate show), I'm disappointed.

I had a call with MI last year but decided to go with a different Indy turnkey company when we made our first investment property purchase last month. The team we worked with on the sale was great and I had same-day (sometimes same-hour) responses to my emails. I drove up there from Nashville, and they spent half a day with me showing me around, answering questions, helping me get acquainted with neighborhoods, walking me through the actual property I was interested in (as well as others), and meeting their rehab crew supervisor. When the work was done, their contractor did a full walk-through with me by Facetime video to show me the completed work.

When they handed me over to the property management company, I was equally impressed with their systems and communication. The unit isn't rented yet (only been available a few weeks so far, and that was over the holidays), but I get a report every Friday like clockwork that shows me who has expressed interest, how the PM got the lead, and what action and follow-up the PM has taken to get it filled. I can't ask for more than that. Hopefully it'll get rented out once we get into the new year.

Like you, this was my first investment purchase to dip my toe in the waters. I know there's risk with C-class properties like these, but my on-site visit (before the purchase) gave me confidence to move forward. I'm sorry you've had a much different experience!

Allen,  What was the name of the turnkey provider you used in Indy?  I purchased a property from MI this past summer, and have had good luck so far.   Intrigued about who you worked with on your first deal.   

Originally posted by @Hector Ortiz :

Allen,  What was the name of the turnkey provider you used in Indy?  I purchased a property from MI this past summer, and have had good luck so far.   Intrigued about who you worked with on your first deal.   

Replied by PM.

Originally posted by @Donnie N. :

Hi @Allen Harris, would you mind sending me that info as well? Thanks!

Sure. I've received a lot of requests, and I've answered them all by PM. I'd rather stick to one-on-one referrals by PM for now. I've seen the Indy C-class property discussions go sideways a LOT on the forums. :) 

@Allen Harris   one thing for certain MI is creating a lot of business for all the other providers in INDY that have their ground teams running in a husband like fashion.  :)  glad you were able to find one that works for you and you like and trust.. that's important.. and will be the reason for success or failure long term.  not to mention don't buy homes in the hood  LOL.

I dont want to sound like a jerk....but a crappy house from a crappy company in a crappy neighborhood is exactly what I would expect from buying a property that costs $55k.

@Brandon Heimsoth . that is exactly my story too. I got into REI by hearing Clayton on TWIT, started listening to the MI podcast, heard about Bigger Pockets on his podcast, and then got hooked on the BP podcast. I had a consult with MI when I was considering investing with them, and decided not to do it, but I do think he provides an angle of REI that is valuable to be aware of and I still listen to his podcasts.
Originally posted by @Russell Brazil :

I dont want to sound like a jerk....but a crappy house from a crappy company in a crappy neighborhood is exactly what I would expect from buying a property that costs $55k.

Yeah, not a helpful reply.


My goal in writing this post is to serve as a warning to others, and hope that it has enough of an effect on Morris's business that he'll actually make some changes to how he runs things.  It would also be nice of BP (and I see that you're a moderator) would do something about him too, even something as simple as contacting him and having a chat.

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