Turnkey Nightmare with Morris Invest - Indianapolis

[Maria Dantas]

Hi there fellow investors!

We've done our first turnkey purchase with Morris Invest in Indianapolis about 6 month ago. A house in a C neighborhood near downtown, for about 50k. For this price the house was supposed  to be renovated and ready to rend. We had a hard time receiving photos of the process, and communication wasn't that good. Morris Invest gave the management part to Ocean Point, and things just got worse from there on, everyone is always too busy to come to the line, and calls are never returned. We got an email saying the property was still empty and they were having a hard time putting a tenant in place.

So we've decide to come by Indianapolis and find out what  was going on... as most of you can already imagine, things were much worse than we expected. When we drove by the house we noticed right away that it was the only house in the neighborhood that didn't have any work done in a looooooong time. It looked empty from the out side, so we try to get a better look inside, and that's when we noticed there is people living in the house, by what looks like they are probably squatting! I talked to a lady in her twenties, who said that they bought that house, then said they were actually leasing, and already living there for 8 months, then changed her story to "we are living here for 4 months". I was standing by her door and could feel the strong smell of weed coming from the house.

We called Ocean Point, but as usual everyone was too busy to come to the phone. I was outraged and wanted to visit their office in person, only to find out the address they have listed on their website its only for mailing, and they don't actually have an office for the public.

It's safe to say that we didn't do our due diligence enough with this one, and looking back we would've done things much different.

It's my first time going through something like this, and I'm not sure how to best handle this situation, what would be the best action in this case? If anyone has gone to something similar any tips or advises would be greatly appreciated. 

Thanks in advance, 

Maria Dantas

[Ross Denman]

@Maria Dantas we've been dealing with the OP/MI fall out for nearly a year now. There are a few PM's that are trying to pitch in and assist their clients, but it can be a little cumbersome. We have spent a lot of time and the clients have spent quite a bit of money to try to get these portfolio's straightened out.

Also, I have both actual addresses that OP is using. They have an office for the tenant's (PM operation) and another office across town for acquisitions, rehabs, sales, etc, (business operations.) Most of the easily found, public addresses are to the mailbox on Fox Rd.

Here's my recommendations:

1. If no work has been done (although you have paid for it at closing)

• Ask Clayton to buy back the property. I have seen him buy back several properties, but I think that it's finally starting to get expensive so he's started a new PM. We'll see how that works out, but I'm not hopeful.
• File a civil suit against them. There are at least 2 civil suits going on with them right now. I would recommend contacting one of the attorneys already involved with the suits against them. The information can be found at mycase.in.gov . Search by name and search for both Bert Whalen and Herbert Whalen. Open the case, open the menu next to the plaintiffs, and it will list the attorney and office that they are working with. Obviously, those attorneys will have more experience with them and probably more traction

2. If the work has been done

• Schedule a home inspection. Ensure that they did everything that needed to be done and ensure that it was done properly. If not... ask them to do it and put a (reasonable) deadline on them. Have someone check at the deadline, and if it is not adequately corrected... file a civil suit (see above.)

3. Fire your PM.

• If the unit is tenanted, you can either shift them to another PM or sell it tenanted. Since you've had a home inspection and the problems addressed, it is likely that you may be able to sell the property... but it still my be a loss. I would recommend holding it for a few years with another PM unless the house is in an absolute war zone.
• If it's vacant you can still proceed the same as above.

I would also get a rental and sales evaluation. Odds are you are negative equity and will rent at a low ROI, but Indianapolis is changing rapidly and many areas will be completely different in 18 months. You may find that holding it for a few years may put you in a very good situation, you just need a team to ensure that the property can be taken care of properly.

I will reach out in a PM and we can discuss further. We're working several MI/OP homes right now. We are selective about what we take on, but I can help you get information to decide which direction may be best for you.