Morris Invest Case Study 2.0

[Tyler Jahnke]

Hello BiggerPockets!

I stumbled upon the Morris Invest Case Study by @Ian E. and am now inspired to document my current investment with the company. This is kind of a long post, but I hope you stay with me. Clayton Morris (founder of Morris Invest) has an amazing front facing impression with his valuable podcast (I listen to it everyday) and the multiple interviews he's had with reputable sources (BiggerPockets, EOFire). That's how I got hooked on the buy and hold model his company sells.

Even with all that exposure, and the fact that he's a TV host, it was hard to find and really dig into the details of his company online and there's not a lot of specific content on Morris on BiggerPockets. So here's what transpired:

November 12 - Had a scheduled call with Morris Invest. Thoughts: first, I thought I'd actually be on the phone with Clayton, but it was with Larry, who is an Acquisitions Manager. He gladly answered the 20+ questions I had as if he was reading a script. I get it, he gets the same questions all the time from new investors. Very friendly and easy to talk to. We ended up talking about a couple properties at the end of the 30 minute call and he said he'd email over additional details.

Couple days pass and no email from Larry regarding properties.

November 16 - I assumed I'd get an email from him within 24 hours maybe even 48 but nothing came through so I gave him a call. He explains he sent an email the same day we spoke. I check my SPAM folder, and sure enough it's sitting there. Can't blame this on Morris Invest, feel a little embarrassed, and assess the properties. One of the properties catches my eye:

Acquisition: $24,000 + Rehab: $15,000

Rent: $600

I do my research - LOTS of Google Street View, research on Zip Code, crime stats, Zillow for home value and comp values (I know, not the best) tax numbers. At this point I'm VERY interested and have cash ready.

November 18 - Another Call with Larry for additional questions on the specific property. I ask about everything from Inspection Reports, rehab details (I have specifics for what I want in a rehab), potential scope of work, etc. His general answer was: he'll have my answers by November 22.

November 22 - I follow up with Larry via email as he said I'd have final answers to my questions today.

November 23 - I receive an email from Larry stating the property I'm interested was SOLD over the weekend. He attaches another property in the email for me to look at. I am not interested as it sits directly next to a bar. He states I need to put a property under contract as soon as possible if interested otherwise it'll get picked up quickly.

Obviously, this was not the best example of communication, and set me a little off. I began to question investing with Morris Invest.

November 30 - I receive an email from Larry checking in saying he hasn't forgotten about me. He has some properties becoming available soon. I appreciate this communication and am glad he checked in.

December 5 - I get a property from Larry that catches my eye! $37,000 acquisition + $9,000 in renovations. Should rent at $750/month. I get introduced to Nicole, Operations Manager, I ask to put it under contract, but don't sign just yet.

December 5-7 - I send a couple emails to Nicole regarding the Purchase Agreement, but don't get any answers. I get them answered by asking a colleague who owns his own Realty company. I send another email to Nicole as I need my name revised and cc Larry on the email in for hopes of a prompt response.

December 8 - I sign the Purchase Agreement. Introduced to Danny for Insurance (answer three questions he sent via email) and Daniel for Title work (also answer 3 of his questions via email).

December 12 - I finalize Insurance on the property.

December 13 - Check in with Daniel as I didn't get any updates on closing or next steps after answering his initial questions on 12/8.

December 14 - I receive closing documents, wire instructions, and title work. Need some time to read over everything before signing.

December 15 - Nicole said I'd receive the Scope of Work before closing, but didn't yet, so I check in with her and get it.

December 16 - I send over closing documents, wire money.

December 22 (TODAY!) - I receive the final closing package from Title company with all signed documents. They're saying I should get the Owner's Title Insurance Policy and Deed via email in a couple weeks.

I also am now officially in the rehab phase. Nicole reached out with the Scope of Work and wire instructions. I pay 50% of rehab cost to start construction, 25% in 3 weeks, and the last 25% at completion of renovations. I responded back with numerous questions regarding the Scope as I really want to know where my money is going. I have not wired anything yet. The scope had a number of typos and unreadable line items. Hoping I get a response soon!

I'll keep you all updated!

[Jay Hinrichs]

@Diane G.  when Palo alto and the peninsula made their first run up in the mid 80s.. that's how we did a lot of deal sin P A and other high priced area.. we did equity share.

you had one investor with the cash.. the cash strapped but great job and income investor got the loan.. set up on a 5 year deal.. end of five years the owner occ either refied partner out or sold and moved on.. worked for everyone.  One of my Clients did a bout 30  of these.. Balget Singh she was one sharp cookie..

[Diane G.]

@Jay Hinrichs

Lol... Thanks for sharing.... Indeed there are tons of ways to make money in Bay Area, and honestly, way easier.....than OOS.....

[Jason L.]

@Diane G.

Ok, I'll look at Eden Cove...Don't want to live in Hayward myself though...haha...But it's all about how bad you want it right?

My issue with the Bay is that I can buy for myself and my employer will give me ~$450k as a no interest loan.  But, I only get to use it once and I have to live there.  If I buy something in the Bay and don't use it, I just lose it.  Can only be the first house I buy in the Bay...

[Jason L.]

@Diane G.

You don't know what the Classics in Newark are going for do you?

J

[Michael Wentzel]

@Tyler Jahnke

Thank you for sharing the journey. You are getting a lot of encouragement and criticism from both sides. But I appreciate you making a move and sharing it with all of us. If it works out, you will have a great cash-flowing rental. If it doesn't, you will have a ton of experience to do better on the next one. 

A little extra bonus is that you are learning with small amounts. You didn't spend $50,000 on some real estate course (I hope) and you didn't drop $150,000 into a property with no idea whether it would work or not.

Well done.

Mike

[Manuel Luz]

Not trying to hijack the thread but I have a phone call with Morris Invest today myself. Is there anything you guys are curious about you want me to ask Larry? 

[Jae Collins]

@Tyler Jahnke best of luck on your journey!

I am another recent entry into the REI endeavor courtesy of the Morris Invest podcast and YouTube videos. Did my homework and made my call last Friday. Along with the well documented red flags listed here I found my own during and after the call:

1. The house opportunity they sent me ("our most recent rehab") showed a sale in 2013 and active renting since (on Zillow). Looks like they had one renter for one year and another since. When I asked Larry (by email last Friday) if he was sure it was recently rehab'd due to the Zillow info and does it come with the renter, ... crickets...

2. Decided to check online with the Marion County Tax Assessor and found out the house is owned by the publicly traded conglomerate, American Houses for Rent. Why would Morris Invest be selling someone else's property? I would ask them this if they would respond to me.

3. Also on last Friday, I left message for their recommended insurance agent, Danny. Also crickets...

(End of Red Flags)

Erika, with the property management company, Oceanpointe, was pleasant, helpful and responsive. She sent me the requested sample leasing document within one business day (Monday).

Thanks for the sharing of lessons learned and experience in this thread. From it, I have begun the research on Memphis Invest and reached out to Chris by email last night.

Looking forward to establishing my path forward in creating my REI portfolio.

Best of luck to everyone and look forward to future interactions with all.

Jae

[Jay Hinrichs]

@Manuel Luz  you may ask him about PM

as this is the critical component.

there have been accusations that the PM company they are using is not licensed.. and that is illegal.

I would simply ask him for the name of the broker for the PM company and verify with the state that they are licensed.. you don't want unlicensed folks handling trust money and if its TRUE well one complaint would shut them down.

and this is bad for existing clients as changing PM mid stream with D class rentals like these are can cost owners a bunch..

What ever you do ,, I can't urge you enough to make sure you travel to Indy and look at the areas and the property your contemplating buying PRIOR to purchase.

[Eskiel Elanee]

Thanks to all for the useful info. ✌️

[Mastewal Gezahegn]

Originally posted by @Allen Harris:

I've been lurking in this thread since it started, and I really appreciate everyone chiming in helping to educate all of use newbies. I have been seriously considering Morris Invest for my first property purchase. I've had my consultation call, but I was bothered by the lack of follow-up on their end. Any contact I've had with them has been at my initiation, even though I told the agent I would be ready to buy at the first of the year. 

At this point, I'm thinking I should stay local. I'm in middle Tennessee, and there are plenty of homes in the $100k range within 20 minutes of my house. But the ease of turnkey is so freaking tempting! 

@Tyler Jahnke, thanks for letting us take this journey with you!

 Why not find a turnkey in Tennesse maybe a couple of hours drive. You could do that on the weekends.

[Mastewal Gezahegn]

Originally posted by @Account Closed:

@Diane G.

 

Please stop telling people to take a cash flow loss every month for the next 5 years. You might have been able to support it for years with your full time job, but there is no guarantee that @Tyler Jahnke can. 

You are extremely fortunate to see huge equity gains, but you cannot foresee the future 10 years from now. Telling Tyler that you will see $200K equity in 10 years is irresponsible and you might be sending the poor kid into bankruptcy. 

 Thank you. 

Jay and Diane G make good points on low-income home investing and tenant issues and how renters who pay $600 dollars for rent are one flat tire away from not paying rent so extreme vetting of tenants is a must. However, they fail to understand that almost 50% of Americans including those who pay in the $1200 and up for rent don't have more than a couple thousands of dollars saved up.

https://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-americans-dont-have-enough-savings-to-cover-a-500-emergency/#14af5aba4e0d

Also, it is not sound advice at least in my opinion to tell one to lose money on cash flow for years based on speculation. Not to mention $150 dollar per the door might seem like chump change but lose your job that can go a long way in at least feeding yourself and light grooming as you look for another job. I know many of you are balling out of control as they say but let us remember pennies make dollars.  

To conclude it seems the strategy of the OP is to buy many of these types of units to supplement his income until they grow to replace his wages. 

[Diane G.]

@Tyler Jahnke

How is rib?

[Manuel Luz]

Hey all, here's a quick summary of my phone call with Larry sorry it took a little awhile. Im just going to bullet point my takes on the calls for simplicity

• cash on cash  400 - 600 depending on how much in saving you apply for the property(most used 20% and goes up to 40%) 
• typically 3-8 weeks of rehab- light touch is 3-5 and heavy touch(electric plumbing, roof etc) 6-8
• properties are bought up 28k with an all in expense of 38 to 58k
• They invest in the northeast indy area, area codes are sent to me are 46201, 46202, 46205, 46208,46218,46219
• According to him the big industries around are construction yards, distribution centers and warehouses like Fed-Ex and Barns n Noble, and pharmaceutical companies 
• Crime rates are in a down ward trend murders per 100dz per 100,000dz  and robberies 40dz per 100,000. Forgive me if the syntax on these stats are incorrect as I've never really looked into these kinds of statistics or how they are presented.
• Lastly the property management company is Oceanpoint, he provided their address and a contact which I won't repost here but a google search shows them making some headlines in 2015

Overall he seemed like an OK guy. Not the most enthusiastic but if he was a full on telemarketer personality I would of been turned off as well. He didn't seem to appreciate my questions though and mentioned he gets "one of me" out of every 200 calls he does. He didn't seem super confident in the area when asked these questions and he himself doesn't live there. I forget if he said had at one point or not though. 

I haven't looked into the area codes and what those area's are like but it doesn't seem any direct information on where this company invests is in this thread so maybe someone else can take it further. 

[Diane G.]

@Manuel Luz

At some point, turnkey property going to exceed number of tenants.... if not already...

Ask @Abdul Azeez about his rental experience in Memphis.....

https://www.biggerpockets.com/forums/311/topics/410284-average-rental-time-in-memphis

[Abdul Azeez]

Originally posted by @Diane G.:

@Manuel Luz

At some point, turnkey property going to exceed number of tenants.... if not already...

Ask @Abdul Azeez about his rental experience in Memphis.....

https://www.biggerpockets.com/forums/311/topics/410284-average-rental-time-in-memphis

 Worst experience and I would not suggest for anyone to invest there.

[Amit M.]

good popcorn thread...

[Diane G.]

still waiting for @Tyler Jahnke to tell us about the ribs....

[Andrey Y.]

Originally posted by @Par Attaran:

Checked out the most recent Podcast and Clayton is pretty much calling out BP now. 

"Don't listen to people on internet forums, they sit around typing all day with out taking action" 

Hahahahhahahahaha

 What's the name of the podcast/episode? I want to have some fun :)

[Tyler Jahnke]

Hello BiggerPockets!

I had a great time in Indy earlier this month and met a ton of great people on the ground. I walked through my property and have keys as well. I then spent a week traveling for work, followed by another busy week full of work events.

@Diane G. - didn't get a chance to eat ribs!

I'll provide detailed updates this weekend!

-Tyler

[Abdul Azeez]

Originally posted by @Account Closed:

@Abdul Azeez- It's your money and your decision, Please don't blame markets.

 Your can have your opinion and I can have mine.

[Abdul Azeez]

Originally posted by @Account Closed:

@Abdul Azeez- Certainly we agree to disagree. Good luck with Indy Investing.

 Yes that's obvious.

[Tyler Jahnke]

Hi BP,

As you know, I took a trip out to Indianapolis, Indiana from March 3rd through March 5th. I can happily say I accomplished all the goals I prioritized on this quick 48 hour trip:

-Meet General Contractor and Property Management company - ACCOMPLISHED

-Visit/Walk-Through Property - ACCOMPLISHED

-Get property keys in my possession - ACCOMPLISHED

-Build relationships on the ground in Indy for future investments (scheduled 6 meetings with various investors, turnkeys, project managers, realtors) - ACCOMPLISHED

As a quick recap, here are a number of photos AT ACQUISITION in December:

Here are first-hand photos I took personally of the property in March:

A day after I left, they brought in a load of gravel for the the driveway and replaced the dented and un-operational garage door.

Stay tuned for more updates. Hoping to get this place rented by the end of the month and see my first rent check!

-Tyler

[Adekunle Betts]

@Tyler Jahnke 

Out of curiosity.. Did you pay full cash on this property or financed it ?

[Brian M.]

@Tyler Jahnke

Thanks for the update, Tyler.  How did you feel overall about the rehab?  What about the neighborhood in general?  

[Tyler Jahnke]

Hi @Adekunle Betts - I paid cash and did not finance.

-Tyler