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#2 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Oakland, CA
- 638
- Votes |
- 340
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Morris Invest Case Study 2.0
#2 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Oakland, CA
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!
No need for a crystal ball with these MidWest cash cows. These properties work. Equity growth is just reinvested cash flow and much easier to predict then appreciation. Yes there will be maintenance and vacancy but that can be mitigated by just selling the property with owner financing at a later date.
In the example above I would guess the taxes and insurance are about $150 a month. You could sell the property with owner financing for a P&I payment of $600 a month at 9%. If the all in cost was 45k the sale price would be around $74,596,12 (30 year Am). Because the sale price is more then the loan amount the yield on those numbers comes out to 15.86%.
At 15% you will double your money every 5 years or so and have a second property in 5 years.
Going forward
Year Properties Monthly Payments Received
1 1 $600
5 2 $1,200
10 4 $2,400
15 8 $4,800
20 16 $9,600
25 32 $19,200
30 64 $38,400
Sure they are not glamorous and there will be some bumps along the way but if you want to build wealth the old fashioned way, slowly, this is one way to do so. If you throw in some additional capital along the way you can accelerate the process, a lot.
#2 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Oakland, CA
- 638
- Votes |
- 340
- Posts
#2 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Oakland, CA
@Diane G. - I joined BP to be a part of a supportive/interactive/knowledgeable real estate community. I get it...you've stated it multiple times...you don't agree with my strategy. And it'll be years until I can conclude if I made the right decision on this property. But, there's no going back!
Thanks for your positivity. I wish you the best of luck in your investing.
-Tyler
I am not trying to convenced you one way or another..... I am trying to make a point for those who are considering buying OOS... So no need to take it personally....
@Bob E. I like the thought process. Getting tired of dealing with maintenance and vacancy on my own properties.
Do you find that seller finance works best on lower priced properties (under 50k)? If this property was valued at 100k, would you have the same market for buyers? Banks will provide traditional financing for properties over 50k, assuming the borrower can qualify. Maybe that last point is the distinction and I answered my own question.
I imagine that lease options might be another valid exit strategy, in which your tenant has more skin in the game so they take better care of the property.
@Tyler Jahnke There are many here that value your time and energy spent on these updates. Keep up the good work.
Originally posted by @Tyler Jahnke:
@Diane G. - I joined BP to be a part of a supportive/interactive/knowledgeable real estate community. I get it...you've stated it multiple times...you don't agree with my strategy. And it'll be years until I can conclude if I made the right decision on this property. But, there's no going back!
Thanks for your positivity. I wish you the best of luck in your investing.
-Tyler
Yes, Tyler, thank you so much for starting this thread and keeping everyone posted. I’m sure many will agree that this has been tremendously helpful and very interesting to follow. Please keep it up and let us know how it goes. It sounds like you’re starting down a great path. There are a lot of helpful people on here. Don’t let the “know it alls” and “ that ain’t going to work” types distract you. Cause how many times does someone need to state the same “point” before they feel validated? Maybe that’s something for them and their Facebook therapist to workout. : )
Thanks again Tyler! Looking forward to the next update.
Oh well, it is nice of @Tyler Jahnke to post this thread, I enjoy reading all the updates for one...
That said, if someone (anyone for that matter) has to feel offended simply because I came out and said this is not going to work over long haul (my view, and I don't feel ashamed to say it), then you need to ask why you feel that way.....
You can come and tell me that investing in A+ location in SF is not going to work, and I guarantee you I won't be offended... I will be amused... End of discussion...Happy Sunday....
And I should also that I am not opposed to all C class investing... I do have my doubts on single property hundreds of miles away, turkey....
@Diane G. You could start a new thread instead of hijacking @Tyler Jahnke's thread.
y@Todd Krzeminski Yes. This strategy works much better either the lower price point homes.
This is a very informative and inspiring thread with a lot of knowledge for newbies like me. Thank you all.
Hey Tyler,
Any updates on this thread? I am considering Morris invest myself and would really appreciate it if yo u can share your experience since then. Especially regarding the estimated rehab cost vs. the actual cost that you ended up paying for.
@Mohamed Tamraz, welcome to BP! This is a huge thread with a pretty wide and wild mix of comments and updates. Tyler has given several incredible updates over the past several months and as recently as three days ago. If you're curious about turnkey or Morris Invest in particular, be sure to check out all 15 pages of this thread!
@Mohamed Tamraz, My wife and I visited Morris Invest's operations in Indianapolis last month. PM me for details.
yes, I just realized that there were updates in the thread that I missed, thanks!
@Mark Whitted Thanks Mark! Will Pm you.
@Mohamed Tamraz - Search BP for Morris Invest and you will find many threads. Please read the thread carefully on cost vs quality.
Good Luck Investing
Vivek
@Todd Krzeminski, Yes, Seller finding works better on the lower price point properties, under 50k. Properties will find buyers at any competitive monthly payment. Mot buyers think in terms of their monthly payment.
These are going to be buyers with scratch and dent credit.
Tyler Jahnke - I actually bought one property through Clayton before seeing this thread. Thank you for providing a light at the end of the tunnel as I've been a bit astounded by the lack of communication- and not just that, but the inability for the ops manager to provide an update by the date they say they will.
So my question to you is would you buy another through Clayton? Are you looking elsewhere? I have plans to purchase a stable of these cash cows if it makes sense, but this thread does give me pause, especially as I'm sitting on another lump of cash ready to invest in my second property and want to make sure it's going towards my goal and not away from it.
To be honest my hope is to eventually get a team on the ground in some city so I could be the beneficiary of the improved equity by renovating rather than paying it to Clayton, but in the absence of time / ability right now and wanting to get cash flow going Im willing to pay for a (good) service to help me accomplish my goals.
First, thanks again to @Tyler Jahnke for the continued updates on this experience! Very happy to see that you're not allowing the negativity (or unsubstantiated criticism/naysaying) to get in the way of your experience.
Contrary to some of the garbage and unsubstantiated bashing regarding @Account Closed' turnkey operation, my experience thus far has been one that inspires confidence rather than caution. Though I was not quick enough on the contract review/signing process to take the first property presented to me after speaking with James from Clayton's team, I had substantial back and forth both with Clayton and some other Morris Invest team members that was universally positive. As a lawyer, my inclination to read and digest the contract of sale brought a number of questions to light that I wanted to clarify before proceeding with the deal. Admittedly, my approach to these questions was more along the lines of a conversation I would have with a lawyer representing the party on the other side of the deal but much to Clayton's credit, the seeming complexity of it didn't get in the way of what was his genuine desire to make a deal that would be fair to -- and on terms that would be agreeable to -- both of us. I cannot speak more highly of the professionalism all of the Morris Invest folks demonstrated throughout what ultimately did not amount to a consummated transaction. It is precisely because of that professionalism and because of how obvious it is that Clayton cares about providing his clients a positive experience and delivering on the promise of single-family homes for wealth building that I would choose to work with Morris Invest in the future.
If there is anything that the BP community can take away from this thread and from Tyler's experience acquiring his first property through Morris Invest, I hope it is that despite a few bumps in the road and a hell of a lot of doubters along the way, Tyler ended up with exactly what Morris Invest marketed to him: a cash-flowing property!
Anyone getting into the REI game with the expectation that any aspect of the experience will be 100% seamless or that every one of the many people involved will always perform perfectly needs a reality check: at the end of the day, we are all small-business owners interacting with other small-business owners to provide housing to the market of renters. That includes Clayton and his team at Morris Invest as much as it includes everyone here thinking about how rental real estate can help them meet their financial goals. Unless you're ready to pack it in when your first renter points out that you were slow to respond to an issue or missed the mark in some other small way, you need to ask yourself why Morris Invest should be judged only on the petty and relatively insignificant issues that some have cited throughout this thread rather than on the fact that the end result is a happy client getting the benefit of the promised cash-flowing property.
@Nicholas M - Was your comment in direct response to my above response? There's a long list of things here that could be positive, neutral, or negative towards Clayton, and I have no information to determine one way or another whether or not I will have what they promised me - and like Tyler experienced, I too continue to have faith that Clayton and his team should be able to get me this one property up and running and hopefully consistently rented for. I am not giving up hope yet, and like this thread showed, it worked out for this one house, at least for now and time will tell on the long-term side of it - which is what I'm looking for. I've emailed back and forth and had some conversation with him and by all accounts appears to be someone who is passionate about his system and believes it will work for me and seems to be working for him - so he's had to talk me off the ledge a couple times already. It's not so much as the end result, but also how you get there too and the customer experience along the way. As expected, my interaction with Clayton has been great, but followup with the boots on the ground is spotty at best which is where the frustration comes from. Since I'm funding the rehab I do feel entitled to understand the timeline and get some level of updates as we go because let's be honest, I'm a planner and would like to plug in when I'm going to get that first rent check and start building towards that next one.
But as you stated, you didn't end up buying a house and going through the process that Tyler went through, or what I am going through now, so how are you to speak on actual experience other than what they said they'd do while trying to get you to close a deal? I appreciate you chiming in, but it feels hollow coming from someone who has only 3 posts from basically an anonymous account who really doesn't have first hand experience post sale. If I'm wrong here, I'm happy to put my foot in my mouth and admit when I'm speaking out of turn.
The whole point of my post was to reach out to Tyler and see if he'd be willing to share his honest feedback with me. Obviously I'm all in on this first house and I'm rooting like heck for Clayton's team to produce a winner for me, but as for my second, third, fourth...etc.? I guess I should have just shot him a PM instead...sorry if I'm stirring the pot and taking away from the conversation.
Originally posted by @Andrew Buchanan:
@Nicholas M - Was your comment in direct response to my above response? There's a long list of things here that could be positive, neutral, or negative towards Clayton, and I have no information to determine one way or another whether or not I will have what they promised me - and like Tyler experienced, I too continue to have faith that Clayton and his team should be able to get me this one property up and running and hopefully consistently rented for. I am not giving up hope yet, and like this thread showed, it worked out for this one house, at least for now and time will tell on the long-term side of it - which is what I'm looking for. I've emailed back and forth and had some conversation with him and by all accounts appears to be someone who is passionate about his system and believes it will work for me and seems to be working for him - so he's had to talk me off the ledge a couple times already. It's not so much as the end result, but also how you get there too and the customer experience along the way. As expected, my interaction with Clayton has been great, but followup with the boots on the ground is spotty at best which is where the frustration comes from. Since I'm funding the rehab I do feel entitled to understand the timeline and get some level of updates as we go because let's be honest, I'm a planner and would like to plug in when I'm going to get that first rent check and start building towards that next one.
But as you stated, you didn't end up buying a house and going through the process that Tyler went through, or what I am going through now, so how are you to speak on actual experience other than what they said they'd do while trying to get you to close a deal? I appreciate you chiming in, but it feels hollow coming from someone who has only 3 posts from basically an anonymous account who really doesn't have first hand experience post sale. If I'm wrong here, I'm happy to put my foot in my mouth and admit when I'm speaking out of turn.
The whole point of my post was to reach out to Tyler and see if he'd be willing to share his honest feedback with me. Obviously I'm all in on this first house and I'm rooting like heck for Clayton's team to produce a winner for me, but as for my second, third, fourth...etc.? I guess I should have just shot him a PM instead...sorry if I'm stirring the pot and taking away from the conversation.
Hi Andrew -- no, my post wasn't in direct response to yours at all; your post seems to be the exception for this thread rather than the rule. Having gone through all of the posts, I'm pretty sure you are among only a handful of posters (@Tyler Janke aside) who is commenting based on actual experience with @Clayton Morris rather than from pure peanut-gallery speculation and negativity. I think your post is valuable feedback consistent with the spirit of this thread in that it indicates what some of your pain points are/were so that others can both make informed decisions about their own investments and also so that the Morris Invest team can continue to hone their services to be the best they can be. The bigger issue is not that Morris Invest (or any turnkey provider for that matter) is imperfect because we know that they are even if we pretend that we expect perfection; rather, the bigger issue is that the spirit of many comments -- yours excluded -- is less and less about highlighting the positive aspects of individual experiences with Morris Invest and more and more in the spirit of "told you so" from people who haven't had any personal experience working with Clayton's team at all.
While you are correct that I did not purchase the property presented to me (as I said, I did not return the purchase agreement quickly enough as I was reviewing the terms and wanted some further assurances and clarifications), I still feel that my interactions with Morris Invest in that process provide me a legitimate basis on which to provide feedback and my impressions. Importantly, as I noted, the experience I had even in a process that did not result in a consummated transaction was a positive one and makes me feel comfortable about continuing to work with Morris Invest for future opportunities. I tried to make clear that my comments and opinions come from that perspective rather than from the perspective of a person who has purchased properties from Clayton. Regarding the assertion that my account is anonymous, the most I can say is that everyone on BP has to start somewhere and one can't have 1,000 posts without first having had 1, then 2, then 3, etc. Your point, though, is valid and worthy of being addressed.
I like what you said about feeling entitled to consistent information about your investment and I agree wholeheartedly with that. To summarize the position I'm taking in this thread (and the impression I have gotten from Tyler's series of posts and also from your original post and response to mine), though the first purchase acquired from Morris Invest may have been imperfect, those experiences are areas for improvement rather than reasons to flush future opportunities down the drain. If we're all being honest (after having interacted with Clayton in this process), it is indisputable that Clayton abides by the "continuous improvement" principle: while one may never reach the point of perfection, that's no reason to settle for "good enough" but instead to constantly take a step back to find the areas in need of improvement and to implement improvements that move the experience closer and closer to the ever-elusive "perfect" state.
^ this dude just spent 30 minutes writing a review for a company that he never hired.
@Tyler Jahnke and @Andrew Buchanan's review of Morris Invest is probably the most valuable, considering they actually USED Morris Invest, purchased properties from them, and went thru the rehab process, etc.
@Nicholas M.'s review of Morris Invest is like reviewing Pizza Hut based on the phone call to order, and then saying they're awesome at pizza..... you need to wait for the delivery and actually TASTE the pizza before you can review.
Freakin lawyers...always wasting our time.
Originally posted by @Account Closed:
^ this dude just spent 30 minutes writing a review for a company that he never hired.
@Tyler Jahnke and @Andrew Buchanan's review of Morris Invest is probably the most valuable, considering they actually USED Morris Invest, purchased properties from them, and went thru the rehab process, etc.
@Nicholas M.'s review of Morris Invest is like reviewing Pizza Hut based on the phone call to order, and then saying they're awesome at pizza..... you need to wait for the delivery and actually TASTE the pizza before you can review.
Freakin lawyers...always wasting our time.
At least we aren't being charged by the minute for the information/thoughts shared! Solid analogy on Pizza Hut. Long-time follower of this thread - been ignoring the, in my opinion, useless posts recently - but just wanted to comment that I appreciate the addition of more real-world experiences of folks (Andrew Buchanan) that get back to the initial focus of this thread. Anyone with verifiable and actual experiences beyond the initial screening and the most important step of putting capital to use is a much welcomed addition.