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!

[Steve K.]

@Tyler Jahnke Also gotta chime in here and say how impressed I am with your fortitude in the face of adversity. The way you handled all of this absolute crap and bounced back with utterly undaunted positivity is downright inspiring. You're a classy guy, wish you much success in the future. 

[Greg H.]

Originally posted by @Account Closed:

MORRIS MORRIS MORRIS-stop it already.

Anyone ever heard of due diligence.   Anyone ever ask for Nurse contact to confirm they live in $40k  getto housing.  Anyone take photos before they wired money.

I put Morris @ 2 per cent culpability those who bought his SCHTICK   90%  and 8% can be blamed on climate change.

MY gf wont buy a $29.99 bikini wo pulling , making sure it covers her fun parts yet you people buy houses sight unseen.   And have the GALL to complain after.   Shame on you people.

Morris was brilliant bringing his wife into his podcasts.   She rambles on about i dont know what but she is very cute.  

 First....I agree with you that people should not buy a house sight unseen.  However my wife does buy bikinis sight unseen

However....that is about as far as I go in agreeing with you

The clients of Morris Invest have reported-

-Endless lies about the scope, state of completion of rehab, lack of accounting of rehab funds and flat out crappy work and in some cases no work at all done

-Leases on properties that are vacant, supplementing the actually amount of rent without the clients knowledge in order to increase returns.  This is flat out fraud and reeks of a ponzi scheme

You want to revise the 2% that you hold Morris responsible yet?  If you not ready yet, I am sure some actually involved with Morris can chime in

[Jay Hinrichs]

Originally posted by @Account Closed:

You want my REAL OPINION on MORRIS MORRIS MORRIS.

I blame the buyer 100%.

I was trying to be polite putting some blame on MORRIS n climate change.  Seems people dont appreciate the cold hard truth.  Add some levity.....lol.

Playing victim is the IN thing now.

Say your son saw Morris video  and was intrigued with his Freedom # concept. Your son takes a flight to the "hood.   A smart kid would say  NYET. NYET NYET.  The reno's , accounting, lack of communication would become MOOT.

A buyer who didnt take that flight carries on.  

Is it MORRIS and his wifes fault they bought KHRAP?

that's one way to look at it..

Another is high profile TV and Fox News Anchor Pod cast host with HUGE following.. doing a pod cast on BP that lended a lot of credibility..   

I think you would be surprised at how many investors buy homes without looking at them.. in person.. and

this is just a sad tale of someone with a lot of on line notoriety influencing some newer investors.. who simply did not know what they did not know..

I know this is not a good investment and wont be over time.. and I don't care who what or where you buy it.. Inner city cheapest homes Never work unless you live there and stack them up by the 10's to 100s and want to deal with that tenant base and homes that are basically functionally and economically obsolete...

Where I blame Morris is that he knew things were not right early on in this Indy debacle and he went on to continue to sell.. I know he was contacting people I know in Indy asking for advice last year as to what to do.. Instead of stopping after it was apparent OPpoint as ground partner was basically inept.. he kept charging on like nothing was wrong.

And then took the model to FLA and other states his Model MORRIS Model is to buy the cheapest home in the areas and sell them for basically under 40 to 50k and promise that they perform like higher end homes.. its just not true.

However at the end of the day we are all responsible for what we do..

Its just like when people pay 40k for a bus tour and guru system then whine they want their money back it was a fraud.. who is to blame the guru or the person who bought the system and bus tour. .????

[Brian M.]

@Account Closed

No, I think most people don't want your opinion - because you sound nonsensical.  

When a seller makes claims and promises about what they sell (no matter what the product is), and it's proven that they have not followed through on their claims/promises, the buyer has rights.  Regardless of the due diligence the buyer performed.  

The buyer can also publicly recount their experience for others as many have done here.  It's helpful to other potential buyers.  What is not helpful is someone like you discouraging others from telling their experiences by making ridiculous claims that it's all the buyers fault.  That doesn't help anyone.

[Jay Hinrichs]

Originally posted by @Brian M.:

@Account Closed

No, I think most people don't want your opinion - because you sound nonsensical.  

When a seller makes claims and promises about what they sell (no matter what the product is), and it's proven that they have not followed through on their claims/promises, the buyer has rights.  Regardless of the due diligence the buyer performed.  

The buyer can also publicly recount their experience for others as many have done here.  It's helpful to other potential buyers.  What is not helpful is someone like you discouraging others from telling their experiences by making ridiculous claims that it's all the buyers fault.  That doesn't help anyone.

 Every state or pert near every state has sellers disclosure docs that must be signed in a real estate transaction.. this to give the buyer any advance notice of issues they should address..

so short of this because we know these are very poor houses in horrid conditions the disclosures would or should say dilapidated etc etc.. then you have a SOW that is promised.. it is this scope that was either never done or done so poorly as to be totally inept.. Morris knew it and continued to sell.

I have been funding turn key since it was invented back in the early 2000  I have seen this play a few times but most reputable resellers of properties or marketers like Morris is.. One they are licensed two.. if they get bad feedback they cut off the ground partner until fix's are made or completely cut them off.

you think real wealth network would put out 400 plus homes like this and just keep going like Morris did.. or Hartman or Norada or Maverick.. or hipster all these folks have dealt with less than stellar ground partners and they cut them off.. not sell 400 plus of the same issue.. Morris and wife got a taste of the money is what I am thinking and how easy they could sway people who believe in the rich dad BS..

[Jeremy Z.]

Originally posted by @Account Closed:

You want my REAL OPINION on MORRIS MORRIS MORRIS.

I blame the buyer 100%.

I was trying to be polite putting some blame on MORRIS n climate change.  Seems people dont appreciate the cold hard truth.  Add some levity.....lol.

Playing victim is the IN thing now.

Say your son saw Morris video  and was intrigued with his Freedom # concept. Your son takes a flight to the "hood.   A smart kid would say  NYET. NYET NYET.  The reno's , accounting, lack of communication would become MOOT.

A buyer who didnt take that flight carries on.  

Is it MORRIS and his wifes fault they bought KHRAP?

 So you are okay with fraud?

Yes, it is Clayton Morris and his wife's fault, because they knew the product they were selling didn't match the product being delivered. Or at least had a responsibility to know so. Should the buyers have done more due diligence? Absolutely. But does "buyer beware" give sellers and marketers a license to commit fraud? No it does not.

[Brian M.]

@Jeremy Z. @Jay Hinrichs

I agree with you, Jeremy and Jay.

It's rather comical in a day and age where more than half of all goods in the U.S. were purchased online last year (i.e. sight unseen), that someone is claiming that it's all the buyers fault when a company doesn't follow-through on what they promised.  People are buying everything online now - groceries, household appliances, even cars - without actually inspecting the product before they buy it.

I guess companies should do away with refund policies, satisfaction guaranteed policies, etc.  They aren't needed as long as the buyer is always at-fault when they purchase something that is, in fact, not what they were told it would be.

Truly amazing.

[Colin Zhu]

Clayton also had multiple guests on his podcast where they claimed to have purchased hundreds of properties sight unseen. So it's not really a valid argument here.

Granted, they probably have a team to perform their own diligence.

[Matt R.]

Originally posted by @Colin Zhu:

Clayton also had multiple guests on his podcast where they claimed to have purchased hundreds of properties sight unseen. So it's not really a valid argument here.

Granted, they probably have a team to perform their own diligence.

That is possible sure and or happens all the time. I hark back to the dude I know of who has a 1000 doors, he still shows up personally for every inspection. He needs to know what his exact capex expenses will look like and perhaps negotiate some other fiscal matters that can be realized prior to closing. I think this is wiser than having to rely on remote boots but to each his own right. I have plenty more personal examples on why you walk a property beforehand and these all seem obvious really. Good luck! 

[Colin Zhu]

@Matt R. After this experience, I'm definitely walking every property before I buy. 

[Matt R.]

Originally posted by @Colin Zhu:

@Matt R. After this experience, I'm definitely walking every property before I buy. 

 Agreed and I don't see any how investor can go wrong with that one simple task. Good luck!

[Jay Hinrichs]

Originally posted by @Brian M.:

@Jeremy Z. @Jay Hinrichs

I agree with you, Jeremy and Jay.

It's rather comical in a day and age where more than half of all goods in the U.S. were purchased online last year (i.e. sight unseen), that someone is claiming that it's all the buyers fault when a company doesn't follow-through on what they promised.  People are buying everything online now - groceries, household appliances, even cars - without actually inspecting the product before they buy it.

I guess companies should do away with refund policies, satisfaction guaranteed policies, etc.  They aren't needed as long as the buyer is always at-fault when they purchase something that is, in fact, not what they were told it would be.

Truly amazing.

 Yup I bought two brand new Tesla’s on line :)

[Matt R.]

Originally posted by @Account Closed:

Originally posted by @Matt R.:

Originally posted by @Colin Zhu:

@Matt R. After this experience, I'm definitely walking every property before I buy. 

 Agreed and I don't see any how investor can go wrong with that one simple task. Good luck!

 I can see an investor going wrong even with walking the property...............hahahaha.  Walking is just one step in doing due diligence.

Making a BAD cal on a $30,000 is one thing making a Bad call on a $300,000 sfh is another.

 I hear ya and yes one of many tasks in the DD dept. 

[Steve K.]

Maybe people shouldn’t go down certain alleys wearing certain pants, but that doesn’t make the perpetrator of what happens next innocent. I don’t think anyone should be rubbing people’s mistakes  in their faces, it’s mean spirited and unhelpful unless you have a flux capacitor and a Delorean you’re willing to lend out. If @Tyler Jahnke hadn’t had the humility and been brave enough to come on here and share his story honestly, other people may have made the same mistake. Dude’s a legend and has provided us all a service, we should all get his back. Looking at you @Account Closed

[Colin Zhu]

Totally agree with you @Steve K.! 

Sure, all buyers have the requirement to perform their own due diligence and assess the risks, as with any form of investment. However, the seller also has the obligation to properly disclose the condition of the properties without misrepresentation, knowingly or not. The seller in our case clearly knew of the issues since they had an inspection done before I closed the property but failed to provide us with the report anyway.

I am thankful to have discovered the brave folks here at BP who have shared their stories. Otherwise, many of us would still be in the dark.

All I can say for myself is that although this experience hasn't been the smoothest, I have learned so much just by taking action and going through the process. Had I sat back and done nothing, I would have never met some seriously standup and helpful people such as @Todd Burton and @Jay Hinrichs.

Would I invest out-of-state again? You bet. But I won't be making the same mistakes for sure.

Best,

Colin Zhu

[Edward Vazquez]

Hey Tyler, 

Just finished reading all 26 pages. Thanks Tyler this forum has been invaluable. I have a few questions though where is this property located would you consider it a "C" class neighborhood. Do you think the issues were mostly with the property management/ Ocean Pointe? And have you tries to contact Clayton about the fact that you were receiving rent checks while it was empty?

[Jay Hinrichs]

Originally posted by @Steve K.:

Maybe people shouldn’t go down certain alleys wearing certain pants, but that doesn’t make the perpetrator of what happens next innocent. I don’t think anyone should be rubbing people’s mistakes  in their faces, it’s mean spirited and unhelpful unless you have a flux capacitor and a Delorean you’re willing to lend out. If @Tyler Jahnke hadn’t had the humility and been brave enough to come on here and share his story honestly, other people may have made the same mistake. Dude’s a legend and has provided us all a service, we should all get his back. Looking at you @Account Closed

 Steve every now and then there is someone like Lance that pops on to BP and thinks he is gods gift to comedy... However making fun of those that trusted what many think is a TV and Internet personality only to find out that they were not ready for prime time. All this Lance is doing is showing on many threads that  his total contribution just being a wise @$$ so no one is going to take him seriously from here on out.. Kind of like Joe Gore.. not sure why he (Lance) thinks this is something anyone wants to read.

However its apparent that Morris Knew what the situation was way back early in the transactions and still decided to keep selling this stuff.. that's the issue right there.. then moved to other markets and targeted the same asset class's 5 to 10k junkers sell to trusting buyers these homes even if they were not butchered on the rehab are simply not good investments that asset class as described by Morris is simply not accurate.. not sure why  or how he got those opinions.. but he did and look at whats happened..  

[Jay Hinrichs]

Originally posted by @Account Closed:

Mr Morris might be a fan of the woman who said theres a S.u c.k.er. born every minute...  Is that Morris"s fault.

Bob Brinker says there Sharks out there.  It is your job not to be bitten by one.   AGAIN Responsibilty of the Person.

 the point flew right over your head... this is real estate.. there are rules and laws defining how we transact business .. and its very apparent here that these rules and laws have been broken.. on many levels.

but I guess when you watch American Greed you see it every weekend.. those that invest in things they think are good only to find out they are total scams.

but with real estate there is an asset.. and when your provider discourages inspections and visits it should be a HUGE red flag but again you have to realize and I have seen this act before over the years... but this guy is running on celeb .  status.

same thing about the big TV flipping Guru's LIke Tarik and his X wife  who then go into how to flip houses and sell those systems and bus tours charging 40k to each person.. many think the folks that sign up for those are suckers as well.. 

[Jay Hinrichs]

Originally posted by @Account Closed:

You made so much money you cant see straight.   Do you want government involved to OFF morris?

Real Estate or ART or Jewelry or your kids baseball card collection.The principles apply to whatever you are buying.  You ever hear what happens in art or the jewelry industy.   Thier dogs gonna eat your rabbit if you not careful.

I beg to argue if Morris is a celebrity.  Bozo the Klown is a celebrity.

There are rules regarding narcotics.   Golly gee ....some people deal in em.   Oh woe is me.

you and Lance kawakami need to team up you guys have all the answers..

[Tom D.]

Disclosure: Former Investor

I picked up a property from Morris right when they first began. For the first year or so things went smoothly (ie; Oceanpointe actually managed the property) but once they started scaling the business that's when things went down hill fast. 

Jay was correct earlier in this thread when he stated that these cheap properties will always revert back to what they are. Basically what happened in my case is Oceanpointe let the property completely go to crap (liquor bottles all over, grass not cut)  it got so bad the city has to board it up because there were bums living in the house rent free (when I was still getting rent checks mind you) smell Ponzi anyone? I also was able to obtain copies of the lease agreements which I believe were falsified.  

In any case, to make a long story short, I liquidated the property "as is" and actually ended up breaking even on my initial investment. Needless to say it was a learning experience for me not to buy these types of properties. 

Just don't understand why Morris would ruin his reputation like this for a few million bucks? Surely a good rep is worth more than that throughout a lifetime. 

[Andrey Y.]

Originally posted by @Jay Hinrichs:

Originally posted by @Steve K.:

Maybe people shouldn’t go down certain alleys wearing certain pants, but that doesn’t make the perpetrator of what happens next innocent. I don’t think anyone should be rubbing people’s mistakes  in their faces, it’s mean spirited and unhelpful unless you have a flux capacitor and a Delorean you’re willing to lend out. If @Tyler Jahnke hadn’t had the humility and been brave enough to come on here and share his story honestly, other people may have made the same mistake. Dude’s a legend and has provided us all a service, we should all get his back. Looking at you @Account Closed

 Steve every now and then there is someone like Lance that pops on to BP and thinks he is gods gift to comedy... However making fun of those that trusted what many think is a TV and Internet personality only to find out that they were not ready for prime time. All this Lance is doing is showing on many threads that  his total contribution just being a wise @$$ so no one is going to take him seriously from here on out.. Kind of like Joe Gore.. not sure why he (Lance) thinks this is something anyone wants to read.

However its apparent that Morris Knew what the situation was way back early in the transactions and still decided to keep selling this stuff.. that's the issue right there.. then moved to other markets and targeted the same asset class's 5 to 10k junkers sell to trusting buyers these homes even if they were not butchered on the rehab are simply not good investments that asset class as described by Morris is simply not accurate.. not sure why  or how he got those opinions.. but he did and look at whats happened..  

 And there is the problem. From Day 1, their product was inferior, rushed, and not a good investment. They got a taste of the "rich life", and providing a good product, honestly, or reputation became secondary. After the outright BS and lies on his podcast, and his greedy nature I could tell he was selling junk that will never be profitable. I cannot believe there still are people who will go to his youtube channel and think everything will be hunky-dory if they buy a property from them.

[Jeremy Z.]

Originally posted by @Jay Hinrichs:

Originally posted by @Account Closed:

You made so much money you cant see straight.   Do you want government involved to OFF morris?

Real Estate or ART or Jewelry or your kids baseball card collection.The principles apply to whatever you are buying.  You ever hear what happens in art or the jewelry industy.   Thier dogs gonna eat your rabbit if you not careful.

I beg to argue if Morris is a celebrity.  Bozo the Klown is a celebrity.

There are rules regarding narcotics.   Golly gee ....some people deal in em.   Oh woe is me.

you and Lance kawakami need to team up you guys have all the answers..

 Haha, Lance and Erica have to be the same person, right???

[Jeremy Z.]

@Account Closed

There are rules regarding narcotics. Golly gee ....some people deal in em. Oh woe is me.

Yes, and if they get caught they go to jail. Thank you for proving our point.

Not sure why I'm feeding the trolls...

[Brian M.]

@Account Closed's experience, and other buyers of this stuff on BP, is just blatant fraud and misrepresentation.  If you have to pick a side, it's usually best to side with those who aren't breaking the law.

[Richard Lewis]

Hello @Account Closed - You beat me to it.