Morris Invest Review (after 8 months of ownership)
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:
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.