Morris Invest Experience (Yet Another One)

24 Replies

While I know there has already been a vast amount of virtual ink spilled regarding Morris Invest, I still feel obligated to recount my ongoing experiences in an objective and impartial manner as to help other investors make an informed decision. These are my own experience and I urge everyone to do their own research and due diligence before investing in anything. I apologize in advance for the lengthy post.

Some Backstory

Around this time in 2017, I had two cash-flowing rentals in California and decided it was time to look out-of-state for better returns. Naturally, the first resource I turned to was BP and BP podcasts, where I first heard about Morris Invest.

I was immediately hooked by Clayton's investment philosophy of focusing on the numbers and the ROI instead of the actual real estate itself. After all, it's just "four walls and a roof" as he often says.

He seemed very passionate and genuine on his own podcasts, especially the ones where his wife is on as well. The banter was both entertaining and informative.

Before you know it, I binged through ALL of his podcasts and watched all his videos on YT, as I still do today. I even left a five-star rating.

Around July 2017, I scheduled what would be my first of two calls with MI. I spoke with a gentleman named Dave and discussed their purchase/rehab process and timeline, which I had already become quite familiar with from listening to the podcasts.

The emails came in week after week, each with a not so great looking house but some really appealing numbers. I did not immediately purchase because I was closing on another property at the time and needed the cash.

As 2018 rolled in, along with my New Year resolution of taking more action in real estate investing, I booked my second call with MI and spoke with Glenn. It was the same type of call but this time I was armed with motivated liquidity.

Ongoing Timeline

1/7/2018 - We started reviewing every property as they came in, ran our own pro forma (Google Sheets), neighborhood analysis (Google Maps), and comps (Redfin, Zillow, Trulia). The problem was that by the time we were happy with the numbers, the property was gone like the wind!

1/25/2018 - Decided Indiana was the state to invest in first. Did the paperwork and formed an LLC.

2/6/2018 - After 50 properties or so, we finally found one that fit our budget and investment objectives. I think it was genuine FOMO that made us jump into signing the purchase agreement.

2/7/2018 - Signed the purchase agreement and was informed that the Property Management company will be Boardwalk Property Management. At this time, I still don’t know about Oceanpointe PM and their revoked license.

2/12/2018 - Spoke with Ash to start the insurance setup process.

2/13/2018 - Wired the money to an actual Title company. Still did not do research on MI company on BP though. They looked pretty legit so far.

2/14/2018 - Escrow closed and we became excited owners of our first out-of-state rental property! Honestly, we were quite satisfied with how quickly and smoothly the purchase and closing process went. All parties involved were professional and communicative throughout the entire process. But as many of you know, making the purchase is the easy part.

2/20/2018 - Followed-up with MI operations for a timeline estimate. I was informed that they will typically send me pictures when the rehab is about half complete, at which time, I will be working with the PM company directly. OK, sounds reasonable.

2/21/2018 - Setup and purchased insurance.

3/25/2018 - No communication from MI so far, except the property emails, which we still analyze. Meanwhile, I was preparing cash for the next purchase.

3/26/2018 - Went to my local RE meetup, talked to a few fellow investors and heard some bombs dropped regarding MI. I thought maybe it was #FakeNews at first, so I spent the entire night until 4 am reading through BP forums and finally doing some desperately needed research about MI and Oceanpointe Investments LLC. Needless to say, I'm not sure what is going on at this point. Did they expand too quickly? Do they just need more staffing? Are they really a Ponzi scheme? Am I an idiot?

3/27/2018 - First thing in the morning, emailed all my contacts at MI, except Clayton since I never actually spoke with him. It has been six hours now and still no response yet. Oh wait, I did get another property email though!

If you are still reading this, thank you for your time, truly. You are pretty much all caught up with my experience using MI so far. It is still too early for me to make any definitive conclusions, but things aren't looking great. While I am hopeful that the situation will turn out positively, I am preparing for the worst.

Yes, I know I could’ve avoided all of this by doing some simple research ahead of time (lesson learned). However, that's water under the bridge. The most helpful and useful thing right now would be some good advice on what my next steps should be. I’m all ears!

I will update this thread to the best of my ability as events unfold.

Good luck!!! Based on the read up I am understanding that you have purchased the property and have the title but just don't know anything else about the house and the status of Rehab? Is that correct?

Disclosure: Current Customer

Originally posted by @Rob Reddy :

Good luck!!! Based on the read up I am understanding that you have purchased the property and have the title but just don't know anything else about the house and the status of Rehab? Is that correct?

 Yep, that's exactly it. I don't want to jump to any conclusions yet as they're technically still within their "rehab" period. However, the lack of communication is worrisome.

Sad to hear. Clayton's podcast was really instructive for me starting out as well but I'm glad I didn't get carried away before I found this community. I hope everything works out. If you've read the longer thread about MI at all I would recommend documenting all communication and financials related to them if you haven't already and retain your own legal counsel. 

Disclosure: Current Customer

@Josane Cumandala Thank you for the advice. I will definitely do that. I'm hoping that we can resolve any issues that may come up without legal counsel but I'm not ruling that option out either.

its appears Morris monitors these posts and the squeaky wheel will usually get the grease based on others that have aired their issues.

the bottom line though   to  state "4 walls and a roof and its just numbers" is in my opinion and 40 years experience about as ridiculous a statement as can be made.  

what this has done and i don't care if you buy from Morris or any of the other companies that deal in these super low end HIGH risk assets.. you can rehab it fine etc.. but your still have a high risk low value asset. that was probably bought before you bought it for 5 to 10k maybe 15k then you rehab.. that's all fine and profits are made i get that but use simple logic what kind of tenant base wants to live where houses sell for less than a 5 year old Honda accord.. with 107k miles on it.. 

At least Morris finally after all this investor carnage we have seen on BP got smart and dumped the Oceanpointe folks.. but as I have said before.. usually marketing companies and that is all Morris is really at the end of the day.. if they get negative feedback from ground partners they cut them right off Not sell 100's of properties then have to clean up the disasters.

so bottom line don't get sucked into thinking D class middle America assets are safe for out of state investors. Does not matter who your buying them .. these assets are fine for locals who can really handle them or locals that own 10 to 100 of them.. but one off out of state  HUGE RISK  only one making money is the people your buying it from

Disclosure: Current Customer

@Jay Hinrichs I think you bring up a few good points here. Buying real estate just for the numbers could be a slippery slope to trouble and I'm starting to realize that now.

Even if I end up with a good rehab in a high-risk, low-value area, there is still the question of the long-term exit strategy.

I'm in the process of doing more research on Oceanpointe and Boardwalk. I will update once I have anything definitive.

-Colin

You need to understand the value, numbers don't mean anything on their own.

Ya its easy to fall into that trap when your sitting in SF and the average price is one million plus and you see a 40k mid west home

Boardwalk Property Management Group and Oceanpointe Property Management are one and the same. Same address and same registered agent, Steven Rosenbaum (also their Broker) . Just a DBA name change to evade the bad PR heat.

Link to screen shots from IN.gov site 

@Todd Burton   well i guess that figures.

One builder i funded in Oregon that cost me about 300k large.. he got indicted lost his ability to ever be a contractor in Oregon... His son is now licensed and dad just pulls the strings..

I simply don't get it.. I really don't 

@Colin Zhu

Colin, if you don't mind disclosing, what were the details of the purchase?  Cost of property, rehab, etc?

Disclosure: Current Customer

@Brian M.

I'm commuting right now so I don't have all the docs with me. But if my memory serves me right, it was around $47K + closing costs. $700 rent and $16.5K of rehab. Property taxes were under $1K. Hope that helps.

Disclosure: Current Customer

OK, I have some major updates regarding this property. 

I had an inspector go out and take a look at it during construction and he found MAJOR problems ranging from possible asbestos insulation being airborne, lead-based paint cracking, cracks in the foundation and crawl space, old knob and tube wiring, moisture and mold issues, roof shingles replacement, and loads of other issues.

Rather than talking about them, I made a playlist of the inspection here: https://www.youtube.com/watch?v=aR2_h9onvFQ&list=P...

In order to fix all the issues could cost more than what I paid for the property itself. This is crazy.

Colin,

Did you not have your own independent inspector do a (current state) inspection right away before buying the property? Might have spent a few hundred to see what is really going on with the property. You need an inspection in the beginning to see if the TRUE scope of work matches up with the estimate and numbers that a turn key resale company is estimating or claiming.

I have said it AGAIN, and AGAIN, and AGAIN. How are people buying 40k houses from any company saying major rehabbed? On older houses all those items you mentioned can be standard problems encountered over and over. This is why you might hear other investors say they won't buy houses pre 1980's etc. because they know what they run into.

It looks like you might be taking a big loss on this property. Hopefully not. 

From the video it appears like someone tapped PVC into galvanized plumbing.

You might have been better off buying ONE quality property at a higher price in a better area than 2 to 3 crappy ones you take losses on. Buying multiples just for the sake of spreading risk out doesn't work when the area and property is inferior. You just own a lot of bad properties at that point.

No legal advice given. 

Disclosure: Current Customer

@Joel Owens Yep, great advice. Hard lesson learned for us. Definitely cannot trust the hype and must send out third-party inspectors.

Quality over quantity applies very well here.

Not a chance. Oceanpointe was handling the rehab but they seem to have stopped their operations and cannot be reached. They took the rehab money but didn't finish the work.

I'm working with a different PM company now to reassess the situation and complete the work out-of-pocket.

Best,

Colin

@Colin Zhu thank you for sharing your painful story here... I feel really bad about this, but damn if you aren't helping a ton of us and the karma will come back around. Hoping the complete property rents well and this is a distant memory in 6 months!

Thank you @Riyad Kalla . While this has been a "less than ideal" experience for my first time investing out of state, I have learned a great deal and met tons of awesome people along the journey. I'm still dealing with the fallout right now but getting closer to the end of the tunnel every day.

Stay strong, keep your head cool and help each other.

Originally posted by @Colin Zhu :

Thank you @Riyad Kalla . While this has been a "less than ideal" experience for my first time investing out of state, I have learned a great deal and met tons of awesome people along the journey. I'm still dealing with the fallout right now but getting closer to the end of the tunnel every day.

Stay strong, keep your head cool and help each other.

 Boy from my point of view if these bad actors Morris and OP just ride off into the sunset leaving this carnage behind them with no real consequences I will be so very disappointed in our judicial system and the state of INdiana regulators.. This is such an abuse of trust 

@Jay Hinrichs I agree with you 100%. I'm not entirely sure we've heard the end of the story yet. Our judicial system moves like a large glacier, slow at first but hopefully hard to stop once it gets going.

Originally posted by @Colin Zhu :

@Jay Hinrichs I agree with you 100%. I'm not entirely sure we've heard the end of the story yet. Our judicial system moves like a large glacier, slow at first but hopefully hard to stop once it gets going.

 and carves deep valleys and leaves a lot of rubble in its wake.. !!!! 

The reason Clayton always says in his videos that you can’t get emotional and his properties are just “ 4 walls and a roof“ is because that’s all he is literally selling his customers  “ 4 walls and a roof !”  .. in Indiana.. in the ghetto .. .. in a full blown war zone 

Originally posted by @Dennis M.:

The reason Clayton always says in his videos that you can’t get emotional and his properties are just “ 4 walls and a roof“ is because that’s all he is literally selling his customers  “ 4 walls and a roof !”  .. in Indiana.. in the ghetto .. .. in a full blown war zone 

 I found you all because I had been watching the Morris Invest podcasts for the last month or so non-stop (during commute, on weekends, just listening while working in the garage) and COULD NOT for the life of me reconcile the volume of homes he was talking about with the "buy and hold" strategy he and his wife espouse in every episode.

I noticed this especially when he was interviewing hyper successful ("1000 house guy") investors and they would do some ego-measuring... "I think I have you beat this week with 10 closings" or comments like "In the last year we have closed 100s of houses"

I know they are doing well, but unless they had 10s of millions in hard cash laying around, this rate of acquisition just did't make sense to me... especially for high-maintenance/high-risk properties he talks about (30/40/50k)

When I came here and started reading up on the MI pipeline it started making a lot more sense... we are their 20-50% margin on dilapidated/restored properties.

@Colin, your story solidified this in my head and then the whole machine sort of became clear to me.

I'm years behind you all - took me too long to see the machine at play, but I was totally bought into the "wow these are two really nice people!" thing and never thought to look deeper at a hyper-aggressive sales/flip machine that leaves a wake behind it.

Thank you all for the knowledge!

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