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

[Dave Pockets]

Originally posted by @Maria Dantas:

Wow, this post has really generated a lot of feed back! Thanks all for the constructive comments!
I am a first time investor, with my fiancé, we thought since this is an affordable property, this could be an entry into real estate investing, and boy what a lesson we learned! So this is at least a good experience. Expensive, but important lesson going forward.
So here’s the update:
We contacted Ocean Point the same day we discovered the house in that condition. I, as usual, could not get in contact with the person in charge, or any body that could help me. Go figures, I thought. Next day after my initial post here, we got a call back from Ocean Point. On that call, we talk to them very gently, with a purpose, and calmly explained that we haven’t had the tenant in 6 month. A surprising comment that came back was we had tenants in our property since the middle of March, and that we should have money coming into our account very soon. (It didn’t, yet, btw). Of course I complained I had never received a lease, or had been notified of property being rented. And the reported amount of rent was much lower than what was presented in the pro forma. OP’s argument was the property wasn’t renting so they had to lower the rent (but of course, the house hadn’t been rehabbed properly! Back to this later). We waited for them to finish talking to inform them that we were actually in town and had drove by the property to find tenants living there reported for more than 4 months, and in very questionable conditions. OP said they had no information about such a thing and that they would check and let us know…which they didn’t get back to me.
So the facts are, 1. they didn’t notify the owner for the supposed “lease” and the new tenants, 2. lowered the rent without notice, 3. the house looks abandoned, 4. and the story doesn’t check out with the tenants who supposed live there for more than 4 months. It’s been exactly month and a half now and no rent has come in. It’s another thing we’ll have to wait and see. Looking at the condition that the house is in, no wonder one would had to drop the rent. It looks like an abandoned house, with paints falling off everywhere, broken glass window patched up with some wooden board, unpaired and crudely nailed in railings, etc. The pro forma picture (which is the before photo) looks much, much better than the current “rehabbed” one! And for those who maybe wondering why I didn’t ask for the before and after pictures, of course we had asked. But there were supposedly waiting list for the pictures to be taken, and most likely you wouldn’t get those before and after photos. So MI asks you to just trust them, and only get very low resolution photos of what seemed like a 80% rehabbed (interior only) pictures. Now I know why.
We contacted Clayton about their extreme negligence with rehab not being done in the property, and all the problems with OP. The response we got next day (not Clayton) was that they would like to move us to Blue Sky, and get our property back on track. They would assess a crew to complete whatever it's left of the rehab work. Ending the email with: "after that get the property market, tenanted and cash flowing”. No explanations, no apologies, just the same pitch from 6 month ago. While our cash it's been invested, taxes and insurance are being payed, and not a single check from rent has been received, due mainly to rehab work not being done and negligence by the property management which he vetted as “turnkey.” This, being
We understand now that this is not a turn-key company. Proper turnkey is buying a finished product, ready to rent. But with Morris Invest, buyers are paying both the product and the rehab cost at closing, and no proper work is being done for the rehab and marketing it for rent.

Following a lot of the great advice we got here, our next step it's to figure out the best way to reduce losses, whatever that may be. This was an expensive lesson, but important one for us. While in Indianapolis we took our time to meet with few people that we got good reviews here on BP, that would help us solve this nightmare of situation, and also saw the market in person.
Just to clarify few things: When we purchased that property we weren't aware of BP, and didn't know about all the other nightmares stories that were already going on with Morris Invest. There is no shame for me in admitting we are beginners, and we are not very familiar with the ins and outs of Real Estate Investing. I trusted too much, and from a reputable source, I thought, from a public figure who would not want to damage his reputation, and “not over analyze and just take action,” as he says. As someone said in the post above, maybe we will see a headline “Former Fox News Host Indicted in Massive Real Estate Scam”?

Thanks you so much everyone for the kind words and advice (also thankful for the tough love). We will keep everyone posted!

Are you still doing business with MI and I think you should try using social media to get the word out.  Judging from your IG accounts both under mariamariadantas and mariamaria.dantas you have many followers to reach, but the profile says you're in Seoul, S.K.?  Since you started a youtube channel, post a vlog about your MI experience.

[Son D.]

@Chris Nelson your experiences feel familiar. I've also seen all MI youtube videos. However, if you watch his videos again knowing all the things that happened, especially within the last month, you will see it in a different light.

Remember all those videos of him telling people to use their 401k and ira to buy properties? Yea lots of people have done that too.

[Mike Siers]

Hi Maria,

We are victims to Morris Invest as well. The more we learn about the situation, the more lies and fraud we uncover. We have contacted a class action attorney who has already reached out to Morris Invest. Morris Invest is claiming no responsibility. Instead, they are putting all liability on OceanPointe. However, we found an area to counter their attempt to assume no liability. Clayton Morris is the one who signed the purchase agreements, which counters their claim of no involvement. We believe this constitutes fraud on behalf of Morris Invest and Clayton Morris. I am reaching out to others who invested in property through Morris Invest and have an interest in joining in on a class action lawsuit. We already have many people on board, and I want to know if you are interested.

Nothing would be required from you in terms of finances or involvement. You would simply be part of the lawsuit and subject to any awards. If you can verify that Clayton Morris signed your purchase agreements, please let me know. If you know of any other people in a similar situation, please help me make contact with them. You can contact me through here initially. Happy to share my details with you if you are interested.  

[Jay Hinrichs]

Originally posted by @Mike Siers:

Hi Maria,

We are victims to Morris Invest as well. The more we learn about the situation, the more lies and fraud we uncover. We have contacted a class action attorney who has already reached out to Morris Invest. Morris Invest is claiming no responsibility. Instead, they are putting all liability on OceanPointe. However, we found an area to counter their attempt to assume no liability. Clayton Morris is the one who signed the purchase agreements, which counters their claim of no involvement. We believe this constitutes fraud on behalf of Morris Invest and Clayton Morris. I am reaching out to others who invested in property through Morris Invest and have an interest in joining in on a class action lawsuit. We already have many people on board, and I want to know if you are interested.

Nothing would be required from you in terms of finances or involvement. You would simply be part of the lawsuit and subject to any awards. If you can verify that Clayton Morris signed your purchase agreements, please let me know. If you know of any other people in a similar situation, please help me make contact with them. You can contact me through here initially. Happy to share my details with you if you are interested.  

seems to me Morris videos are evidence enough how else would you have found this.. also ask your attorney about a civil Rico.. that could move to a criminal rico I mean monies were flat stolen.. its wire fraud  at its finest..  keep pounding away.. Morris is still selling and telling the same stories.  

[Colin Zhu]

@Mike Siers Please message me regarding your situation. I have some information to share with you.

[Marquis Washington]

WOW

[Paul Ewing]

Saw this piece on Market Watxh. It is mostly about Rootstock and similar, but it had a mention of how small local turnkeys could go bad with a link back to one of the BP threads on Morris Invest.

https://www.marketwatch.com/story/the-new-housing-...

[Jay Hinrichs]

Originally posted by @Paul Ewing:

Saw this piece on Market Watxh. It is mostly about Rootstock and similar, but it had a mention of how small local turnkeys could go bad with a link back to one of the BP threads on Morris Invest.

https://www.marketwatch.com/story/the-new-housing-...

 for a national article not bad on balance.. and pretty accurate I think most folks on BP understand you cant buy a rental house in cash flow markets and exit within 5 years without taking a capital loss. its a long term play.. let your tenant pay your mortgage off that's been the basis of rental investing since day one.. get those suckers paid for let someone else do it.. positive cash flow is just icing on the cake.

[Justin Murphy]

Technology has benefited many industries through improvements in efficiency and transparency but real estate investing has always been, and will always be a local business. Institutional investors can make markets "local" with reliable partners and hefty travel budgets. That's not economic for most individual investors. You can't change a toilet or fix a leaky faucet from 2,000 miles away, at least not yet!

[Paul Ewing]

Originally posted by @Justin Murphy:

Technology has benefited many industries through improvements in efficiency and transparency but real estate investing has always been, and will always be a local business. Institutional investors can make markets "local" with reliable partners and hefty travel budgets. That's not economic for most individual investors. You can't change a toilet or fix a leaky faucet from 2,000 miles away, at least not yet!

 I think that part is the earliest to automate with technology. Have an online form or virtual assistant take the repair order. Have it automatically be routed to the appropriate service person or just call them and be done with it. I'm a small time landlord with only ten properties and I am almost there. I kinda like not having to do the hands on repairs if I don't want to and all my properties are within 20 miles with most within two miles of my house.

The real place where local knowledge is important is on the initial buy. You need to know about the area and the trends that are going on.  Is the house inexpensive because it is an ex crack house in a neighborhood that no one who you want as a tenant wants to rent in or is it just under prices or in general not an expensive area. 

People diss inexpensive houses, but they are not all bad and not all in war zones. I can't believe I just got an offer accepted on a house for $69,900. I have never spent that much on a house. Most were in the $25k-$55k range all in.  They are almost all in great areas, rent for $750-$1200 and I would not have a problem living in any of them. But then I wouldn't pay $30k much less the $60k-$80k asking prices for some houses not ten miles from mine.

[Brian Freeman]

I would very much like to be a member of the class action. I was defrauded by Clayton Morris and Oceanpointe.  And I have a very solid paper trail of evidence.

[Jay Hinrichs]

Originally posted by @Brian Freeman:

I would very much like to be a member of the class action. I was defrauded by Clayton Morris and Oceanpointe.  And I have a very solid paper trail of evidence.

 RICO  I think   skip the class action.. 

[Brian Freeman]

Originally posted by @Jay Hinrichs:

Originally posted by @Brian Freeman:

I would very much like to be a member of the class action. I was defrauded by Clayton Morris and Oceanpointe.  And I have a very solid paper trail of evidence.

 RICO  I think   skip the class action.. 

 I spoke to a couple CA attorneys and they don’t think RICO is the way to go out here, at least in this state. I just want restitution for myself. For others and the protection of the public I hope there are criminal charges brought. 

[Christopher Lombardi]

I never trusted Clayton Morris just because he seems to treat his wife like garbage when they are on the podcast together.  Maybe not blatantly, but did anyone else get the sense there is a lot of underlying animosity between him and his wife?  Mostly just on his part.  But, he is very rude and condescending to her.  I never liked him or trusted him because of that. 

[Jay Hinrichs]

Originally posted by @Christopher Lombardi:

I never trusted Clayton Morris just because he seems to treat his wife like garbage when they are on the podcast together.  Maybe not blatantly, but did anyone else get the sense there is a lot of underlying animosity between him and his wife?  Mostly just on his part.  But, he is very rude and condescending to her.  I never liked him or trusted him because of that. 

 the main thing with Morris is that his theories and representation of low end rentals is all a pipe dream .. not sure where he thought that stuff up.. but he sure took advantage of those that were not savvy to the risks of low end rentals.. even if they did not flat out steal so much money these investor would never have had the consistant returns he touted.. just not possible in those asset class's unless you live there and run them yourself

[Curtis Thompson]

I am struggling to get startup funding for my insurance rehab business I am from Indiana and have alot of connections with property managers and management companies from my 10 years as a water damage/carpet restoration technician. I would love to speak with you and see if we can help each other out and given your situation maybe you would be willing to give me an opportunity to help you out of a bad situation

[Dennis M.]

@Jay Hinrichs

I imagine all the doctors principles and nurses who rent from Clayton would disagree lol I remember hearing on one of his 10,000 videos he posts up about how he thinks it’s an unfair stereotype for lower priced asset tenants to be falsely labeled . He defended them by saying these are hard working respected professionals he rents to that like to relax and have a glass of wine on their balcony after a hard days work ! maybe his “professionals “specialize in urban pharmaceuticals and after a hard evening of hustling and running from authorities they like to smoke a little crack and sip on a few bottles of mad dog on the front porch instead lol maybe when he said “doctor”he actually meant rappers -like DR .Dre ?

[Wesley W.]

@Dennis M. Ha ha, yeah...he called them, "honest, hard working, salt of the earth people."

Many, no doubt, are - but like what was previously mentioned this is an asset class that is not for the inexperienced nor for the faint of heart in many cases.

[Steve K.]

@Jay Hinrichs

@Maria Dantas

Action in Indiana courts: suits moving forward, case files available on the court's website: https://public.courts.in.gov/mycase/#/vw/Search (enter Clayton Morris in the search).

I just binged and read most of the available documents. Complaints state plaintiffs were deceived and harmed by Morris Invest. Purchase contracts were signed by Clayton Morris. Oceanpoint/Indy Jax was the true seller of the properties and also was later contracted to rent and manage them (or Blue Sky, Boardwalk, etc.). Buyers received the warranty deeds from Oceanpoint/Indy Jax conveying ownership despite contracts being with Clayton Morris and payments made to Morris Invest. There weren't any assignments. 

Purchase agreements are available as exhibits and they are just awful: no owner listed, no assignment, only Clayton's signature even though he was not the property owner or a licensed broker. The selling broker line is blank, seller real estate license # line is blank, legal description: blank, earnest money: $0, financing, inspection, insurance sections all blank (only parts filled out are sections that benefit the seller). Don't see how fraud gets any more fraudulent.    

From reading the complaints, plaintiffs allege that Clayton made oral/express contracts and presented marketing materials that promised his company would rehab the properties as included in the sale price but the properties were never rehabbed. Then months later he or his representatives told the plaintiffs that the properties had been rehabbed and rented to tenants when they were actually vacant and collecting fines from the city. Some plaintiffs received "rent checks" from tenants that were fictionalized and were also sent leases that were forged. Morris Invest videos are also referenced in the complaints as oral contracts and attempts to deceive and induce fraud.

One complaint states that the Morris Invest house had actually burned down 4 days PRIOR TO CLOSING and that this wasn't disclosed to the buyer before closing or during the months after the sale. Only when the buyer received a letter with fines from the city saying the burned home would need to be demolished did they learn about the fire. The property managers put in place by Morris had been withholding previous letters from the city and assuring the buyer everything was going according to plan.

Opening up the documents in the case file I saw that on 3/11 a motion to dismiss was granted to Oceanpoint in one of the suits because Oceanpoint doesn't appear on the contract. All other motions to dismiss have been denied or are still pending. The one that was granted states only Oceanpoint is dismissed, not the other defendants (Clayton Morris, Morris Invest plus reps and agents for MI named personally). So it's looking like CM's having a hard time shedding blame with his signature on the contracts and his face in the videos promising turnkey investments that ended up being vacant economically obsolete or literally burned down houses. 

I don't know any of these people or have any involvement or inside knowledge, just going off what I have read on here, watched on the Morris Invest youtube channel, and now read in the case files. 

The different suits vary by case but allegations include many counts of fraud, fraud in the inducement, breach of contract, promissory-estoppel, quantum meriut and unjust enrichment, business opportunity deception, and offense against property. Jury trials have been requested.

I'm actually surprised there aren't more suits because we know there are several hundred victims (and counting) and I could only find a handful of suits. Perhaps more lawsuits are in the works, or a class action? Perhaps some suits have already been dismissed/settled out of court and these ones will be too? I have no idea. If a criminal case isn't also underway I'll lose all faith in the justice system. 

I also looked up the property where the summons/subpoena was sent that was also listed as the main defendant's address: a 6,500ft2 residence in NJ. It is currently listed for sale for $1.5M. It's a nice house, I recognize it from some of the youtube videos. The saga continues...

@Tyler Jahnke

@Colin Zhu

@Jeremy Z.

[Lam N.]

I'm in the Indy market.  I buy my own properties (in person), have full time employees (that I manage in person) to rehab those places, vet potential tenants myself (in person), show the rental units to the potential tenants myself (in person), and manage the properties myself (in person).  Yes, part of the game is you gotta put in a little effort and get your hands dirty.  

I just binge-read through all 12 pages of this thread.  I can't help but notice all the people getting scammed are out-of-state people who thought investing is as easy as putting money in and watch the riches come rolling in.  No effort needed.  

Morris sold a pipe dream.  Ask yourself this question.  Have you ever had anything in your life that easy?  This isn't a rich dad poor dad thing.  This isn't a real estate investing thing.  This is purely about a bunch of people who thought they could do absolutely zero work and call themselves "investors".  

Hopefully, people can learn from this.  Podcast gurus are almost always fake gurus.  You want to learn from real gurus, seek out people who actually do this for a living and succeeding.  

I am just reminded of a recent inquiry.  An acquaintant asked me which youtube guru he should be listening to because he and his fiance want to become investors.  He knows that I've been an investor for a while and is FI because of it.  In other words, he puts more trust in these youtube fake gurus  than the person standing in front of him who has achieved FI and actually has my own operation going on.  Think about that for a second.

As long as there are people wanting something for nothing, there will always be fake gurus out there selling pipe dreams.  And no, real people who know what the hell they are doing aren't holding seminars and such.  Because they are actually doing it instead of selling you tickets to tell you they are doing it.

Added by edit.

What is my experience level?  Earlier this year I bought a house that had no electric and plumbing to speak of.  It was one of those boarded up houses that you sometimes see.  My people did the following: installed new meter box, rewired the entire house with almost 2,000ft of wires, excavated and connected completely new waterline from the water meter, connected completely new sewer line, replaced all the windows, new sidings, brand new kitchen, etc.  There is now a family of 5 living there.  And yes, we pulled permits for everything.  The city gave us all clear.  This was one of 6 units I bought and rehabbed this past year.

Would you rather learn from someone with such experience level or some youtube personality out to get your money? There are many like myself. Stop paying for pipe dreams and actually seek out people with actual experiences to learn about REI. Stop making scammers like CM rich by giving them your hard-earned money. Real investors will genuinely want to help you learn and guide you.

[Anthony W.]

@Maria Dantas Sorry to hear you are going through this.  I was actually considering going through Morris Invest, but will make sure I take your story into strong consideration.  Hopefully you can get this figured out, definitely a tough learning experience.

Thanks for sharing!

Anthony Ward

Seattle, WA

[NA Na]

You all might be interested to know Mr Whalen has been indicted by the DISTRICT COURT IN New Jersey. I hear he is also facing eviction and along with his live in partner Natalie Bastin and Whalen declared bankruptcy.