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

[Ellis San Jose]

You will have to decide whether this is worth fixing this problem by hiring a new manager, get an attorney And sue the people that sold you this deal, or cut your losses.

How much time can you spend in Indianapolis? 

If you decide to clean this up you will have to evict the squatters, rehab the house and rent or sell. Or not fix up and sell with a loss.

Perhaps you can JV with another investor who lives in the area and agree on a compensation.

Sorry you are going thru this, some turn keys are nightmare operations.

[Roger S.]

Originally posted by @Account Closed:

You will be fine.  😁You made a mistake and accepted responsibility. This could make you stronger or Not. 

Everyone else seems to want to pass the 🚌  and totally blame Morris. 

Based on her post, it is totally Morris' fault.

[James Wise]

Note to all reading this. When buying out of state you should ALWAYS get a 3rd party inspection as a contract contingency.

Are there deals that are so good that As-Is cash offers will beat your contingent offer? Yes. But that's ok. There is no need to play high risk poker all the time. You are out of state, therefore already at a disadvantage. Cover your bases & hit singles. Don't always have to go for home runs.

[Tom Ott]

Originally posted by @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

 Yikes, that sounds like it wasn't actually a Turnkey at all! I am sorry this happened to you.

[Derek Crawford]

Thanks for sharing. I’m sorry this happened to you. I actually considered using Morris Invest before but now I think I’ll definitely pass. I can’t believe they allowed this to happen to you.

[Shiloh Lundahl]

Wow. Here is another Morris Invest saga. You can be added to the list of others. Any comments @Tyler Jahnke, @Todd Fry, or @Jay Hinrichs.

[Caleb Heimsoth]

Sorry this happened. This is basically what Morris does. He sells overpriced, crappy homes with shoddy (if rehabbed at all) work.

I’d say you can remedy the situation with an inspection and your own contractor but if the neighborhood is awful you may just want to sell

[Caleb Heimsoth]

To any and all newbies who read this thread, you cannot buy and rehab a house and make profit at 50k. The numbers don’t work.

As James Wise said always get an inspection. And try to visit the area before you buy

[James Wise]

Originally posted by @Account Closed:

Originally posted by @Account Closed:

You will be fine.  😁You made a mistake and accepted responsibility. This could make you stronger or Not. 

Everyone else seems to want to pass the 🚌  and totally blame Morris. 

Based on her post, it is totally Morris' fault.

 How 👵 so?  If my Realtor has a recommendation I get on a ✈ before I buy not after. 

Morris has a line where he says doctors and nurses are his properties tenants. 😂 It's possible he is referring to bankrupt doctors and/or boozed 👆 up nurses who have blown their 💰  on bad investments. 

 Lol Doctors & Nurses renting $50k 🏡🏡🏡 Now that's comedy❗

I've got a few doctor tenants myself. However their rents are around $4,000/mo in a $1M+ medical building. Just a lil different than a $50k $700/mo rental house.

[Ritch Bonisa]

@Maria Dantas My advice is to call Clayton Morris personally.  Call him 5,000 times until you get him.  Put up a Youtube video clearly describing the situation.  Post your story anywhere and everywhere you can - use all the pertinent keywords and names.  Even names of individuals you have spoken to. 

Many have been embarrassed by being duped and losing money on these investments.  Don't take that approach - make it public!  

My opinion, you bear responsibility for your actions, but he bears responsibility for any misinformation.  The management company bears responsibility for any misinformation.   

I am so so sorry to hear that you have to go through this.  

[James Martin]

@Maria Dantas, I hate to think "worst case" but are you positive that you own the property?  It sounds like they are already ripping you off, so the question in my mind is "would it be a reach to think that they TOTALLY ripped you off and you don't even own the place?"

[Joe Splitrock]

It is easy to blame Morris, but if you buy a property sight unseen for $50K in today's market, it is pretty naive to believe everything will be fine. I can tell you without even vising that the place is a dump, probably in a D area. A plane ticket from CA to just about anywhere is maybe $400. The problem is inexperienced investors chasing rainbows. If it wasn't Morris that duped you, someone else would. You have to be smart and thorough when vetting any investment. If you had done a 5 minute Google search on Morris, this could have been avoided.

I know people want to shut Morris down, which it seems is inevitable, but I guarantee someone else will just take his place. Every investment requires due diligence. Not only before the sale, but afterwards. 

[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.

[Maria Dantas]

@James Martin I was afraid of the same thing, but I just checked and looks like we do own the nightmare!

[Jay Hinrichs]

@Ross Denman  offers solid advice.

I would add that the AG should be made aware of this.. AG's do not like people scamming the public

the dissemination of false information ( which is basically all of Morris s sales pitchs is wire fraud.

not to mention the money that was sent is wire fraud. 

Its free to file a complaint I would also file a complaint with the department of real estate its the law you should have gotten a sellers disclosure and since Morris is obviously acting as your broker .. you need to check if he is licensed to sell real estate and if he gave you the mandatory disclosures that would have warned you of the condition of the home up front.. just think how you would buy a home from an agent in CA.

both the DRE and AG  are free on line and will only take minutes those are the poeple that will shut this operation down which it clearly needs to be.. 

I can see how a slick ( as someone else mentioned Conn man) has these videos that pull at your rich dad poor dad soft side you jump on this.. BP even gave them a pod cast but once BP learned of this carnage they took it down.. so good for them.

the local Pm's there are doing their best.. but they are not miracle workers. you basically own a home that a wholesaler sold Morris or Ocean pointe for 5 to 15k max and then they sold it to you for a big profit. 

don't beat yourself up there are litterally hundreds who as others have said got conned by this company they have since started selling in Jacksonsville FLA and i hear the same stuff .. and other markets.

the Model is buy the absolute cheapest homes in the absolute worst markets.. then sell to sight unseen investors at a dollar amount that is so low as to get folks guard down.. then for whatever reason when rehab funds are sent the houses are not rehabbed.. there has been claims by others that rent was even paid on vacant houses. giving the buyers the illusion that they had a finished product and secure investment.. only to find out it was a sham.. house vacant and trashed.. 

the buyers really need to do a public service and shout this from the roof tops along with other remedies of law.. this is giving a very bad image of what out of state investing can be.. it hurts the good people in the business.

[Caleb Heimsoth]

@Joe Splitrock to be clear I’ve bought a house in the Midwest (Cleveland) for less than 50k.  It just wasn’t turnkey.  I also didn’t pay cash and got an appraisal and an inspection, so I knew exactly what I was getting into.  

It hasn’t been perfect so far.  The inherited tenants left early and left behind a lot of junk,  but once I got it resented (higher rent) everything should be pretty good now.  

Also it wasn’t my first deal.  My point is it can work, you just need an inspection and never ever pay for an entire rehab at front.  

Also in Cleveland at least in the C class area I’m in, medium income is about 40k.  Which means a nurse who makes 60-65k or a doctor who makes 100k plus will likely never ever ever live in this type of area.  

[Tyler Jahnke]

I'll chime in here @Maria Dantas and definitely second what @Ritch Bonisa, @Ross Denman, and @Jay Hinrichs all had to say.

I'm still in the middle of a year and a half saga with Morris Invest (you can read my massive forum post here: https://www.biggerpockets.com/forums/92/topics/392...)

We all bear the responsibility for not doing our proper due diligence, but need to help others from falling into this trap. As Ross said:

1. See if Morris Invest will buy the property back. If not...

2. Fire Oceanpointe

3. Get a proper inspection and assess repairs/damage/costs

4. Decide if it's worth keeping or selling

Let me know if you have any questions and best of luck!

-Tyler

[Maria Dantas]

Thanks a lot for your reply @Tyler Jahnke I actually read your forum posts a while back and that was what kept us from buying more properties with Morris Invest. 

As soon as I realized our situation I felt the need to tell others hoping to alert investors from out of state not to get into the same nightmare. I won't lie, it's embarrassing being in this situation, but hopefully this was a lesson well learned.

best of luck to you as well!

Maria D.

[Chris Clothier]

@Maria Dantas - You've learned a tough lesson here, but you also did more than many past investors by jumping on a plane...just a little too late to avoid the headache.   I know nothing about you, but hopefully you are smart enough o move past some of the more negative comments on here and pay attention to the comments that are going to help you move forward.

It has been said on here many, many times how impressive the Morris Invest podcast and videos are.  They are very persuasive.  He is an excellent marketer and has done a remarkably good job of getting his marketing message out to the masses.  Even Bigger Pockets had him on their podcast and he was very convincing.  

Unfortunately, there is one thing that I tell people all the time that investors need to hear and it is never said by him...  

"Take Nothing on Faith!"

You absolutely must dig in, check the facts, ask really tough questions and refuse to take anything you've heard on faith.  You must verify and do your own due diligence.  It is vital to your success that you know EXACTLY what you are investing in and are comfortable that the super slick marketing story that you have heard on videos and podcasts actually matches what you are seeing on the ground.

I, like many other commentators on here, really have no interest in bashing Morris.   It gets old.  However, as long as investors are getting hurt, when the stories are shared, we will all jump in and help however we can.  As @Joe Splitrock noted, this guy is just one of many who are working from the exact same playbook.  Cheap, junk properties are in big supply in every major city and there are many, many companies out there doing exactly the same thing he is doing.  And they are hurting a lot of people while lining their pockets.

All he needs is someone who says they can get them cheap and will do the work and companies like this have their opportunity.  That is all Morris is selling - Opportunity.  He sells opportunity - not reality.  He paints a picture that could happen and makes some statements that may or may not be verifiable (such as renting to nurses. i.e. - he may have rented to a nurse once so the statement is true).  He is simply telling a story to a buyer.  Whether it will actually happen or not does not appear to be relevant to his business model.  These are great marketers and there are many of them out there.  Morris just happened to go on the BP podcast which made him very visible here.  As you can see, he does not come on the site and comment and bashes it in some of his commentary as a site full of elitists that are jealous.

The reality is, you have a $50k problem.  You will most likely lose some money on it, but you should not lose everything.  Regardless of how good it sounds to invest relatively small amounts of money in these low-price, challenged areas of cities, they are best left to local investors who are going to be very hands-on.  

Out of state, passive investors whether they are new or not and whether they are are buying Turnkey or not, are ultimately responsible for the verification of what they are buying.  Right now, you can tough it out with this property, but my advice is to make a plan to get rid of it as soon as possible and if it pencils out to a loss, then your first loss will be your best loss.

Don't waste any more dollars or time on this price point.  Dump it - take a loss if you have to - and then make a plan for being a smarter real estate investor going forward.  You've been duped, but you're going to be ok.

[Caleb Heimsoth]

@Maria Dantas I would listen to what Chris says, he’s spot on.  The other major thing to consider is the area it’s in.  C class means different things in different cities.  You need to make sure you’re actually in C class.  In Cleveland C class means 40k average wage, 650-850 rent and low violent crime.  If there is crime it’s usually petty theft.  

[David Riska]

So you can likely add me to the list of those who may have been duped by Morris. I actually purchased my first property in 2017 that was in need of some fairly minor rehab, which to Morris's credit was completed. Although I had to have some local real estate friends stop by a couple times to check on the rehab. The place was eventually rented and PM'd by Oceanpointe. All seemed to be going ok for a few months, so I stepped in and purchase a second property the end of last year.  

The second property was previously rehabbed a few years back, so again just needs some basic rehab.  Now, 4 months later, I had little to no communications from Oceanpointe, although I was in regular contact with the Morris team, which were at least responsive, but could provide no insight to when the rehab work on the property might even be started much less completed.

I was just recently asked by Morris to switch to the new PM company, and given a promise they would get my rehab moving and the property eventually ready for rent.  So here is the fun part, now the rent checks from Oceanpointe have stopped coming on my first property.  

I want to thank all on this forum for the great advice on how to proceed with this potential mess.  I will fill everyone one in on the remainder of this journey with these properties with Morris as it unfolds.

[Caleb Heimsoth]

David Riska the license for ocean pointe was revoked by the Indiana AG. So I’m pretty sure they lost their ability to be a PM. Hence Morris appears to just be starting a new one under a different name.

Did you ever confirm anyone was actually in your first property ?

[Ross Denman]

I believe that OP has a broker that they are working under, but it doesn't appear that Bert can hold a license anymore.

Something else, the root of the problem that I've seen appears to be with OP but Morris has certainly covered for them. Now he wants to break away from them, but I am not convinced that they will do much better and would be very hesitant to work with them.

Lastly, let this be a lesson... it's super important to know who you are aligning yourself with. If Clayton actually had good intentions for the business that he's been running, he would have separated himself from them 6-9 months ago. I believe that it's super important to know the people that you are working with. I just had a client close a house using a realtor that I had referred. The client said that she would not work with that realtor again. This was the second person who was not happy with the pace and speed of that person. I followed up to see if there was an issue that I needed to be made aware of. While I don't think that anything was done wrong, this realtor is falling further down my list of referrals. Always try to find honest, reputable, and hard working people to work with. It really can make or break your business.

[Chuks Erinne]

Hi @Maria Dantas, Like others have suggested...I would definitely reach out to Morris on YouTube, Facebook etc. Give him a time frame to respond.

In the meantime, figure out your options. Light rehab and hold if renting makes sense. If not, whats the comps and ARV in that area? Since your house is the "ugliest" in that specific area, this might be a flip option if numbers work.

Figure out your exit strategy and minimize loss ASAP. 

I plan on providing foreign investors a similar service and one thing my advisor have mentioned is avoiding any conflict of interest as seen with most turnkey providers. (Hi @Mitch Messer)

Hopefully going forward, you can use other 3rd party providers to help keep everyone "honest". I hope this doesn't derail your ambition.  This is just a fork on the road, you will drive around and past it and KEEP GOING!

Good luck and I hope things go well. 

Dont let Morris and his team off the hook though!

[Ginger Marcos]

I was speaking to Morris Invest and decided not to after I received no response to my request to actually visit Indy.  My advice is to SUE them!  They are ripping people off left and right and continue to post their stupid podcasts.  On camera, they seem like the perfect young couple and in reality, they are ripping people off.