Morris Invest Case Study

[Ian E.]

I want to apologize ahead of time for the long post but there are a lot of members asking questions about @Clayton Morris , with Morris Invest ( morrisinvest.com ) and not much information out there. I wanted to provide a case study on my time with the company and hopefully provide an unbiased “face based” documentation of my dealings with the organization.

In early July 2016 I heard about Clayton Morris, through his BiggerPockets Interview, which led me to the Morris Invest Podcast. I had bought a duplex a few months before and while it was a positive experience, traditional bank financing took forever so I decided to use cash for my next purchase. I spent a few weeks on vacation, listening to every Morris Invest podcast and over 30 of the BiggerPockets podcasts and decided I was going to buy another rental house.

When I got home from my vacation I looked on the Morris Invest website and couldn't find an available phone interview with Clayton for almost 3 months. I looked again a few days later and low and behold, a spot had opened up the next day. I immediately schedule the phone consult and impatiently waited.

I didn't end up talking to Clayton but I did get to talk to Dave (Client Specialist). He was courteous and intelligent and walked me through the process. I didn't get pressured to do anything and after our conversation I felt comfortable moving forward. Dave explained that he would send me details on a property and the first to claim the property would have the right to purchase.

The next day,I received a picture of a house in Indianapolis, with a sale price of $20k, projected renovations of $20k and projected rental price of $700 per month. I spent 24 hours trying to conduct my due diligence but by the time I was done, the property had already been sold to someone else. Two days later I received an email for a a $30k duplex with $30k projected rehab cost and projected rents of $1,300. I jumped on this deal and immediately go the house under contract.

The purchase only took a few days and by July 17, the house was mine. I was immediately handed over to Nicole, the Operations Manager, to start the rehab. She explained that 50% of the rehab was due up front, 25% after the crew was complete with half of the rehab, and the final 25% once it was complete. At first, email contact with Nicole happened very quickly, but as the renovations started it took longer and longer to receive a reply. I was able to get a scope of work (after a few requests), paid 50% of the rehab cost and everything seems to be going smoothly.

Aug 19 - I received my first set of pictures of the rehab and things look good. They crew built new kitchens, bathrooms, electrical, and replaced the flooring and new interior paint. I still haven't receive my deed or any official documentation that shows that I own the house other than a contract and purchase agreement. I also payed another 25% to continue the rehab.

Sep 24 - Received my second set of pictures showing the new plumbing and more of the interior. Everything looks good so I ask for some exterior photos and more information on the status of my deed and paperwork and am told the house should be ready in the next few days.

Sep 30 - have still not heard back from Nicole with the final pics of the rehab, status of the paperwork, and if we are ready for tenants.

So far, we have had a few hiccups and communication is getting slower and slower. We are over two months in and I do not know if the house is ready for tenants and I only have email contact information so I am in “wait mode”.

I will keep this forum up to date as I continue through the process so people can use it as a case study for Morris Invest. Please let me know if you have any questions.

[Ian E.]

13 Dec update:

Clayton contacted me to see if everything was going alright. This is the second time he has contacted me and each conversation has been helpful. It seems like Clayton is still trying to get his property management staff to rise to his expectations. For instance, in my most recent conversation with Clayton, he told me that both sides of my property were leased. This was great news but was a first heard for me. I immediately contacted my property manager to ask for the new lease. Evidently, the second unit was leased 12 days ago for the expected rent amount (which is great) but utilities were included(not so great). The reason this is a sticking point is that the property manager never asked me to accept a new tenant or if I was willing to pay for utilities. I now have to do some more research in the area but I am guessing that an Indianapolis winter will severely cut into the expected $650 rent for that unit (cut ROI from 16.6% to 13%).

I have two other properties, in other areas, and there is a constant conversations with the property manager when the unit is transitioning to a new tenant or undergoing maintenance (the rest of the year there is zero need for interaction, other than monthly statements).

I also received update pictures of the units and I am impressed with the interior rehab.  The house is very old so the exterior of the unit (especially the front) needs some real work before it is something I could proudly show off. I also received my first payment from my first tenant at the end of Nov (4 months after purchasing the duplex).

Although things have moved slower than advertised and communication with the property manager still needs some work, I am hopeful that we are over the rough patch and I will actually start to receive some cash flow.

[Ian M.]

Thank you Ian E. for posting another update.  I listen to the MorrrisInvests podcasts and I've spoken to Clayton, but it really is helpful to get an independent perspective.  An obviously unbiased one.  Much appreciated.  I'll wait to hear about an improvement in the property management, then will likely pull the trigger...and post my experience.  

[Eddie T.]

@Ian E. If you are paying for all of the utilities it may come out to $200 - $250 per month during winter for Electric and Gas depending on size of unit age and efficiency of furnace and other factors. But I would never purchase a property where I would have to pay for utilities it is just a bad idea.

[Ian E.]

Property manager responded to today's question immediately and informed me that utilities will be covered by the tenant. With that said, I now have a duplex, fully paid for, both units rented, a great interior and "egg" exterior. Now I just have to cross my fingers and hope things continue to move in a positive direction.

[Scott Scharl]

Anything new to report here, @Ian E.? Thanks again for starting this valuable thread.

[Ian E.]

Just received my first full payment with a full duplex (Novs payment was only with one unit occupied).  Numbers work out as:

Monthly Payment - 1300

Cash Flow - 867 (after management 10%, maintenance 10%, vacancy 5%)

ROI - 16.76% (this is after buying with cash)

I am going to try and season the property for the next 6-12 months and then pull my money out of the property. This should push my ROI considerably higher.

[Tyler Jahnke]

@Ian E. Loving the case study and updates! Glad to hear your property is fully rented and is cash flowing - although it took a little longer than expected.

[Tyler Jahnke]

If anyone here is interested in another account of my experience with Morris Invest you can follow along on my journey here:

https://www.biggerpockets.com/forums/92/topics/392...

I just closed on my first property with Morris Invest and will begin the rehab phase shortly. Happy Holidays!

-Tyler

[Jeremy Karja]

@Ian E.What is your ARV? What will the cashflow after expenses be when you pull your money out?

[Ian E.]

If I can get a loan for 75% LTV then I should be able to change my ROI to 40-50%. The sounds crazy high but only works if my maintenance costs stay at 10% with a 5% vacancy.

[Tyler Jahnke]

Hi @Ian E. - How has the past month since you received your first check gone?

-Tyler

[Ian E.]

Update:

I have now had two months with the duplex completely full. Both tenants are on one year leases so we will see how it goes. While the first few months of rehab were slow, everything has. When going fine so far.

Did anyone else on this thread end up purchasing? If so, how are things going?

[Donnie N.]

@Ian E. What was your all in cost on the duplex again? And what is the monthly rent for each of the units?

[Ian E.]

$60k for the purchase and rehab and each side is renting for $650 per unit.

[Eddie T.]

Ian E. what is your yearly property tax?

[Donnie N.]

Thanks @Ian E.! $1300 for $60k...doesn't sound bad. Looking forward to seeing how it performs over the next 8-12months. Keep us posted! 

[Ian E.]

Right now I am just crossing my fingers and hoping things go well. Luckily, the cash flow will allow me to prep for some maintenance once I have new tenants moving in.

[Adekunle Betts]

Just read... Please keep us updated

[Sean Gannon]

New to the forum, but read this and had talked to Morris Invest and thinking of using them. I have never done rental properties, but I want to get into real estate. The duplex is what I was looking for, and would love to hear more about it. Keep the posts coming. I learned a lot. Thanks.

[Jay Hinrichs]

@Sean Gannon   for sure you want to personally inspect anything your going to buy from this company prior to closing..  many mixed reviews and they seem to be focusing on new investor who may not know what they may not know with regards to a safe and secure rental investment

[Sean Gannon]

Jay Hinrichs thanks for the advice

[Jay Hinrichs]

@Sean Gannon  in addition some of the statements MOrris makes are just so out there as to wonder if he has ever really invested before.. some pearls.

1. low end tenants are much eaiser ot manage than A class tenants they are just happy to have a place to live.

2. Since they are just thankful for a place to live they take real good care of the home and stay for years.

3. many of the homes he sells are rented to doctors and nurses  LOL

4. homes are completely rehabbed... well that one has been debunked 20 times on BP its a joke.

Caveat Emptor to the tenth power.

[Sean Gannon]

@Jay Hinrichs  Thanks again for the tips.  Good to know.

[Michael Sarrail]

Sure would be great to hear the final outcome. Maybe even some pictures of the before/after.

[Account Closed]

@Ian E. How is everything still going? I'm curious. Interesting read...

I'm considering contacting MorrisInvest myself but have reservations about it. 

45k for a house sounds alittle "too" cheap :P