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!

[Matt K.]

Originally posted by @Paul Ewing:

The truth is that there is money to be made in this type of asset.  The problem is that it isn't going to be made by the standard turnkey buyer with one or three properties.  The is a guy that does this by me that specializes in what I consider slumlord places. He has about 80 of them in one town where I have one of my best cash flow places. I am looking for a few more places thwre, but I am very picky about the immediate neighbors.  It is generally a C class area and mine is in the sort of C+ section.  It is locally know as Felony Bay but there are a lot of decent hard working folks living there, but a lot of meth heads as well.  I think the key is owning a lot of properties to spread the risk and doing all the management yourself.  Even the slumlord guy does the tenant screening and higher level stuff himself.  He has a few guys to handle repairs when it gets to the point where they can't be ignored any more.

 The key is being local and able to either be hands on yourself or have a team that knows how to collect rent and get people in/out.

[Tyler Jahnke]

Now THAT'S a productive Saturday @Gerard J. hahah!

Thanks for your positive support!

-Tyler

[Tyler Jahnke]

@Will Zena - Glad this thread could be of such VALUE. That's the intention. I've learned a lot. I'm sure others have as well. Best of luck to all the investors out there!

-Tyler

[Tyler Jahnke]

@Jay Hinrichs - You mentioned that I'm a well-paid engineer in the Bay Area. I WISH hahah!! I'm FAR from what you assume. I never made more than $50K a year from my W2 salary until last year. Living in the Bay Area. Paying $1,300 a month in rent. So, I just want to make sure that's clear...it's not like I have all this money to play with. But I worked, and hustled, have side-gigs, and saved for my two investments.

Like you said though, I'm keeping a positive frame of mind and am moving forward so I appreciate that comment!

[Jay Hinrichs]

Originally posted by @Tyler Jahnke:

@Jay Hinrichs - You mentioned that I'm a well-paid engineer in the Bay Area. I WISH hahah!! I'm FAR from what you assume. I never made more than $50K a year from my W2 salary until last year. Living in the Bay Area. Paying $1,300 a month in rent. So, I just want to make sure that's clear...it's not like I have all this money to play with. But I worked, and hustled, have side-gigs, and saved for my two investments.

Like you said though, I'm keeping a positive frame of mind and am moving forward so I appreciate that comment!

 Ok all the more disheartening that the first company you run into is Morris... its one thing to be able to invest this kind of money and shrug it off but when its a good portion or most of your liquidity then that just erks the ever living heck out of me.. ( edited for family audiences)  its simply does not have to be this way,  We all have bummers yours truly included.  Although this is unique in that its such a highly visible marketing effort.  There is a reason BP took down the Morris pod cast.

[Will Zena]

@Jay Hinrichs it erks the hell out of me as well. when they preach paying it forward and being good to others on their podcast. they do podcasts on chartitable efforts and "tithing" to where ever you are fed spiritually. Well if you put people in this kind of position I would rather be fed spiritually or any other way in the opposite direction. those are some of the reasons this pisses me off the most.

[Alan Grobmeier]

@Jay Hinrichs, looks like he got 7 years.

https://www.sltrib.com/news/2017/10/12/utah-man-se...

@Will Zena, this is like 'becoming a millionaire', no money, no skills, no nothing.  Just trust us with your nest egg.  The main problem in the United States is that most of us are NOT taught about money.  So we (not meaning me) buy annuities where everything will be 'ok' when we retire.  BTW, it is 'ok', just not for us.  :-(

[Steve K.]

Wow just read this whole thread last night. It's really, really looking more and more like an episode of American Greed. I want to know more! How many investors are having problems with this company? Are they under investigation? What's to happen next? Based on this thread, it seems like the lid is about to blow off (opens giant bag of popcorn). 

[Jay Hinrichs]

Originally posted by @Steve K.:

Wow just read this whole thread last night. It's really, really looking more and more like an episode of American Greed. I want to know more! How many investors are having problems with this company? Are they under investigation? What's to happen next? Based on this thread, it seems like the lid is about to blow off (opens giant bag of popcorn). 

not sure if you read this first then posted on that other turn key post where you backed into the financials exactly how they play out.

[Steve K.]

@Jay Hinrichs not sure the exact timeline of reading this thread vs. posting on my other thread. Basically I've been cramming as much info all weekend regarding out of state investing, turnkey, wholesaling, etc. Learning a ton on these threads over the last few days. Friday I had a vague idea what TK was now I'm a lot more educated. This particular situation here is really wild. I am wondering why we haven't seen this story on Nancy Grace yet. My day job industry (Solar) has attracted some interesting characters over the years so I'm no stranger to the effect a few bad apples can have. I've really appreciated guys like you and Chris Clothier and everyone on here providing me with a quick education. It's extremely valuable.  Interested to see how this thread/story develops. 

[Jay Hinrichs]

@Steve K.  yup strange saga this one..  I think everyone has the right to transact that whatever level they want to.

what happened here is that you had new investors getting a marketing message that is so far from reality.. 

and once they get in the game reality starts to hit them

add that to a ground partner that did not execute. 

Many turn key marketers have experienced this same issue Morris did.. but they cut off that ground partner ASAP.. Morris it appeared just steamed on.. And from what we see is convinced that D class is doable for out of area folks.

time will tell if he is correct.. EArly in the thread you could see folks that were feeding him inventory come to his defense 

[Son D.]

i just got a post rehab inspection on my property last week. Here is the video. https://youtu.be/_jn6G6cZsdE

[Steve K.]

Thanks for sharing Son D. Wow. Hard to believe that is POST rehab. How hard is it to direct a gutter downspout away from the foundation, cut a stump off a gas line, cut down the giant dead tree in the yard, at least caulk and paint, etc.? It doesn't look like they did anything. I left a comment on your YouTube, maybe they will see that video getting some traction and offer you your money back to take it down. 

[Jay Hinrichs]

Originally posted by @Steve K.:

Thanks for sharing Son D. Wow. Hard to believe that is POST rehab. How hard is it to direct a gutter downspout away from the foundation, cut a stump off a gas line, cut down the giant dead tree in the yard, at least caulk and paint, etc.? It doesn't look like they did anything. I left a comment on your YouTube, maybe they will see that video getting some traction and offer you your money back to take it down. 

 actually based on what I have seen and a few I drove by this one is in GREAT Shape one of Morris's better efforts frankly.. ... Still not up to prime time for what they advertise.. but in the scope of the product they put out in the last few years.. many of them would make this look like the Taj Mahal..

[Son D.]

I was sending the videos to everyone I thought may be investing with them. Someone reported the account for spamming so youtube suspended the account and took the videos down. I've reuploaded them here

[Tyler Jahnke]

@Son D. - Thanks for sharing these videos Son. Very eye opening to anyone looking to invest with Morris Invest.

-Tyler

[Son D.]

All inspired by @Tyler Jahnke and others before me

[Hector Peralta]

This thread has been hugely eye-opening. Thanks again, @Tyler Jahnke and everyone who contributed. How was your trip to Bogota, by the way? I was born there but I'm not really familiar with the country in general.

[Manuel Luz]

I been following this thread since it started. Reached out to Morris myself last year. Didn't like the vibe from his employee so backed off. 

I just want to give a shout out to @Tyler Jahnke if nothing else for you new guys reading this thread is pay attention to his attitude. He doesn't get stressed out or angry, just takes it as it comes and looks for solutions than wallows in the problem.

"Oh the PM lost it's license? Lockbox on the front door? Cool lesson learned, new PM, new tenants. On to the next." 

You either win or learn, that's how real growth happens

[Tyler Jahnke]

Thanks @Hector Peralta for following along! Glad this little post that started a year and a half ago could be of such value.

I haven't made it to Bogota yet! Heading out there in May. If you have any cool recommendations I'm all ears!

-Tyler

[Tyler Jahnke]

Hey @Manuel Luz - I appreciate the shout out man!

To your point...you can't get overly emotional. Not only in real estate...but, in life in general. There's no value in stressing over, wasting your energy, or complaining when something doesn't go your way or how you'd expected it to. MOVE ON. Find a solution. And get through it.

Have a wonderful day everyone!

-Tyler

[Jay Hinrichs]

@Tyler Jahnke  while I appreciate your calm demeanor through this whole debacle.

and I understand you only invested 50k or less which you also point out was a majority of your cash.

there are others who have done 4 and 5 times that or 10 times in one case and their lives are in turmoil..

everyone is different in how they handle this stuff..

some people would completely fall apart if they lost 40 or 50k..

of course your not a total loss until you try to sell there is some value there. not what you paid for it but some value..

I think the issue is all those that trusted Morris and its now come out that is was just misrepresentation at the least and gross negligence at the worst or even the F word.. or P word

it is amazing to see how each of your folks that fell for this react though..

[Tyler Jahnke]

@Jay Hinrichs - agreed that everyone handles this stuff differently. I'm just trying to encourage folks that may have fallen down this trap, or other traps, or made a mistake, or are in a negative situation, to not dwell too long on it. Easier said than done, but take full responsibility, spin it to a positive (think about what you learned through it? What can you do to avoid the mistakes from ever happening again? etc.) and bounce back.

We're getting real deep here Jay hahaha especially on a Friday morning when most of the Bay Area has already started their weekend hahaha.

-Tyler

[Ned J.]

Holy crap....that's post rehab? Wow.......

Been looking at OOS Turnkey........ it always surprised me how many people in the OOS crowd will buy stuff sight unseen. IF I ever do it, I'm flying out well in advance to look at previous properties, current rehabs and possible properties offered by the company....no way I could drop that kind of $$ based on phone calls and pictures

[Colin Zhu]

@Ned J. Yah, I'm learning a lot about that now, after the fact, unfortunately.

I will definitely fly out next time before I invest in anything OOS.