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

[Joe Splitrock]

Originally posted by @Son D.:

He told some investors in my group that he's experiencing the same problems as we do. He hasn't received rent on 22 of his properties for the last 2 months. My bs senses are tingling. Assuming it's true, then maybe it's because OP knew MI was building their own property management team. Even I knew it back in January. So there is a view of teammates kicking each other.

However, when I research the different LLCs that were created relating to these companies within these few months, I can't help but feel that they're trying to create entities within entities to misdirect but eventually it leads to the same people. Clayton Morris's refusing to publicly separating himself from OP just adds to that feeling. Good thing states made these info public and those that found Morris on YouTube are able to navigate...you know...the internet.

Just curious why you and the other investors continue to stay with OceanPoint and Morris Invest? You say that you knew in January and yet Morris seems to just keep feeding you lies. It is like you want to believe him and want to stick with him. You have been given the advice multiple times to drop these crooks and find a new PM. I am not sure what it takes, but it seems the bad judgement that landed you with Morris is keeping you there. For your own good fire their asses and move on. Complaining on group e-mails may make you feel better, but it isn't solving your problem.

[Jay Hinrichs]

Originally posted by @Joe Splitrock:

Originally posted by @Son D.:

He told some investors in my group that he's experiencing the same problems as we do. He hasn't received rent on 22 of his properties for the last 2 months. My bs senses are tingling. Assuming it's true, then maybe it's because OP knew MI was building their own property management team. Even I knew it back in January. So there is a view of teammates kicking each other.

However, when I research the different LLCs that were created relating to these companies within these few months, I can't help but feel that they're trying to create entities within entities to misdirect but eventually it leads to the same people. Clayton Morris's refusing to publicly separating himself from OP just adds to that feeling. Good thing states made these info public and those that found Morris on YouTube are able to navigate...you know...the internet.

Just curious why you and the other investors continue to stay with OceanPoint and Morris Invest? You say that you knew in January and yet Morris seems to just keep feeding you lies. It is like you want to believe him and want to stick with him. You have been given the advice multiple times to drop these crooks and find a new PM. I am not sure what it takes, but it seems the bad judgement that landed you with Morris is keeping you there. For your own good fire their asses and move on. Complaining on group e-mails may make you feel better, but it isn't solving your problem.

Joe unfortuantly many of these people just have a boarded shell.. when they paid for a rehabbed home.. its just not as simple as changing managers.. a good portion of these homes the rehab money was missappropriated and the owners got rent on boarded homes.. 

so they need 15 to 30k just to get them rent ready.. its a major issue thats not as simple as i don't like the pm  shampoo carpet and slap some paint up..

[Joseph M.]

I see that Clayton Morris is still putting up videos on his Youtube channel. 

Most recent one on April 27th ,2018 about "

Being Financially Free vs. Debt Free" 

Doesn't sound like he's done too great a job helping people become financially free ...according to many of the comments on this thread and elsewhere on BP. 

https://www.youtube.com/watch?v=FwucCW5iiN4

He did the video with his wife.  She's a CNBC broadcaster and cofounder of Morris Invest.

https://www.cnbc.com/natali-morris/

 Lot's of the comments about them being "so cute". Maybe some that have been wronged should comment too and share their experiences. 

[Richard Elvin]

@Joe Splitrock I think it's a basic math problem.  The investors now have a house, see below, that is likely worth $16k at best. They've paid +/- $48k for it, and it likely still needs tens of thousands in rehab. Once the rehab is done it will still be in a rough neighborhood without a viable exit strategy. 
So, would you throw another $15k-$25k at a $16k house to get it rentable? You've already spent $48k for a, at best, $16k house. Do you want to have spend up to $73k for a $16k house? Where's the profit in that? How can these investors exit this mess? 

I'm not asking you in particular, just trying to put myself in the shoes of these investors. I can identify with being desperate enough to try something, anything, just to get a piece of the pie. I'm glad I didn't get talked into anything like this. There, but for the grace of God, go I. :) 

Originally posted by @Todd Burton:

[Colin Zhu]

I thought about commenting on his YT videos and posting links to inspection videos of his properties. However, people have tried that in the past and their comments end up getting deleted.

If we really want to get his attention, we should report his videos on Youtube. If enough people report, his videos will get flagged, and possibly get taken down.

Also, leaving reviews on iTunes and various other podcast apps with true stories, links to pictures and videos of the "rehabbed" properties, so that other potential investors are aware.

People have lost their kid's college savings, retirement accounts, etc. This needs to stop.

Thanks,

Colin Zhu

[Jay Hinrichs]

Originally posted by @Colin Zhu:

I thought about commenting on his YT videos and posting links to inspection videos of his properties. However, people have tried that in the past and their comments end up getting deleted.

If we really want to get his attention, we should report his videos on Youtube. If enough people report, his videos will get flagged, and possibly get taken down.

Also, leaving reviews on iTunes and various other podcast apps with true stories, links to pictures and videos of the "rehabbed" properties, so that other potential investors are aware.

People have lost their kid's college savings, retirement accounts, etc. This needs to stop.

Thanks,

Colin Zhu

Colin along with Rip off report you put a report on that site along with supporting documents and it will go to the top of google and stay there.. Again folks can just complain or they can take action and you can do it with a handle on r of report.. and of course they give mr. and Mrs. Morris a chance to rebut and that would be interesting.

[Steve Babiak]

Originally posted by @Joseph M.:

I see that Clayton Morris is still putting up videos on his Youtube channel. 

Most recent one on April 27th ,2018 about "

Being Financially Free vs. Debt Free" 

Doesn't sound like he's done too great a job helping people become financially free ...according to many of the comments on this thread and elsewhere on BP. 

https://www.youtube.com/watch?v=FwucCW5iiN4

He did the video with his wife.  She's a CNBC broadcaster and cofounder of Morris Invest.

https://www.cnbc.com/natali-morris/

 Lot's of the comments about them being "so cute". Maybe some that have been wronged should comment too and share oktheir experiences. 

Success with a Ponzi scheme requires finding newcomers to participate who aren't quite aware of the wrongdoing that preceded their participation ...

[Kevin Coggins]

Came across an ad for Morris Invest on my facebook and basically commented for people to do their own due diligence...had somebody message me asking about my experiences and just linked to this thread. Been following this thread and would feel bad if I saw that ad and said nothing. Could've easily been myself or a friend/family member caught up in this.

[Joseph M.]

Clayton did a Webinar on March 20th... the title.....  "How to avoid risk as an investor" 

"

Any new venture can be intimidating, and that’s certainly the case with real estate investing. We hear questions constantly from new or prospective investors who are worried about risk. Sure, there are horror stories about investors who lost it all, but if you play your cards right and put a few safeguards in place, you will are very unlikely to encounter issues.

In order to mitigate risk in real estate investing, you need to attend this webinar!"

https://info.advantaira.com/avoid-risk-as-investor...

[Jonathan White]

I have been listening to allot of Claytons Podcast and you-tube videos lately.  I am surprised by what I read in the forum just because they way Clayton and his wife talk up their turnkey business opportunity and how dialed in it is.  They sound like the real deal and are very convincing.  Like mentioned previous, I would call Clayton direct by phone, emails to all his websites, put posts on his web or youtube site and or even show up where he attends investment seminars to try to get through to him.  It could be possible he thinks everything is running well and needs transparent blunt feedback that it's not and fire a few folks.  You can only hope he is a good person and stands by what he says and sells and will right this wrong for you.  Another avenue is to listen to his podcast guest and contact some of them if you cant get through to him.  Surely they maybe able to contact him and ask him to call you.  The bigger people get, the more they may not know what is happening right under there nose.  I hope this is the case as compared to another hyped of scheme to lure suspecting good hearted investors into a deal that is not what it was lead to be when they were trying to sell it to you.  Please keep your status posted...I need to know if I should stop supporting his cause.  

Good luck.        

[Ross Denman]

Back to the point at hand... One of my home inspectors had a video shared with the OP/MI group and they were all freaking out. There are still some who are starting to see this for the first time.

We've taken on some of the OP load, but we are at capacity to manage any more distressed properties. That's not what we do, we specialize in PM not TK or large rehabs. I know that I've spoken with some other PM's in town and I think we are all nearing capacity. I'm sure that we will see some of these cycle through the wholesalers as well.

[Darrin Carey]

@Caleb Heimsoth YOU can't buy and rehab a house and make a profit at 50k. I've been doing it as a landlord for 15 years. There are a lot of houses at that price range that suck, but with patience, skill, and proper due diligence, the right ones are out there.

[Darrin Carey]

There's a lot of great advice here already, and I think all the bases have been covered.

@Shadonna N. The TV station is an excellent suggestion beyond the obvious civil suits, Division of RE, AG, etc. They would be interested from a neighborhood impact angle, less so to the out-of-state investor impact.

[Steve K.]

@Jonathan White the time to stop supporting his cause was over a year ago. There’s no way Clayton and Natali didn’t know they were a part of a scam back then, they were getting reports from clients and people on here way back then but still pressed forward with fraudulent videos and kept selling more “turnkey” properties for $50k that they knew were practically worthless. Clayton’s first lie can be found in his intro bio on his Morris Invest channel. He claims “I’m Clayton Morris, longtime real estate investor...”  I wouldn’t consider someone who just got into real estate investing to be a “longtime investor”, and anyone who is a longtime investor knows that selling falling down properties in war zones and claiming  they’re turnkey properties is a scam. If you rewatch the YouTube videos through the lens of knowing what happened, you can pick out lots of lies: “Nurses and doctors rent these properties”, “C class properties are easier to manage than class A properties”, promising 12% returns without lifting a finger, etc. bottom line is Clayton and Natali should not have put themselves in a position to be trusted with people’s life savings. They were posing as experts when they actually had limited experience investing themselves. People who went through the process or got partway into the process have said Clayton and his employees told them they couldn’t get an inspection or come see the property first or they would lose the deal. That’s a sure sign of a scam. I’d say at the very least Clayton and Natali were negligent in the beginning and then became complicit. At this point they’re guilty of helping people lose their hard earned money.

[Son D.]

@Joe Splitrock when I started regretting investing with MI/OP I've already purchased property and paid rehab. It was not finished "rehabbing" in January yet. I used biggerpockets forum to post my story and update frequently to keep them publicly accountable. I believe it worked to a small extent. I think PM here would agree my property look a lot better, although still not up to standard living condition, than most MI/OP home they've seen. I hounded them to get an inspection right after I was told it was done "rehabbing". The inspection did not take place until March 28. I've already changed management.

I feel like I need to repeat. Most people in the group only found out about this last Saturday. It's been barely a week. They each put a considerable amount into these properties. They're going through different stages: shock, confused, anger, hopelessness, realization, etc. Don't think I'm being over dramatic. A lot of life savings and retirement accounts went into this. The first thing is to call MI/OP to demand answers. Post discussions within the group. Compare Stories. Contemplate different scenarios. Do research. Then decide where to turn to. That's a lot to go through in a week. Like @Jay Hinrichs said, after you turn to different PM, you still have the problem of an unfinished property. Despite all this, overwhelming majority have already left. As for the rest, well, some people go through the process slower than others.

[Andrey Y.]

Originally posted by @Steve K.:

@Jonathan White the time to stop supporting his cause was over a year ago. There’s no way Clayton and Natali didn’t know they were a part of a scam back then, they were getting reports from clients and people on here way back then but still pressed forward with fraudulent videos and kept selling more “turnkey” properties for $50k that they knew were practically worthless. Clayton’s first lie can be found in his intro bio on his Morris Invest channel. He claims “I’m Clayton Morris, longtime real estate investor...”  I wouldn’t consider someone who just got into real estate investing to be a “longtime investor”, and anyone who is a longtime investor knows that selling falling down properties in war zones and claiming  they’re turnkey properties is a scam. If you rewatch the YouTube videos through the lens of knowing what happened, you can pick out lots of lies: “Nurses and doctors rent these properties”, “C class properties are easier to manage than class A properties”, promising 12% returns without lifting a finger, etc. bottom line is Clayton and Natali should not have put themselves in a position to be trusted with people’s life savings. They were posing as experts when they actually had limited experience investing themselves. People who went through the process or got partway into the process have said Clayton and his employees told them they couldn’t get an inspection or come see the property first or they would lose the deal. That’s a sure sign of a scam. I’d say at the very least Clayton and Natali were negligent in the beginning and then became complicit. At this point they’re guilty of helping people lose their hard earned money.

 Absolutely true.

[Todd Burton]

Every day we see and hear more horrible things. 

Today we found out that Clayton promised to buy a house back, sent the owner a purchase contract (and a Non-disclosure agreement) and the closing date has now passed and he did not purchase the property back and will not respond to emails or calls. I know this is true as I have spoken to the owner and have seen the documents.

Another property that they sold and closed in May, 2017 had many, many Health & Hospital violations, fines, etc. and years of unpaid taxes. The title company, Paramount Title Agency LLC, escrowed the money for these items but did not pay them after closing. The property went to the tax sale 5 months later (Oct. 2017) and the tax liability was sold. The new owner found out and applied pressure and the title company finally paid this off and "redeemed" the property in Jan., 2018 (9 months after they should have been paid). If he had not this found out he could have lost his entire investment at the end of the redemption period.

And finally (at least for today), it looks like their "Straw Broker" has jumped ship. A couple months back I spoke to the Indiana Professional Licensing people because their site did not reflect the name of the Oceanpointe Broker. They immediately updated it with the Brokers name, Steven Rosenbaum. I just checked again today and his license is with Park Place Real Estate LLC. The search for Oceanpointe reveals that now there is no associated Broker. The status is listed as "Closed Facility" and "No Related Licenses". This means that they cannot legally manage properties in the state of Indiana.  

[Stephen Flynt]

Originally posted by @Son D.:

@Joe Splitrock when I started regretting investing with MI/OP I've already purchased property and paid rehab. It was not finished "rehabbing" in January yet. I used biggerpockets forum to post my story and update frequently to keep them publicly accountable. I believe it worked to a small extent. I think PM here would agree my property look a lot better, although still not up to standard living condition, than most MI/OP home they've seen. I hounded them to get an inspection right after I was told it was done "rehabbing". The inspection did not take place until March 28. I've already changed management.

I have to ask, when you say you hounded "them" to get a post-rehab inspection, are you saying you hounded MI/OP to do an inspection?  If so, why would you not have hired any third party inspector in the Indy area who would have been happy to inspect your house just as soon as he could put it on the schedule?  I realize this was probably a first-time investment for you and many others and not trying to be unduly critical but getting third-party (not seller-related) inspections is a pretty standard process when buying real estate.

[Jay Hinrichs]

Originally posted by @Todd Burton:

Every day we see and hear more horrible things. 

Today we found out that Clayton promised to buy a house back, sent the owner a purchase contract (and a Non-disclosure agreement) and the closing date has now passed and he did not purchase the property back and will not respond to emails or calls. I know this is true as I have spoken to the owner and have seen the documents.

Another property that they sold and closed in May, 2017 had many, many Health & Hospital violations, fines, etc. and years of unpaid taxes. The title company, Paramount Title Agency LLC, escrowed the money for these items but did not pay them after closing. The property went to the tax sale 5 months later (Oct. 2017) and the tax liability was sold. The new owner found out and applied pressure and the title company finally paid this off and "redeemed" the property in Jan., 2018 (9 months after they should have been paid). If he had not this found out he could have lost his entire investment at the end of the redemption period.

And finally (at least for today), it looks like their "Straw Broker" has jumped ship. A couple months back I spoke to the Indiana Professional Licensing people because their site did not reflect the name of the Oceanpointe Broker. They immediately updated it with the Brokers name, Steven Rosenbaum. I just checked again today and his license is with Park Place Real Estate LLC. The search for Oceanpointe reveals that now there is no associated Broker. The status is listed as "Closed Facility" and "No Related Licenses". This means that they cannot legally manage properties in the state of Indiana.  

Just FYI I was at a closing a few weeks ago there in Indy and my client was talking to the owner of the title company and he had 5 properties that paramount did not pay the pro rated tax's on .. and was getting ready to turn them into the insurance commissioner this is a HUGE violation for the title and escrow company. 

[Jay Hinrichs]

Originally posted by @Stephen Flynt:

Originally posted by @Son D.:

@Joe Splitrock when I started regretting investing with MI/OP I've already purchased property and paid rehab. It was not finished "rehabbing" in January yet. I used biggerpockets forum to post my story and update frequently to keep them publicly accountable. I believe it worked to a small extent. I think PM here would agree my property look a lot better, although still not up to standard living condition, than most MI/OP home they've seen. I hounded them to get an inspection right after I was told it was done "rehabbing". The inspection did not take place until March 28. I've already changed management.

I have to ask, when you say you hounded "them" to get a post-rehab inspection, are you saying you hounded MI/OP to do an inspection?  If so, why would you not have hired any third party inspector in the Indy area who would have been happy to inspect your house just as soon as he could put it on the schedule?  I realize this was probably a first-time investment for you and many others and not trying to be unduly critical but getting third-party (not seller-related) inspections is a pretty standard process when buying real estate.

for sure this is common sense. 

[Steve K.]

@Stephen Flynt they were preying on first time investors, using heir personalities and podcasts and YouTube videos to build confidence. It seems like when they scheduled calls with seasoned investors they would turn them away or just not follow up. If an inspection or visiting the property was mentioned they would say “well this property is going to be sold in an hour so if you’re not ready to pull the trigger then this investment isn’t for you.” They would send property info, and if the investor showed interest they’d say “oh that one sold right away, here’s another similar one but you have to send money within an hour or it will be gone.”, Creating a false sense of urgency and convincing people to sign up without doing any due diligence, just going entirely on trust in Clayton. True definition of a confidence man. Looking back on the process and how they set everything up it’s very clear it was a scam and everyone involved on the selling end had to know it. Maybe in the beginning Clayton thought Oceanpointe could magically polish these turds somehow and turn them into performing assets but I doubt he’s that’s stupid to believe what he was selling was a viable product even in the beginning, and a year or so ago when he started getting compliants/ people asking for their money back he could have stopped then but he was in too deep and kept selling trying to sell his way out of it by attracting new investors and using those new funds to “pay rent” to his existing investors, who hadn’t yet learned that their property was vacant and never got rehabbed or rented.

[Melissa Gittens]

My Take back from this is ALWAYS DO YOUR DUE DILIGENCE 

[Chris Clothier]

Originally posted by @Darrin Carey:

@Caleb Heimsoth YOU can't buy and rehab a house and make a profit at 50k. I've been doing it as a landlord for 15 years. There are a lot of houses at that price range that suck, but with patience, skill, and proper due diligence, the right ones are out there.

 Darrin,

I can't see Caleb's original post on here to say definitely what he meant, but you illustrate a point that I think he was making and many of us have been making for years.  You are a landlord.  You are experienced and most likely local to your properties.  You are a perfect example of who can and should be buying 50k properties all in after purchase and rehab.  It can be done by active, local, hands-on investors.

When you add in the last step of selling these properties to a passive investor Turnkey, thereby adding in your profit, it makes it unsustainable and likely a very bad investment.  There is simply not enough spread in the deal unless you like selling things for little to no profit. 

When a property is sold Turnkey (this being the key word) at $50k, someone is going to lose and it is almost always going to be the passive investor.  From having read many of Caleb's posts here on BP, I believe that is what he meant.  The economics do not work at this price point for a good, quality turnkey investment.

[Caleb Heimsoth]

@Chris Clothier that is likely what I meant.  From my experience so far (albeit somewhat limited) my turnkey properties have been much less effort as far as time and what not, that is the benefit of having a good provider, and I am willing to pay for that.  

That being said I have also purchased non turnkey to see how that goes and if I can reproduce the “turnkey” effect.  So far I can tell you, in spending money on capex and upgrades, so it will likely end up being about the same as my turnkey properties, just the upgrades and capex will happen over the first several years of ownership and as they do it’ll become less and less.  Once the roof is replaced it should be fine for 20-25 years usually as an example.  

I think you can be successful with both strategies and personally plan on doing both going forward.  

[Shiloh Lundahl]

I wanted to chime in here because I’ve spent the last couple days reading through this thread and I’ve learned a lot. I want to thank everybody for the things they have shared and all of the things that I have learned by reading everyone’s posts.

Also, there were a couple of posts that mentioned some of the property managers that are taking over some of the properties that were managed by Oceanpoint are getting Overwhelmed by so many people looking for property management companies. I have never invested with Morris Invest nor have I ever had any properties managed by Oceanpoint. However, I did have some of my properties managed by a different property management company that didn’t do a very good job so I had to look elsewhere. I switched all of my Indianapolis properties over to Harvey Levin about a year ago  and he was able to help me get my properties back on track. So if anyone else is looking for a good property manager out in Indianapolis, that is who I would recommend. I Favorites thing about Harvey was that he communicated with me throughout the process.