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!

[Glenn Paulson]

@Tyler Jahnke

Hi Tyler

1. What class neighborhood would you classify your property? C or D?

2. Would you invest with Morris Invest again?

Thanks in advance

Glenn

[Diane G.]

@Tyler Jahnke

as long as money rolls in, why do you care? Lol

[Diane G.]

But honestly, I would rather be in PM position than Tyler's...

$75 for doing nothing each month, and anything/everything is extra charge....

If I can only get 100 doors, I am all set... Who cares to OWN 100 doors, MANAGING 100 doors is the way to go.....

[Glenn Paulson]

Completely disagree. Property Management is busy work with all of the headaches and calls. I am a President of an HOA and work closely with my PM owner and his staff. Not a business that I would want to own.

[Glenn Paulson]

Real Estate Investor from Sunnyvale, California replied about 2 hours ago

as long as money rolls in, why do you care? Lol

Well, likely more turnover and potential evictions in D class. Potential harder to sell property down the road.

[Chingju Hu]

@Tyler Jahnke this thread is amazing! thank you so sharing the whole experience with us! How's your search on the next property?

[Jay Hinrichs]

@Diane G.   Diane could not let that one go by AS @Glenn Paulson states  its a tough job.. and nothing could be further from the truth that a PM in a low value asset environment just sits back and does nothing.. there is nothing more difficult to manage in real estate than low value assets.

Now take SF property with high wage earners that have their rent ACH into your account each month live as neat and clean as you do.. then I can kind of agree.. but not low end houses.. no way no how.

There is over head to a management company .. its not all net profit.

Also Glenn with these type of rentals if you have never been in them.. asking how its doing in the first 6 months is a waste of time.. you need to check in year 2 and 3 once the honeymoon is over and a few  turn overs have happen maintenance then you can get a feel for the true numbers..

Think of it when those with a lot of experience go to buy apartment buildings what do they want to see..  2 to 3 years of tax returns and rent rolls they want to get a true picture.. not just how did it do for 6 months on a freshly turned unit..

now you will have low value assets were tenants will move in and quit paying 4 to 6 months in that happens.. but generally they make it the first year.. but what damage did they do.. how much is the turn over.. usually 1 to 2k for turn over plus a month rent.. and plus a month down doing your turn over.. so until you account for this happening 2 or 3 times over the course of a few years you will never know your true numbers.

Although like with anything you can get very lucky and get a neat and clean tenant that stays 3 years never causes any damage etc.  its happens as well.. but you just can't paint a broad brush.. there is a reason these homes are priced the way they are.. the market prices them for rental/ risk.. they are higher risk than others .. plain and simple.

[Diane G.]

@Jay Hinrichs

Yes, Jay, you have a good point

[Jay Hinrichs]

@Diane G.  I have a feeling your other post you were being facetous

[Diane G.]

@Jay Hinrichs

No, I was not being deliberately facetous... i simply got carried away by how easy it is to make that $75, by doing exactly nothing SO FAR....

[Nicholas Kilpatrick]

Awesome thread! I have looked into Morris Invest as well and made the phone call a couple weeks ago. I have been working with Dave and he was very insightful during our initial phone call. We have been emailing back and forth about some current offers, but after reading Tyler's experience, I am a little more hesitant about Morris Invest. Looking forward to future updates!

[Shawn Ackerman]

Great thread!

[Lionel Li]

Thanks for taking this investment journal @Tyler Jahnke very informative and I've been following this thread for a long time. Was very intrigued with Morris Invest (like most who came to this thread..aside from a couple..) Went through the process with Larry but ultimately decided to go through the process by myself in Indy, seeing that this is something I want to do in the long run. Purchased my first property and now beginning with the rehab stage. Would like to network a little with people who are vested or even slightly interested in Indy. 

[Glenn Paulson]

@Lionel Li....What price point & area did you enter Indy?

With some internet searches, Indy seems to be high crime in the $20-$50k areas that Morris Invest sells. I am past the point of "I" am not living there but the higher the crime the higher the potential of non payers/evictions/turnover and property damage. That said, MI areas do not look like a war zone. The streets look nice enough.

[Lionel Li]

Originally posted by @Glenn Paulson:

@Lionel Li....What price point & area did you enter Indy?

With some internet searches, Indy seems to be high crime in the $20-$50k areas that Morris Invest sells. I am past the point of "I" am not living there but the higher the crime the higher the potential of non payers/evictions/turnover and property damage. That said, MI areas do not look like a war zone. The streets look nice enough.

Hey Glenn, I've invested in the west side of Indy and will probably continue in this area because I have found networks that are more experienced in this part of the market. I know Clayton's company focuses on the east a lot like around the Speedway neighborhood, they definitely don't venture as far west as I was looking. I definitely did not invest in the 20k-30k range but around the 40k-60k range but it should be on the higher end of the spectrum or even exceeding by a bit in ARV. With that said, I wouldnt opt out the lower priced properties as soon as I'm more comfortable with my first investment property. After almost 6 months of really studying Indy I really have a much better understanding of how the neighborhoods work in terms of rent/comps/crime/school district (I understand that's very hard to believe considering I've yet to visit Indy). There are pockets of good and bad areas but without a local hand it'd be extremely difficult to sift through neighborhoods and understand what kind of deals you're looking at. I know I'm not telling you anything that you don't already know but, I've done all I can as an OOS investor to mitigate as much risk and now I leave the rest to the research that I've done over the past 6 months to unfold itself. I believe Indy is a very strong market or I would've kept my money in NYC.

[Stan Kaneshige]

Hi Everyone!

I just wanted to say thank you to @Tyler Jahnke and all that have contributed to his excellent documenting of his journey with Morris Invest and his Indiana property.

MY EXPERIENCE SO FAR (For those with time to burn)

I made a reservation online with Morris Invest on June 30th of 2016 and received a phone call appointment for October 6th - an almost 3 month wait.

On that day I got a call from a 727 area code which turned out to be a gentleman named Dave Koehn who said he was an associate of Clayton's. We talked briefly, he filled me in on the broad strokes and it sounded good to me in concept. 

Later that day he sent me an email with an example photo and details of a property similar to what I would presumably purchase from them or with their help? That part was not exactly clear. Does Morris Invest buy houses and resell them? Or do they just facilitate the sale and take a cut?

It was such a long time ago I don't remember our conversation in detail but I do remember him saying they get a lot of calls and are very busy. The basic idea I came away with is that if you are serious buyer they want you to buy quickly without fussing over too much as it is a hot market and asking for too much in the way of info, pics, updates, etc. gives someone else time to buy it before you, thus wasting Clayton's (or his team's time and effort).

$40k is more than I can come up with so I asked a good friend if he would like to partner up and go on this adventure with me. He took awhile to watch Clayton's videos and we talked and eventually decided we could do it together.

My friend got busy, I got busy and here we are 1 year later. I decided to check here at BiggerPockets and search "Morris Invest" to see if I could find any testimonials and or tips on if and how we should go about getting our first rental property with or without Clayton's service.

After reading this thread I will have to discuss the pros and cons of going this route again with my investor friend/partner. Tyler's recent post saying he will try to get a second property without using Clayton's service, in addition to his frustration with lack of communication is honestly making me rethink the path we should take.

Once again, thank you everyone for contributing your voices on this subject! Any lurkers out there that have dealt with Morris Invest, please share your experiences, positive or negative! I am sure that other newbies as myself will appreciate it very much :)

[David Song]

@Tyler Jahnke nice documentation and good luck. Very interesting thread. 

[Chad C.]

Great thread, thanks for sharing

[Chad C.]

Is it just me, or does it seem like @Account Closed for getting started in real estate, even if some people don't agree with the method. No doubt there will be expenses over time and you'll want to budget for that, but thank you for sharing your experience and congratulations. I listen to Clayton's show and I appreciate that it has moved away from being a sales pitch every episode to more of an inspirational show on getting started and helpful tips, whether you use his company or not.

[Colten Peak]

ha!! @Chad C. I've had the exact same thought about that trolling relationship as I've browsed the Morris-related threads. 

[Kevin Estey]

I know I will get flamed and trolled for this, but @Chad C. and @Colten Peak, you hit the nail on the head.  For better or for worse, every experience in real estate is individual, unique, and an opportunity to learn and grow. The doing, and the making of mistakes, is the best instruction you will ever have. What is the quote? "Experience is the best teacher, and the worst experiences teach the best lessons" Something like that.  But I've never heard the quote "Naysayers and negative thinkers are the best teachers".  But then again I could be wrong.

All I know is, the motivation of anybody who has the time to make 16,000+ posts on a forum over 3 years (For Context: that's 5300+ posts a year, or 14+ posts a day. Every. Single. Day) should certainly be brought into question.

[Jay Hinrichs]

Originally posted by @Kevin Estey:

I know I will get flamed and trolled for this, but @Chad C. and @Colten Peak, you hit the nail on the head.  For better or for worse, every experience in real estate is individual, unique, and an opportunity to learn and grow. The doing, and the making of mistakes, is the best instruction you will ever have. What is the quote? "Experience is the best teacher, and the worst experiences teach the best lessons" Something like that.  But I've never heard the quote "Naysayers and negative thinkers are the best teachers".  But then again I could be wrong.

All I know is, the motivation of anybody who has the time to make 16,000+ posts on a forum over 3 years (For Context: that's 5300+ posts a year, or 14+ posts a day. Every. Single. Day) should certainly be brought into question.

Kevin your sitting over in a foreign land and not really knowing what trolling is .. but it its sharing a strongly held opinion based on 20 years of funding over 2,000 turn key properties in 12 markets... well then I guess that's what I am doing.. I fund a lot of stuff were your fellow countrymen bought these type of assets fro 50 to 60k a door.. in 09 2010 etc from marketers that were hammering AU NZ.. well they are now selling them for 10 to 15k per door to local wholesalers that I fund.. I see the HUDS I put up the money..  these people are taking HUGE loss's not just a little educational experience in a positive way the education is buying this asset class from the other side of the world or anywhere out of area is highly risky.. the fact that they are promoted as solid investments and other representations about the asset class and tenant class. is just not founded in reality and in a few years many of these folks are frankly going to get that education you speak of .. 

But thanks for posting on my prolific numbers on BP I had not thought of it that way... When you have a 40 plus year career at this its easy to talk about a lot of subjects.. and we all have learned the hard way myself included.. its why we give back to the BP community to try to help them through the learning curve.. there are a lot of threads on BP that talk about the risk of this type of investment. 

where this one gets a little wild is this is the first time someone with so much social media success in a different field jumped into the fray and started selling this stuff..  Much like TV  flip this house guru's that then go on to have their 40k work shops and bus tours.. they get the people in based on their TV star power.. its big money make no mistake about it. 

But hey guys go buy a few and see how it goes.. nothing wrong with U doing that then in 2 to 3 years make a report back on how it went..

[Jay Hinrichs]

Originally posted by @Kevin Estey:

I know I will get flamed and trolled for this, but @Chad C. and @Colten Peak, you hit the nail on the head.  For better or for worse, every experience in real estate is individual, unique, and an opportunity to learn and grow. The doing, and the making of mistakes, is the best instruction you will ever have. What is the quote? "Experience is the best teacher, and the worst experiences teach the best lessons" Something like that.  But I've never heard the quote "Naysayers and negative thinkers are the best teachers".  But then again I could be wrong.

All I know is, the motivation of anybody who has the time to make 16,000+ posts on a forum over 3 years (For Context: that's 5300+ posts a year, or 14+ posts a day. Every. Single. Day) should certainly be brought into question.

PS I have over 15,000 votes  and I am not voting for myself  LOL....also to clarify what is a troll ???  not familiar with that term, as it relates to internet I suspect its a negative connotation ...  AS well as I don't deal with the one of general public in my business world so if you think my post are slanted to the hey hey do business with me.. your WAY off base  :)  Most post on turn key tend to be that.

you will see providers from each market come on or other marketing companies and post with the hopes that folks contact them to look at what they have to sell. I have nothing to sell.. I am a B to B guy  not a retail seller to one off investors.  So I have no motivation say to Have the OP contact me to buy I don't sell this stuff.. 

[Joshua C.]

This is a wonderful thread for those considering investing with Clayton. He seems quite genuine and busy! But not too busy to answer an e-mail.

Definitely comforting to know about the process even though the communication seemed fair at best, it eventually came with pictures and solid proof of how the investment is coming out.

Can't wait to get started with CM!

[Edith TenBroek]

I'm just dipping my toes into the idea of Morris Invest and these threads are very valuable.  My thoughts on this thread?  People who have actually HAD dealings with Morris Invest are frustrated with the level of communication, but ultimately happy with the results.  I responded to Clayton's first email asking why I was interested in learning more... I actually got a response from Clayton!  Not something I expected!

Edie