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Turnkey Nightmare with Morris Invest - Indianapolis
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
@Jay Hinrichs I am among that group. We've been talking the whole day today through over 100 emails. It feels more like instant messenger than emails.
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Originally posted by @Son D.:
@Jay Hinrichs I am among that group. We've been talking the whole day today through over 100 emails. It feels more like instant messenger than emails.
Poetic justice.. OP sends out a blast email and copies everyone.. can we say tee it up.. !!! the class each throws in 1k to 2k to lawyer that gives them 250 to 500k in legal fee's to start. that will about do it..
there is simply NO defense for what these guys did and Mr. King who said a report to the police for stolen rehab money should also we a slam dunker.. I have seen many a small contractor send up doing jail time for this.
Poetic justice indeed! They sent an email and CC'd EVERYBODY? Wowzers! I hope all who invested with MI/OP get obscenely rich from the lawsuit, that would be even sweeter poetic justice!
All this time everybody in this group has been contacted by BHBinvestments just at the most convenient time. Would anyone here like to share their knowledge or experience with them? Hundreds of people want to know.
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WOW crazy development @Son D. - we’ll chat.
-Tyler
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Originally posted by @Tyler Jahnke:
WOW crazy development @Son D. - we’ll chat.
-Tyler
Tyler just curious if you got your initial property fixed back up and rented ??? or have you decided to sell it.. ? and move up in asset class's.
@Maria Dantas I'm sorry to hear about your experience. Unfortunately, like many other investors here on BP who have worked with MI, we know exactly how you feel! Like you, I was also inspired by many others here to share my experiences here: https://www.biggerpockets.com/forums/92/topics/552...
While I didn't fly out to Indy yet, I did hire an inspector to do a simple walkthrough. There are major health and safety issues such as loose asbestos insulation, chipping lead-based paint, knob and tube wiring, numerous water damaged areas, cracks in the foundation, mold and fungus growth in the basement, roofing needs replacement, and lots more. The property is uninhabitable right now, there is no power (tree took out the power line), gas or water. This is also after Blue Sky told me that the rehab is almost "done".
The videos here will do more justice than my words will ever can: https://www.youtube.com/watch?v=aR2_h9onvFQ&list=PLZesZrWooy5jMteMfchzgdK3L9pRbaqTN
Since our property is supposed to be managed by Blue Sky and not Oceanpointe, I sent an email directly to Clayton over a week ago informing him of the property issues and the misrepresentation during the sale of the property. I told him straight up that OP knew about the all the material defects and did not properly disclose them to me before we closed and I've asked for a buyback. No response so far.
At the same time, someone from MI's office told me to work with their Construction Manager to resolve the issues in the video. I'm going through that right now and will let you guys know how that works out.
It's unlikely that a buyback is still a viable option, as it is getting more expensive for Morris to do that. What I do next will depend on if they can actually fix all the problems with the property itself. If somehow they can, I'd still hold the property for a few years since data show that Indy is still a good market. If they cannot, I will escalate legally.
The other investors have great advice, listen to them as they've been in this game longer than we have.
The important thing is to not get discouraged by this experience and try to learn as much as possible, even though it is an expensive lesson. I think it'll ultimately help you avoid pitfalls later not just in RE investing, but in other forms of investments as well. Do your own DD, do not easily trust, and always verify.
@Son D. It's just sad that there are so many bad MI experiences popping up on BP that it's hard to keep track. Thank you for tagging me to thread otherwise I would've missed it for sure. Please let me know if there is ever a class action...
Best,
Colin Zhu
@Colin Zhu Thanks for sharing! Great info!
Wow, about time someone did something. Good for you guys. As far as BHBinvestments I haven't heard of them, so I can't speak to their quality. But at least they don't seem on the surface to be connected to OP.
Good luck and if you guys do need some documentation on fraud, I can probably help (need to talk with my attorney first on what I can share) but I definitely have it as we've taken over so many of these properties and see both sides of the equation.
Originally posted by @Son D.:
MI/OP made a big mistake today. Yesterday I received an email from someone working for OP regarding transitioning to AHI property management, their new name. The mistake? There were 250 other emails on there!! So I don't know whether it's an oversight or laziness, but Oceanpointe inadvertently allowed 250 of their clients to connect. Most of which had no idea what's going on until today. This whole day has been us talking back and forth, sharing stories, comparing notes. Lots of people excited/relieved to have found others in the same boat. Common themes throughout that we've exhausted on BP. It seems that none of us received any rent in April or longer. Clayton Morris's email is in there and people directly called him out for answers. Not a peep so far. Someone is leading the charge and is speaking to a lawyer tomorrow. It seems a long awaited class action lawsuit may be coming.
To catch up everyone watching... Oceanpointe is transferring their portfolio to AHI... interestingly enough, they operate in the same building as Oceanpointe. It appears to be the same team (except for Herbert/Bert)
Clayton has finally realized that his partnership with OP is burning him and created a new PM company... Blue Sky. I do not know how involved Clayton is in the questionable activities, but he is distancing himself from the OP problems.
His clients are scattering... my phone, email, and BP account has been very active.
OP is now backtracking and saying they are still in business. They are asking all owners to schedule an appointment to have a talk with them. Funny how I've spent months trying to call them with zero call back and spending weeks waiting for an email reply because they were busy talking to other clients. Today it takes them minutes to email me back. They proposed 5/4 at 1pm for me. I told them tomorrow 5/1 or we're done. They told me to send them an official termination letter for them to file. Do you guys think it's better to actually send them the letter or would they be able to use it against me later for something? I know they already breached their contract but I just want to cover myself from all angles.
Several people shared they've finally received invoice for April. All of them stated "in collection". OP said the delay was due to AHI debacle and the rest of us should be receiving in May. We'll see.
@Steve K. @Jay Hinrichs I've called the Indianapolis PD today and they said this is a civil matter because I got a contract with them as my management company. Was worth a try though.
Originally posted by @Son D.:
OP is now backtracking and saying they are still in business. They are asking all owners to schedule an appointment to have a talk with them. Funny how I've spent months trying to call them with zero call back and spending weeks waiting for an email reply because they were busy talking to other clients. Today it takes them minutes to email me back. They proposed 5/4 at 1pm for me. I told them tomorrow 5/1 or we're done. They told me to send them an official termination letter for them to file. Do you guys think it's better to actually send them the letter or would they be able to use it against me later for something? I know they already breached their contract but I just want to cover myself from all angles.
Several people shared they've finally received invoice for April. All of them stated "in collection". OP said the delay was due to AHI debacle and the rest of us should be receiving in May. We'll see.
Sometimes it is best to stick it out with someone in hopes that they have incentive to make things right, but my gut tells me OP is in WAY over their heads here. I'm not involved with MI/OP in any way though, that's just speculation based on BP threads.
Now that you are in contact with others in the same situation, have you considered the idea of a group visit to Indianapolis? An informal "summit" of sorts? You could meet with OP directly (if they show up) and meet with other potential PM outfits and contractors at the same time. You would have strength in numbers, and prospective vendors would have an opportunity to discuss options with you in one fell swoop. It might be easier to determine if you should make the investment work or cut bait. I know travel is just another expense, but seems like a lot could be accomplished in person, particularly as a group.
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Originally posted by @Jeremy Z.:
Originally posted by @Son D.:
OP is now backtracking and saying they are still in business. They are asking all owners to schedule an appointment to have a talk with them. Funny how I've spent months trying to call them with zero call back and spending weeks waiting for an email reply because they were busy talking to other clients. Today it takes them minutes to email me back. They proposed 5/4 at 1pm for me. I told them tomorrow 5/1 or we're done. They told me to send them an official termination letter for them to file. Do you guys think it's better to actually send them the letter or would they be able to use it against me later for something? I know they already breached their contract but I just want to cover myself from all angles.
Several people shared they've finally received invoice for April. All of them stated "in collection". OP said the delay was due to AHI debacle and the rest of us should be receiving in May. We'll see.
Sometimes it is best to stick it out with someone in hopes that they have incentive to make things right, but my gut tells me OP is in WAY over their heads here. I'm not involved with MI/OP in any way though, that's just speculation based on BP threads.
Now that you are in contact with others in the same situation, have you considered the idea of a group visit to Indianapolis? An informal "summit" of sorts? You could meet with OP directly (if they show up) and meet with other potential PM outfits and contractors at the same time. You would have strength in numbers, and prospective vendors would have an opportunity to discuss options with you in one fell swoop. It might be easier to determine if you should make the investment work or cut bait. I know travel is just another expense, but seems like a lot could be accomplished in person, particularly as a group.
way back in the day when I was project lead for a Major west coast syndicator and deals had gone off the rails a little bit I got thrown into running these meetings.. and you talk about a hostile environment..
OP wont show is my bet... it would be a full on assault on them..
@Colin Zhu Blue Skies was registered in Indiana by Clayton and Natalie Morris in Feb 2018. There is no real estate license for operating a PM business. When Mr. Morris was asked by one person who is his local PM, he was referred to MI's client liason who is not in Indiana.
Long before the emails of this weekend, I had been warning people I am not aware of anyone locally managing Blue Skies. They are likely affiliated with Op by local personnel.
Probably need to find local people who can work with these assets and not just more of the same.
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Originally posted by @Joel Wilmoth:
@Colin Zhu Blue Skies was registered in Indiana by Clayton and Natalie Morris in Feb 2018. There is no real estate license for operating a PM business. When Mr. Morris was asked by one person who is his local PM, he was referred to MI's client liason who is not in Indiana.
Long before the emails of this weekend, I had been warning people I am not aware of anyone locally managing Blue Skies. They are likely affiliated with Op by local personnel.
Probably need to find local people who can work with these assets and not just more of the same.
Geez oh Pete just turn them into the department of real estate this is all totally illegal business practices
you cannot manage property without a broker in charge.
@Jay Hinrichs here is the process in Indiana. If you have been harmed, or if you have a complaint (you have a PM agreement and you learn there is no appropriate licensing) you go to this online form and submit your complaint. The Indiana Attorney General oversees issues such as illegal real estate practices. The Professional Licensing Agency governs actual licensees.
https://www.in.gov/attorneygeneral/2434.htm
Originally posted by @Son D.:
OP is now backtracking and saying they are still in business. They are asking all owners to schedule an appointment to have a talk with them. Funny how I've spent months trying to call them with zero call back and spending weeks waiting for an email reply because they were busy talking to other clients. Today it takes them minutes to email me back. They proposed 5/4 at 1pm for me. I told them tomorrow 5/1 or we're done. They told me to send them an official termination letter for them to file. Do you guys think it's better to actually send them the letter or would they be able to use it against me later for something? I know they already breached their contract but I just want to cover myself from all angles.
Several people shared they've finally received invoice for April. All of them stated "in collection". OP said the delay was due to AHI debacle and the rest of us should be receiving in May. We'll see.
Write up a termination letter detailing the situation (just the facts, leave out emotions), CC it to all attorneys involved in MI/OP cases as well as the Indiana real estate board. Then follow with a c&d for further communication. The audacity to tell you essentially that you work on THEIR schedule and that they can't find 10 minutes to call you tomorrow is disgusting. As if they are calling your bluff...
They should certainly have an office. Are they a brokerage? The office should be listed with the real estate commission.
Help me understand what is going on here. Ocean Point has been engaged in activities that go past bad management and many people believe raises to the level of criminal. They send a bulk e-mail to 250 clients who proceed to complain to each other. Why don't ALL 250 of you send a termination letter and hire an attorney? I don't get why you are all staying with this company. You call the police before you even terminate your contract?
I talked about due diligence before the sale, but now that you own the property, take control and run it properly. That means FIRE THE DAMN PM. It is like you are all in an abusive relationship and refuse to leave. Get your property under control and get away from Ocean Point and Morris, then go after them for civil damages.
Guess what else happens if you ALL fire them? They will go out of business and stop harming people.
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Originally posted by @Joe Splitrock:
Help me understand what is going on here. Ocean Point has been engaged in activities that go past bad management and many people believe raises to the level of criminal. They send a bulk e-mail to 250 clients who proceed to complain to each other. Why don't ALL 250 of you send a termination letter and hire an attorney? I don't get why you are all staying with this company. You call the police before you even terminate your contract?
I talked about due diligence before the sale, but now that you own the property, take control and run it properly. That means FIRE THE DAMN PM. It is like you are all in an abusive relationship and refuse to leave. Get your property under control and get away from Ocean Point and Morris, then go after them for civil damages.
Guess what else happens if you ALL fire them? They will go out of business and stop harming people.
Joe this just goes so much deeper than what most would imagine.. these are 5 to 10k value ghetto homes that were in many cases never touched.. they are trashed.. and they are for all intense and purposes past their economic and or functional life span.. so these folks got talked into paying 40 to 50k for the property then sending an additional 5 to 15k to rehab them.. when in fact a proper rehab would never be warranted on these as it would be 25 to 40k.. each property.. it only works for locals who snag them for the 5 to 10k.. and keep them.. Morris took all the equity plus a bunch out of these and then to add insult to injury never rehabbed most of them and they have been sitting there rotting.. so as to create an illusion of a good company IE model that worked OP kept sending rent to these folks based on non existent tenants.. and or many other combinations of same. And for me personally I know for a fact Morris knew of this stuff LONG ago.. but kept charging on.. how could he not.. he sold hundreds of these.. and he takes videos in the market he could drive by a home and see it was not touched..
this is a very nasty case of high profile marketer who by the sheer position he had on TV and the internet was able to spin a tale.. and folks just thinking he was something it appears he is not ( expert real estate investor) got duped..
I would be livid as well. However there Is no doubt Morris preyed on absolute first time rental home buyers.. you here the back and forth of how little these folks understood about the transaction and how trusting they were.
Its easy for us who do this for a living and have been doing it for years to second guess it all. but that's what happened.. taking over these assets while all well and good is not financially feasible in many cases.. in most cases they will just sell to the next low level wholesaler who will then sell to the next person who thinks they can make the hood work.
Originally posted by @Jay Hinrichs:
Originally posted by @Joe Splitrock:
Help me understand what is going on here. Ocean Point has been engaged in activities that go past bad management and many people believe raises to the level of criminal. They send a bulk e-mail to 250 clients who proceed to complain to each other. Why don't ALL 250 of you send a termination letter and hire an attorney? I don't get why you are all staying with this company. You call the police before you even terminate your contract?
I talked about due diligence before the sale, but now that you own the property, take control and run it properly. That means FIRE THE DAMN PM. It is like you are all in an abusive relationship and refuse to leave. Get your property under control and get away from Ocean Point and Morris, then go after them for civil damages.
Guess what else happens if you ALL fire them? They will go out of business and stop harming people.
Joe this just goes so much deeper than what most would imagine.. these are 5 to 10k value ghetto homes that were in many cases never touched.. they are trashed.. and they are for all intense and purposes past their economic and or functional life span.. so these folks got talked into paying 40 to 50k for the property then sending an additional 5 to 15k to rehab them.. when in fact a proper rehab would never be warranted on these as it would be 25 to 40k.. each property.. it only works for locals who snag them for the 5 to 10k.. and keep them.. Morris took all the equity plus a bunch out of these and then to add insult to injury never rehabbed most of them and they have been sitting there rotting.. so as to create an illusion of a good company IE model that worked OP kept sending rent to these folks based on non existent tenants.. and or many other combinations of same. And for me personally I know for a fact Morris knew of this stuff LONG ago.. but kept charging on.. how could he not.. he sold hundreds of these.. and he takes videos in the market he could drive by a home and see it was not touched..
this is a very nasty case of high profile marketer who by the sheer position he had on TV and the internet was able to spin a tale.. and folks just thinking he was something it appears he is not ( expert real estate investor) got duped..
I would be livid as well. However there Is no doubt Morris preyed on absolute first time rental home buyers.. you here the back and forth of how little these folks understood about the transaction and how trusting they were.
Its easy for us who do this for a living and have been doing it for years to second guess it all. but that's what happened.. taking over these assets while all well and good is not financially feasible in many cases.. in most cases they will just sell to the next low level wholesaler who will then sell to the next person who thinks they can make the hood work.
I am someone who looks for solutions, so my point is keeping the property with Ocean Point is nothing but trouble. If the property has a tenant in it, then they should move to a different PM. If the property is vacant and not in condition to rent, then they should consider either doing rehab or selling the property for a loss.
After they sell the property for a loss, they can take Morris to court to sue for the difference. Taking a loss has some value in many cases, because you drop the nonperforming asset and take the loss against other income. Every month a property sits vacant, it deteriorates more and continues to cost money.
Just sitting on these properties and begging Ocean Point and Morris to fix the problem, seems like a waste of time. How many times do you e-mail and call before realizing you need to move on? People are just banging their heads against the wall.
I would recommend taking action quickly, Once the house of card topples, there will be no money to sue for. Go after them quickly before they are gone (bankruptcy, jail, whatever their fate is).
I am not disagreeing that they were wronged, but they need to take action to resolve this. The same lack of due diligence that got them into this mess is keeping them from taking action to get out of it.
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Originally posted by @Joe Splitrock:
Originally posted by @Jay Hinrichs:
Originally posted by @Joe Splitrock:
Help me understand what is going on here. Ocean Point has been engaged in activities that go past bad management and many people believe raises to the level of criminal. They send a bulk e-mail to 250 clients who proceed to complain to each other. Why don't ALL 250 of you send a termination letter and hire an attorney? I don't get why you are all staying with this company. You call the police before you even terminate your contract?
I talked about due diligence before the sale, but now that you own the property, take control and run it properly. That means FIRE THE DAMN PM. It is like you are all in an abusive relationship and refuse to leave. Get your property under control and get away from Ocean Point and Morris, then go after them for civil damages.
Guess what else happens if you ALL fire them? They will go out of business and stop harming people.
Joe this just goes so much deeper than what most would imagine.. these are 5 to 10k value ghetto homes that were in many cases never touched.. they are trashed.. and they are for all intense and purposes past their economic and or functional life span.. so these folks got talked into paying 40 to 50k for the property then sending an additional 5 to 15k to rehab them.. when in fact a proper rehab would never be warranted on these as it would be 25 to 40k.. each property.. it only works for locals who snag them for the 5 to 10k.. and keep them.. Morris took all the equity plus a bunch out of these and then to add insult to injury never rehabbed most of them and they have been sitting there rotting.. so as to create an illusion of a good company IE model that worked OP kept sending rent to these folks based on non existent tenants.. and or many other combinations of same. And for me personally I know for a fact Morris knew of this stuff LONG ago.. but kept charging on.. how could he not.. he sold hundreds of these.. and he takes videos in the market he could drive by a home and see it was not touched..
this is a very nasty case of high profile marketer who by the sheer position he had on TV and the internet was able to spin a tale.. and folks just thinking he was something it appears he is not ( expert real estate investor) got duped..
I would be livid as well. However there Is no doubt Morris preyed on absolute first time rental home buyers.. you here the back and forth of how little these folks understood about the transaction and how trusting they were.
Its easy for us who do this for a living and have been doing it for years to second guess it all. but that's what happened.. taking over these assets while all well and good is not financially feasible in many cases.. in most cases they will just sell to the next low level wholesaler who will then sell to the next person who thinks they can make the hood work.
I am someone who looks for solutions, so my point is keeping the property with Ocean Point is nothing but trouble. If the property has a tenant in it, then they should move to a different PM. If the property is vacant and not in condition to rent, then they should consider either doing rehab or selling the property for a loss.
After they sell the property for a loss, they can take Morris to court to sue for the difference. Taking a loss has some value in many cases, because you drop the nonperforming asset and take the loss against other income. Every month a property sits vacant, it deteriorates more and continues to cost money.
Just sitting on these properties and begging Ocean Point and Morris to fix the problem, seems like a waste of time. How many times do you e-mail and call before realizing you need to move on? People are just banging their heads against the wall.
I would recommend taking action quickly, Once the house of card topples, there will be no money to sue for. Go after them quickly before they are gone (bankruptcy, jail, whatever their fate is).
I am not disagreeing that they were wronged, but they need to take action to resolve this. The same lack of due diligence that got them into this mess is keeping them from taking action to get out of it.
cant argue with that.. I think the issue is one for many its their entire cash lifesavings.. so its not as easy as taking a whopper loss .. they will be devastated.. for many they probably don't have the money to fix them up.
and they are just hoping something good happens.. I mean one guy called Morris out with a U tube video of a wreck of a duplex.. Morris doing damage control gets him to take it down promises to fix it.. and or buy it back.. to every ones shock and amazement the guy chose not to get bought out.. even though its documented these are not good long term investments.. so its a strange scenario here and well you cant help those that still believe in this cash flow dream.. they just don't understand no all cash flow is the same and that certain assets carry much higher risks than others..