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!

[Todd Burton]

Sorry if that was confusing as it states "Replace light bulbs as necessary". It was not one light bulb, it was all light bulbs in the house. 

Self managing is great if you have the time. A lot of people either don't have the experience or their time is more valuable spent doing something else. For those people, a good property management service is invaluable.

[Mike O.]

@Diane G. You may not see $250k appreciation, but you can come across 40% appreciation. We all have different strategies, but I am not going to invest in a tiny house that they want over half million for, and then lose money every month for the next 5 years hoping it is going to appreciate and not pop in another bubble. I'll take cash flow now on a $40k property. Because all of those little wins now add up over time like compounding interest. I've bet on the stock market and I've played slow and steady income on the stock market. My strategy is slow and steady.

[Tyler Jahnke]

Quick update here BP family:

January 14 - Reached out last Friday night to voice my concerns on seeing NO visible exterior renovation progress (see pictures on previous page). @Aaron B. kindly drove out to the property to check it out. I received the initial Scope of work on December 22nd (26 days ago).

January 17 - Received an email from Nicole regarding my concerns. Summary of email: she received word from the team that I should be receiving updated progress pictures THIS week. With the current weather conditions, outside work has been delayed. She will send progress pictures as soon as they hit her folder.

-Tyler

[Bob E.]

@Susan Maneck  You have the right idea.  A lot of these renters make good buyers and it gets you off the hood for taxes, insurance, and maintenance.

[Brian E.]

@Tyler Jahnke  Thanks for the continued updates, please keep them coming!

[Rod Joseph]

"Progress not perfection" are the words that come to mind.

[Eskiel Elanee]

Hello to all of you. Does anyone on this thread own apartment building with more than 4 units? I am also interested in owning rental property. Any input would be appreciated!! 

[Joel Owens]

Eskiel,

This is more off topic for apartments. Check the multifamily and investment forum where those are discussed heavily.

Apartments 4 plus especially not brand new and remote count on about 70 units or higher for scale.

Very dangerous to own 10 to 20 units out of state that are average type tenants and older buildings. Lot's of lenders will want local (boots on the ground) to feel comfortable doing a loan.  If you have massive liquidity then you might overcome that objection with the lender. 

[Joel Owens]

Tyler how many months are going by before you get a renter in this unit? When do they start exterior work and how long to finish? Have they started yet?

Why not buy a property already fully rehabbed that was ready to go to start with? Just seems like months going by with no return on your investment so far versus closing a property with a renter ready to go day 1.

[Jonathan Watson]

Yeah, if it's taking this long, it certainly doesn't match the Clayton Morris's elevator pitch on his show.

For example...

I purchased 2 turnkeys in Sept. 2016 (I worked with Norada--signed the contract on 8/29, I think), I had a renter in one on day one (11/10/16), and had a renter in the other on 12/1 (I did offer a 1/2 off your first month's rent on this one to make sure I had a tenant in ASAP--I know that finding someone to move in around the holidays can be rough). One property cash flows about $150, the other $200.

I've already received 2 months worth of income from both properties.  Now, these aren't the types of properties Clayton Morris is selling--one is in a A- neighborhood in Franklin, IN and worth about 115k, and the other is in Memphis and in more a B- neighborhood (worth about $70k).

I did run into some insurance issues--but that was on my agent, not me or Norada. 

Has Morris Invest been communicative regarding your property?  This is looking less positive by the day...

[Tyler Jahnke]

Hello BP! It's time for another update/little recap:

January 13 - Received photos from the very generous @Aaron B. as he stopped by my property. Emailed Morris Invest with my concerns regarding lack of exterior renovation progress (broken basement windows, warped siding, lots of soffit/fascia repair needed, and chipping paint).

January 17 - Received email response back stating I should be receiving progress pictures by January 20th as bad weather has caused delays.

January 25 - Emailed Morris Invest for an update status as progress photos were not received by January 20th.

January 26 - Received a phone call from the Acquisitions Manager, who I personally worked with when targeting and putting this property under contract. I explained my frustration in lack of communication and updates on renovation progress. I was promised photos today and updates on the construction.

Received photos! However, they weren't exactly what I wanted. I got a exterior shot of the front and very generic photos of the interior rooms. I responded back wanting photos of specific items on the Scope of Work (refinished floors, new furnace, new breaker box, repaired soffit/fascia, paint, etc.).

Received Property Management Agreement, W9 Form, and Direct Deposit form for review and authorization of Oceanpoint to manage the property.

January 27 - Got another call from the Acquisitions Manager, who provided additional follow up on the renovation phase. He noted that Clayton Morris was also in the loop on my situation and understands my frustration with communication.

Received a call from Clayton Morris and spoke with him for a good 15 minutes this evening. He was very kind, understanding, and provided updates on my property as to why things weren't going as smoothly as I hoped. Said I should be getting progress pictures of each line item on the Scope the following week.

January 28 - Received additional exterior progress photos. With construction starting the day after Christmas, we're now a little over 4 weeks into the renovation phase.

---------------------------------------------------PHOTOS-------------------------------------------------

January 13 - Photo sent to me from Aaron, who was kind enough to drive by.

January 26 - Exterior photo sent to me from Morris Invest. Visible progress includes new front door, AC unit removal, new larger window/frame, new basement windows at ground level.

January 26 - Interior photos from Morris Invest

January 28 - 4 Weeks in and I'm happy with the results so far! Exterior photos received from Morris Invest. Visible progress includes soffit/fascia repair and painting. Painted window frames and doorway/entrance.

[Donnie N.]

@Tyler Jahnke  Thank you so much for the continual progress report. This a great to see. It's a good study. The rehab work does look good from the pictures. What was the original estimate time frame for the rehab work again? How much longer do you think before it'll be rented? Meaning, when do you think you'll get your first rent check?

[Aaron B.]

@Tyler Jahnke, great to see the progress. Your holding people accountable is paying off.  Let me know if I can be of further assistance. I would be happy to run by your property again. 

[Brynn Misener]

@Tyler Jahnke Tyler, I like your persistence in keeping your team accountable.  Seems like the a little bit of a rocky start, but the curb appeal is now beautiful!  What a great rental for a tenant in need of a place to call their own! Congrats!

[Tyler Jahnke]

Hi @Donnie N. - The original time-frame for renovation work was 6-8 weeks. They started the day after Christmas, so we're officially 5 weeks in. I'm hoping it's rent ready in the next 1-2 weeks to get it rented. Definitely want to see additional photos once renovation is complete!

-Tyler

[Brian E.]

@Aaron B.  How would you characterize the neighborhood Tyler's property is in?  There's so much discussion on whether these are truly C properties or something worse.  Just looking for a local to chime in.

Thanks!

[Tyler Jahnke]

Thank you once again @Aaron B. !!

I won't be in Indy until March, so I'd love to have some eyes on the property once rehab is complete. I'll reach out to you again to take you up on that generous offer!

-Tyler

[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!

[Tyler Jahnke]

Thanks @Brynn Misener !

[Jay Hinrichs]

@Allen Harris  I think your instincts a are good.. your in a tax free state why go to one your going to have to file a return in and pay tax.. the difference in cash flows probably not worth it.

and I see nothing freeking easy about this.. without BP and all this INTENSE social media presense on the company I suspect the out come would be far different.

[Allen Harris]

Great point about state income tax, @Jay Hinrichs. We probably take that for granted here in TN! :) 

[Bea Cortis]

Another newbie here, really appreciate your effort Tyler and everyone else on Morris Investment feedback.  I too have had my consultation call last week, ready to buy three properties and after receiving an information pack, yet to receive any further correspondence.  Any thoughts about investing in Florida - Jacksonville or Saint Petersburg with rehab complete would be appreciated.

[Jay Hinrichs]

@Allen Harris  Yes.. there is that there is the cost of the tax return ( that can be cheap with one prop) but its still something like 1 months cash flow then the income tax is probably another month.. then add in a trip or two there and you have wiped out 4 to 6 months of cash flow compared to what you could do right at home. and Lord knows there are plenty of low end homes in Memphis that rival these.. I like that 100k   1200 renter that's a solid play in my mind.

[Jennifer Colacicco]

@Bea Cortis  I am a wholesaler in St Petersburg, FL. Did you need some referrals or info on the area? 

[James Wachob]

@Jay Hinrichs we do have a few nice homes in Memphis! :)