Oceanpointe (and Morris Invest) Property Management Problems

84 Replies

Hi everyone,

As mentioned before on another post, my husband and I bought a property through Morris Invest back in August 2016. Everything went smoothly, and there were no issues. The only problem that we had was a lack of communication on the part of the Property Management company (Oceanpointe) that we were using based on Clayton's recommendation. The whole thing was set up sort of like a one-stop shop ... Call Clayton, he tells you about a great, completely rehabbed house that he has that he will sell to you for $40k but that he says will appraise for $60k and is renting for $700, and he has his assistant set you up with his network of people (property management and insurance). A few weeks ago, we switched management companies due to the lack of communication from Oceanpointe, and posts on Biggerpockets from other dissatisfied Oceanpointe clients. The new property management company that we went with discovered that the lease agreement provided to us by Oceanpointe might be a complete fraud. The new property management company was provided with a completely different lease agreement by the tenant than what we had been given by Oceanpointe. The "tenant's" hand writing is different, the signatures are completely different (Oceanpointe's lease agreement isn't really even signed by the tenant ... his name is just written), and the rent on the tenant's lease agreement is $350/month, instead of $700. I tried reaching out to Oceanpointe again hoping they would provide proof of payment (copy of checks, or a ledger, etc), but as usual, they have not replied to that request.

In hopes of getting this sorted out, I tried reaching out to Clayton on Jan 30th via email. Below is the email I sent. He usually replies within a day, but so far, no response. I was truly hoping I would get a response, because I don't think Clayton is a bad person, and don't think he purposely sends people toward harm, but I do think he is, perhaps, trying to move too quickly, grow too fast, and, in the process, is guiding, even encouraging his buyers to make bad decisions. For example, he implies that buyers of his houses do not need to worry about performing due diligence. We are learning as we go, and I guess we were susceptible to all of the rah rah and excitement of such exceptional investment opportunities.

At this point, we are waiting to be able to have the new management company do an inspection of the house and an appraisal to possibly off-load it. Fingers crossed that there will not be any additional bad news. I'll add updates here as our ordeal unfolds.

Anyone have similar experience with Oceanpointe's lease agreements ?

Thanks,

~Liliana

I don’t have a lease agreement yet but was planning to buy a property from Morris Invest in Jacksonville. Could you give me the address or area of town where your property is located, so I can see where it is in relation to the property I am considering? Also, could you give me the name of the property management company you switched to in case I need them as a backup to Oceanpointe? I agree Clayton seems like a nice guy, but I think it would be good for all of us to stay in touch with each other, hope for the best, and encourage Morris Invest at the same time.

Oceanpointe lost license to be a PM a couple weeks ago. I wouldn’t buy from them in Jacksonville either, lots of threads on that city to.

There have been many posts on BP on the shady business dealings between MI and Oceanpointe.  I would stay far away from both companies no matter where they operate.  Just do a google search on Oceanpointe and see for yourself of the terrible reviews.  Here is one...

https://www.ripoffreport.com/reports/oceanpointe-property-managementoceanpoint-investments/indianapolis-indiana-46226/oceanpointe-property-managementoceanpoint-investments-oceanpoint-investmentsoceanpoint-1427652

@Jay Hinrichs You have been following this whole Oceanpoint thing, so I thought you might find this interesting.

Sounds to be like a possible ponzi scheme now if the rents actually being collected are half what the owners think they are.  Sounds like rents might be being paid to sellers with new influxes of capital as they sell properties.  

you give Mr. Morris far to much leniency  there is no way he is not aware of every aspect of what is going on at least in my opinion..  he is the one making the claims  he needs to back them up.

I suspect based on the investor feedback some major fraud going on here with fake tenants etc. all done to prop up new sales

@Russell Brazil   its crazy that Morris would put himself in this situation... I suspect this does not end well for him or at least its going to cost him a bundle to stay out of trouble  :)

There are other threads that show the documents where the AG suspended the license

It amazes me that people are still purchasing these lower income type houses.

The really good A to B stuff properties and areas traded out 4 to7 years ago nationally. You might can find one today but it is one in many thousands and not what a low price point TK company can be finding day in and day out for their customers to purchase.

I am talking in general and not about any particular company. 

If you are thinking of buying these types of properties GET YOUR OWN APPRAISAL and not one that is within the circle of the turn key company.

I think investors expectations for PM work on these assets versus what they are paying is way out of whack.

Think about this. Say a PM company is managing 100 low income type tenants and properties. Say the rents are 700 a month so PM at 10% is collecting 70 bucks a property IF,IF all tenants are paying on time..LOL

So let's just go wild and say they all pay on  time. That is 7,000 a month or 84,000 a year! That is nothing for running 100 lower income houses. That 84,000 is before expenses and staff etc. Now some might say if a tenant leaves the PM company might get half or first months rent then 10% a month. That might be true in some cases but PM also has many costs between eviction, collections efforts, and replacing a tenant to get income again for PM fee so the returns are reduced.

Frankly I do not know why anyone would want to manage these types of properties. You have to have absolutely no other options to make a return than doing PM work on low income type houses.

I am not putting it down at all just can think of hundreds of other ways to make higher returns with less headache. 

I think @Joel Owens has a lot of good points. I’ve bought one of these and so far it’s been pretty straight forward. That being said I think the C class neighborhoods in Cleveland are different then Indianapolis. From reading about Morris these seem like D class.

Also I don’t plan to buy a lot of this going forward. I like B class better which is more in the 60-90k range.

@Joe Ansley

If you want to tag someone, type @? and a side menu should pop up with all posters on this thread, unless you are on a phone or tablet, and then just select the person you are trying to tag.

I think you guys are being kind to say Morris seems like a nice guy and this is a result of MI's growth and success. Tyler's post and the most recent thread by Todd seem to be the norm for people who have bought properties from MI. I don't think that he's blind so he has to be aware that these issues are going on.

https://www.biggerpockets.com/forums/92/topics/523...

@Liliana Ruano

The last post on this thread mentions possibly seeking a lawyer with other investors in the same position. You could always make a You Tube video of your experience with MI, maybe he will offer to buy back your property for what you paid for it in return for you taking the video down.

Originally posted by @Joe Ansley:

@Liliana Ruano, sorry about that. Have you heard of any other turnkey companies that are good?

Joe, I  suggest you search and read the recommendations from more experienced members, especially since you are buying in Jacksonville.  I have read of several good PMs, but I am not sure of their locations.  I signed up with City Place to manage the property in Indianapolis, IN.

If anything, I think the RipoffReport story shows the value in visiting your properties from time-to-time. If things are going great, it doesn’t hurt to confirm that things are going great. If things aren’t going great, it’s much harder to ignore you in-person.

And, for what it’s worth, I’ve never come across a good property manager that doesn’t say “Come on out! Let’s go by your units!” Not that you want to intrude on tenants but any smart/competent (from my perspective) PM would love face-to-face visits from owners to build rapport, cement relationships, etc. so that they can keep the business.

@Liliana Ruano Joe Ansley @Jay Hinrichs

Hey all, found this video about Oceanpointe on YouTube from a local Indianapolis news channel. It’s one thing to read about these things, but to see it in video is something else. Also, at the end the reporter talks about targeting owners for accountability... Just scary all around.

Not to mention, I feel terribly for the tenants involved!

https://youtu.be/JXL1VdZxSLs

Julian, thanks for telling us about this video. I am impressed with what the Oceanpointe lawyer said—they have offered the tenant some backups and have even formed a partnership with the hospital to help provide low income housing. Statistics tell us that you can’t expect to never have any problems. The most important thing is that you try to do something to rectify the situation—and they have.

I have been reading all these threads about this Oceanpointe and Morris Invest issues and a couple of questions come to mind.

1. If everything I have read in the past few days is true then why don't all of the people who have bought from MI/OP just get together and file a class action lawsuit? I am sure some lawyer would take it on. I think it would be worth millions. Especially if it's a Ponzi scheme.

2. Has anyone bothered t take their complaints to the Attorney General on Indiana or Florida? If not, why?

3. Jay Hinrichs seems to be in a lot of the posts that I have read. He seems to have vast knowledge of the Real Estate industry and yet people out there do not heed his advice. Why? He pretty much says not to buy this JUNK and yet people do. Junk is junk, PERIOD END OF STORY.

4. Why hasn't anyone called out this Clayton Morris guy on his Youtube Channel? I believe that he does it live. I don't see anyone posting their complaints on there.

5. When will this be on American Greed? 

Originally posted by @Joel Owens :

It amazes me that people are still purchasing these lower income type houses.

The really good A to B stuff properties and areas traded out 4 to7 years ago nationally. You might can find one today but it is one in many thousands and not what a low price point TK company can be finding day in and day out for their customers to purchase.

I am talking in general and not about any particular company. 

If you are thinking of buying these types of properties GET YOUR OWN APPRAISAL and not one that is within the circle of the turn key company.

I think investors expectations for PM work on these assets versus what they are paying is way out of whack.

Think about this. Say a PM company is managing 100 low income type tenants and properties. Say the rents are 700 a month so PM at 10% is collecting 70 bucks a property IF,IF all tenants are paying on time..LOL

So let's just go wild and say they all pay on  time. That is 7,000 a month or 84,000 a year! That is nothing for running 100 lower income houses. That 84,000 is before expenses and staff etc. Now some might say if a tenant leaves the PM company might get half or first months rent then 10% a month. That might be true in some cases but PM also has many costs between eviction, collections efforts, and replacing a tenant to get income again for PM fee so the returns are reduced.

Frankly I do not know why anyone would want to manage these types of properties. You have to have absolutely no other options to make a return than doing PM work on low income type houses.

I am not putting it down at all just can think of hundreds of other ways to make higher returns with less headache. 

That is a very good point you brought up.
I never looked at it that way but the arithmetic of this whole equation shows how challenging it can be to provide good property management services and how low the returns are.

@Joel Owens Good points here, Joel.  However, PM companies make money in other ways as well.  They mark up everything - repair work that is done, bill payments, cleaning, evictions, etc.  In many cases, they also take a full months rent to place a tenant.

And, let's face it, most PM's are not only in the PM business.  They usually are RE Agents, Wholesalers, flippers, etc.

@Patrice Penda I think one of the interesting things about property management is that the lower the rents the harder the work.  It's an overgeneralization but I think the $400/month units are more of a pain to manage than $800/month units but you're getting paid 1/2 as much.  That's why some property managers (in my opinion) just don't want to touch the lower end stuff.  Who wants to work harder for 1/2 has much gross income to the PM company?  It doesn't make fiscal sense.  Now if I bought some $400/month units, would my PM manage them for me?  Probably.  But that's more likely because it blends with the rest of a 'less lower-end' portfolio.  

On top of that (and this is through anecdotal stories) you hear that lower-end property owners sometimes don't like to do as much upkeep to the units.  Sometimes it's hard to blame them because the property doesn't have the self-sustaining returns to allow it.  But then you end up with deferred maintenance issues and your PM then get even more chaos from the property with random things breaking, etc.  

So I think what you can have with lower-end properties is that problems create problems which create more problems.  All getting managed for half of the topline revenue of nicer units...