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!

[Donnie N.]

@Diane G.

A burnt down meth lab...HAHAHH....not sure if you were serious when you posted this...but this is the funniest one I've seen in a while. Well, good to know that if this one gets bid out, there are 3 other meth labs within a mile that you can buy. Maybe cooking rocks is the way to go. no need for rehab, no need for tenants, no need for insurance...high return...HAHAHH

@Tyler Jahnke

Can't wait to get your report back from the trip. Thank you so much for chronicling your journey through this. The rehab is looking good man! Good luck on the trip!

[Diane G.]

@Donnie N.

while you wait, you can read this from someone just back from Memphis:

https://www.biggerpockets.com/forums/311/topics/41...

@Tyler Jahnke

have a good trip... eat lots of ribs please......

[Tyler Jahnke]

You're welcome @Donnie N. and THANKS!

-Tyler

[Tyler Jahnke]

Thanks @Diane G. !! Ribssss....yummmm.

-Tyler

[Ake S.]

@Tyler Jahnke Thanks for sharing your journey with BP.  I know you've learned a lot through the process.  I've learned a ton just following the thread.  Excited to continue to hear about your property, and your growth as a real estate investor.

All the best.

[Tyler Jahnke]

Thanks @Ake S. - Looking forward to catching up soon!

-Tyler

[Michael Prassel]

Hi Tyler, any updates?

[Nate Hammond]

Thanks for sharing this experience @Tyler Jahnke. As an out-of-state investor myself looking to buy in Indy, this was very informative! I can't wait to hear more updates.

[Milo Graham]

@Tyler Jahnke thanks for sharing your experience with Morris Invest. Your post were very helpful and cleared a lot of questions and concerns for myself. 

I found there podcasts a month or so ago and became interested in there process as I am a brand new investor myself. I have not done a single deal, but I have landed a few phone calls off of some of my marketing. I scheduled a call with Morris Invest which was done today. I to talked with Larry as a bunch of people have seemed to. On our phone call a few red flags popped up and became very concerning. I was curious if any of you guys on this post remember where Larry said he was from? On our call he called in from a local Colorado phone number and told me he was based out of Pueblo, CO. That interested me right away because I use to work and live there (though Larry did not know that). When I asked where he was located in Pueblo he stumbled to give me an answer and then stated right in the middle of town. He then threw out an intersection that doesn't even exist in Pueblo. 

As the phone call came to the end he asked if I had any questions. I asked the standard questions everyone else seemed to ask... how do you make money buying a house rehabbing it and selling it for 35-50k? He said they acquire most houses for around 5K do they make instant money. When I asked about what kind of renters they would get he stated the houses were in B- to C neighborhoods and they get long lasting renters in who treat the properties as if they owned it. It was stated the ranters they fill with plant flowers and keep the property up so it is maintenance free for 15+ years. 

After talking with Larry he really made me nervous about the whole process and second guessing myself. He closed with saying in June they will start offering properties in North Carolina. I was just curious if this is how everyones call went. Larry did not do a very good job at trying to get me interested in the program. He actually pushed me away.

[Jay Hinrichs]

@Nate Hammond  if you can get up to PDX on thursday there is a big BP meet up... I am going to try to make it.. as an appraiser we could have a frank discussion of this asset class and model

[Allen Harris]

@Milo Graham, I had my call in September. I spoke with Dave, who said he was in Florida. I didn't have any reason to believe that wasn't the case, but it struck me as odd that such a small company had people across several states. I know Clayton is in NJ, the homes and PM are in Indy, and there was Dave down in Florida. I didn't think anything fishy was going on, but the guy I talked to didn't do a great job selling me on the system, and his follow-up wasn't great beyond the one email he sent immediately after our call. I kind of walked away feeling like the agents who handle the initial calls are not full-time team members, but instead just random call center reps across the country. 

I've been looking at other local Tennessee options and/or possible turnkey companies since then. All that said, though, I still really like Clayton and his podcast. I'm sure many on this thread will disagree with me, but I don't doubt Clayton or his motives. However, I'm wondering if the rapid start-up has put his company in a bind trying to keep up. 

[Nate Hammond]

@Jay Hinrichs Thanks for the invite to the BP meetup! Unfortunately, I can't make it. I also coach high school basketball and we have practice that night (almost playoff time!). However, if you have any questions feel free to ask and I'll do my best to answer them. 

[Chris Clothier]

Originally posted by @Par Attaran:

Originally posted by @Jay Hinrichs:

@Par Attaran  thanks I would not know how to find that.

there are people who can make C class work.. but those are locals who do it for a living and they don't hire someone like Morris and their rehab crews to create a rental for them.

its unfortunate that those that have fallen for this hyperbole don't chime in more.. but that is the way of the world.

AS for nay sayers or experience.. there are tons of experienced folks that came before this dude..

and I have personally seen posts from those that have traveled there looked at the product and neighborhoods and just simply passed on it.. neighborhoods poor.. rehab EXTREMLY poor PM

time will tell.. going to be a lot of broken hearts and wallets come out of this operation I can tell you that.

Just the IDEA that low end rentals are easier to manage than top end rentals is just so ludicrous I can't believe  ONE he makes that statement  and TWO anyone would believe it. 

 What I don't understand: Why hasn't Clayton (who has an account here) come on the BP forums and answered questions?  Nearly all other Turn Keys come here and kindly answer people's questions and concerns. 

Just seems like an odd business practice to shovel everything under the rug. When people leave bad Yelp or Tripadvisor reviews, management will immediately come out and respond. This doesn't sound like a good long term business plan. 

It's simple really.  He only needs a handful of buyers to convince that the forums are lies or one-time issues.  He is not doing enough business to need hundreds of buyers.  He only needs dozens each year to make a helluva lot of money so there is no need to answer the questions.  That would bring more attention.  He is in the media business and knows that eventually this thread dies.  He can deal with some negative comments and explain them away as trolls or investors who didn't follow his advice.  He can keep answering elsewhere instead of actually going on here.  There is no need to answer in his eyes and unfortunately, he will be correct.  He will continue to get the few buyers willing to  explain away all of the craziness and say they think he has a great podcast so he must be legit.  He will find investors who will take a chance and he will find people who have a good enough run over the first few months of ownership to buy more.  

I want to be clear that i don't know him nor his business.  My name or company keeps getting brought up in here every few days and I quit commenting because it has really become a circus.  It just keeps getting worse and worse, but not everyone can see that - and that is ok.  I really could not care any less how he does business.  I wish him well as I would anyone and I hope his clients find success.  I am sure there are investors who are happy with him and their experience so far.  We, as experienced investor see right through what we see as poor business tactics, but that doesn't mean some investors will not have a good experience and like their results.  So really, no need for him to answer in his eyes.  He can let everyone here talk to each other and in the meantime, he will keep looking for the one-off investors who will take a chance on him.

[Charles Gaucher]

. following

[Manuel Luz]

@Tyler Jahnke do you know what your cash flow is going to be? I read through the entire thread and see the rent is $600. Is that before you pay the PM? Sorry if you covered this and I missed it.

[Tyler Jahnke]

Hello BiggerPockets,

No major updates here, just a few small things.

First, @Aaron B. stopped my my place again earlier this week! Thanks AGAIN I really appreciate your assistance and willingness to help out. He sent me a bunch of pictures which I'll share once I get around to it. The place is looking good, but not great. There are still details in the renovation that need to be addressed. But, it's come a long way since Aaron's first round of pictures over a month ago.

Second, I'm super excited for my trip to Indy next week. Will be great to meet and connect with a bunch of people out there.

Third, I haven't gotten any updates on securing a tenant yet. I'm not sure what the timeline is, but my property management company has been actively marketing it since February 8th (17 days ago).

@Manuel Luz - They sold me the property stating rent would be $750 per month, however, until a lease is signed, I obviously can't put a number on it. If $750 is a reality, my monthly cash flow would be $375-$400 per month, depending on how conservative I am on expenses.

-Tyler

[Gautam Venkatesan]

Originally posted by @Tyler Jahnke:

my monthly cash flow would be $375-$400 per month, depending on how conservative I am on expenses.

-Tyler

 Did you pay cash to purchase the property? $400/month for a turnkey property is awesome!

[Account Closed]

$400/month for a turnkey sounds great on paper, but I highly, highly doubt that it will translate into $4800/year or $14,400 after 3 years. I'm sure @Jay Hinrichs and @Joel Owens would agree. 

[Diane G.]

@Tyler Jahnke

Have a good trip and keep us updated.... You are providing a priceless learning experience for us all here.....

[Diane G.]

@Tyler Jahnke

After you come back, reconsider that you can't afford to stay in CA.... 

Check out this one and tell me if you can't afford - 724 Golden Gate Ave, Richmond, CA

Duplex renting $4000...... Asking price of $685K

[Jay Hinrichs]

@Account Closed  I think we have beat this one to death.. bottom line

Morris from what we hear and I have personaly witnessed in Indy is selling D to MAYBE C class PM is adequate to maybe not.. and maybe not even licensed  ( which anyone doing buisnes with them they are not licensed are fools.)  very sad.. that star power creates this false front .

But lets let Tyler look at his investment and decide.. the scrutiny this thread has brought.. Was really Genius on Tylers end.. he no doubt will get the absolute best Morris house ever..

its all the other poor investors I keep hearing about that are in big trouble.  LOL

[Jason L.]

@Diane G., Richmond is tough though...rough city...My friend was murdered there...

How do you know what the rent is?

Still, keeping an open mind.

J

[Jay Hinrichs]

@Jason L.  check murder stats on any areas Morris is selling in and you will see same stats

[Aaron B.]

@Tyler Jahnke, no problem I was happy to assist. I hope the photos prove useful in your engagement with Morris reps. That said, I would encourage you to hold the company accountable for their rehab, especially if it does not meet you expectations.

[Diane G.]

@Jason L. @Jay Hinrichs @Tyler Jahnke

OK Richard is rough.... How about brand new DETACHED SFH in Hayward by KB home called Eden Cove from $600K?

5% down, and you can rent $3500.... Carry a little bit of small loss....... or live in and get a roommate

Bottom line is there are ways to start small.... OOS in not the only soluton....