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!

[Jeremy Z.]

@Richard Lewis

That Cubs comment was the giveaway for me. Yesterday he was rambling on about watching MLB in between comments.

Nice work on the comment comparison. It's like he's following some sort of troll playbook.

[Colleen Cimo]

Originally posted by @JD Martin:

Originally posted by @Colleen Cimo:

I just reached out to Clayton and got a response. We are hoping to get some of these issues worked out very soon. My post was an emotional response. As it is when money is at play. Will be seeing how things progress from here. 

 Always be willing to get on a plane or get in a car and verify things yourself. Transportation is cheap these days. I would never let $5k in fines accumulate without going out there once myself to see what's happening. Trust but verify. 

 Unfortunately, I wasn't aware of ANY fines at all until they were 5K. I bough 12/18 and the fines notice was supposedly sent 12/20 so Im not sure who received the first notice but it wasn't me. I got the delinquency notice after the fines were raised. Its been a fun time!

[Tom D.]

Anyone receive their April rental payments from Oceanpointe? From what I have heard they have not paid.  Are there any class action lawsuit being organized?

[Alex Peralta]

No rent for April here. Have tried contacting Oceanpointe several times. Calls go to a full VM. You'll find a few posts about this on here.  

[Colin Zhu]

It is safe to assume that Oceanpointe is not going to respond to anyone at this point.

File a complaint with Indiana Attorney General online and it wouldn't be a bad idea to find a private attorney as well.

[Todd Burton]

We have taken over a substantial number of these properties. We have received some payment receipts from tenants and some tenant ledgers from Oceanpointe. We are finding there are some properties where the tenant has paid yet the owners have received "invoices" that the tenants are in collections.  We are communicating this to the appropriate owners. This is outright theft. 

[Tom D.]

Wow Todd, that pretty much confirms the Ponzi scheme. Please retain some of the evidence you find for the inevitable Federal court case. I'm sure the authorities will have a field day sinking their teeth into this one.

[Jon Wahlmann]

For what it's worth, Morris Invest just addressed the issue regarding Oceanpointe:

https://morrisinvest.com/blog/2018/5/11/an-update-...

and:

https://morrisinvest.com/blog/2018/5/8/a-statement-from-morris-invest-regarding-oceanpointe-property-management

-Jon

[Tom D.]

Thanks Jon for referencing this.

In my opinion too little too late from Morris as this post is just a last minute attempt to save the business.  He knew full well what Oceanpointe was up to from the start. You can see Bert (Oceanpointe) owner in the background of many of the property walkthrough videos on youtube (if they haven't been removed). Therefore each party was clearly aware of the shoddy rehab jobs being done at these properties. It was the only way they could offer them in the $40-50k price range. 

Wonder why they do all cash deals? Hmm, simply because banks require an inspection of the property and 99% of these places wouldn't pass. 

Bottom line is these 2 gentlemen sold the dream of financial freedom to the consumer and they were the ones who actually achieved it. Heck Morris even documented the journey in his podcast (new house, private schools, quit job).

What do you the investor who was sold the dream have? Properties needing serious repairs, $5k+ in city fines, squatters in your properties, Oceanpointe apparently stealing your rents. 

Really sad situation. 

[Jay Hinrichs]

hey all the post above that was removed was by Tyler Jahnke letting everyone know that his supposed rehab house was vacant and needed another 16k and was not worth keeping so he sold it.. took his loss and move on and bought a nicer property there in Indy.. 

so as we all stated in the beginning of this thread the 9k he was thinking was enough to rehab and another 16k is 25k which is more realistic for a vacant house rehab for rental standards.

but then he came to the realization the neighborhood was not worth the risk.. I think that was the gist of his post.

[Paul Ewing]

So did Tyler delete it or has Morris gotten their lawyer after BP?

[Jay Hinrichs]

I think he had some self promotion in the post and mods removed it 

@Paul Ewing

[Matt K.]

doesn't morris also have a habit of giving money back/making it right with the demand they take down the offending post/video and then a NDA?

[Jay Hinrichs]

Originally posted by @Matt K.:

doesn't morris also have a habit of giving money back/making it right with the demand they take down the offending post/video and then a NDA?

that ship sailed after he probably got hundreds of demand letters.. would not be fun to be him and his wife right now.. but the fact that they are still selling just shows in my mind and personal opinion that they are pretty delusional and think themselves a victim. 

[Matt K.]

Originally posted by @Jay Hinrichs:

Originally posted by @Matt K.:

doesn't morris also have a habit of giving money back/making it right with the demand they take down the offending post/video and then a NDA?

that ship sailed after he probably got hundreds of demand letters.. would not be fun to be him and his wife right now.. but the fact that they are still selling just shows in my mind and personal opinion that they are pretty delusional and think themselves a victim. 

 https://morrisinvest.com/blog/2018/7/2/what-you-ne...

but they have this helpful blog that's always updated...

[JD Martin]

Originally posted by @Matt K.:

doesn't morris also have a habit of giving money back/making it right with the demand they take down the offending post/video and then a NDA?

 That's not the case here; @Jay Hinrichs has it correct. :)

[Rijm D.]

Originally posted by @Tyler Jahnke:

Hello Everyone,

WOW, this post has really blown up. I appreciate all the various forms of feedback, as this is an open community forum.

@Aaron B. - Of course, I want to THANK YOU first for putting yourself out there and providing amazing assistance.

@Tim Ryan - I'm glad you are following along on my journey and appreciate your support.

@Craig T. - Glad you are following along as well and are finding value in my honest experience. Appreciate the support and positivity!

@Jeff Schechter - I appreciate you presenting a different side of the story and glad to hear you've had success with the same supplier Morris uses.

@Account Closed - I'm glad you brought up flying out to Indy as I will be there early March to really experience the city and make connections.

-Tyler

 @Tyler Jahnke what did you learn from your trip out there. I am going there this weekend. What do you suggest I should try to accomplish and who to meet or see. I set myself up with Jeff and his TK, and independent agent I met on here that seems to have connections. Maybe a local  RE investor meeting, a wholesaler and a PM. Rental car and will be driving around. What else?

[Mark Whitted]

@RijmD If you get a chance, make a quick side trip out I-70 to Middletown, OH (between Dayton and Cincinnati) and talk to Missy McCall and Myra Hargrove at retirewithrealestate.biz. My wife and I went out a year ago and met their team. We were impressed. Our capital has been tied up with a note out of my IRA so we haven't bought anything from anybody yet, but Missy is high on our list of prospects. I have a contact with our local Dallas REIA that DOES have property with them and he says great things too.

For me personally it's sad what has happened to Clayton since it was his appearance on a tech podcast which led me to his podcast and got us involved in real estate investing. I probably wouldn't be writing this or know anything about REI if not for Clayton.

Good luck!

[Rijm D.]

Originally posted by @Mark Whitted:

@RijmD If you get a chance, make a quick side trip out I-70 to Middletown, OH (between Dayton and Cincinnati) and talk to Missy McCall and Myra Hargrove at retirewithrealestate.biz. My wife and I went out a year ago and met their team. We were impressed. Our capital has been tied up with a note out of my IRA so we haven't bought anything from anybody yet, but Missy is high on our list of prospects. I have a contact with our local Dallas REIA that DOES have property with them and he says great things too.

For me personally it's sad what has happened to Clayton since it was his appearance on a tech podcast which led me to his podcast and got us involved in real estate investing. I probably wouldn't be writing this or know anything about REI if not for Clayton.

Good luck!

 Just looked at her website. So that's a 2 hour drive though, dont think I can make it for this trip. On her site she talked about the economy there. Sounds good. What are the stats on properties there, price and rent range. She is TK as well, how does she have her business set up. All in house? What's your take on the company and the market there? Rent steady, equity,... since you seem to have done your research already and vetted her. 

Thanks, another playground to investigate. If the concept proofs to be right, though some speak against it being feasible for the long term, there are multiple markets in the midwest to look into. Another company I'd be interested in is Smartland in Ohio I think. 

Well, will see how Indy turns out. 

[Jay Hinrichs]

Originally posted by @Rijm D.:

Originally posted by @Mark Whitted:

@RijmD If you get a chance, make a quick side trip out I-70 to Middletown, OH (between Dayton and Cincinnati) and talk to Missy McCall and Myra Hargrove at retirewithrealestate.biz. My wife and I went out a year ago and met their team. We were impressed. Our capital has been tied up with a note out of my IRA so we haven't bought anything from anybody yet, but Missy is high on our list of prospects. I have a contact with our local Dallas REIA that DOES have property with them and he says great things too.

For me personally it's sad what has happened to Clayton since it was his appearance on a tech podcast which led me to his podcast and got us involved in real estate investing. I probably wouldn't be writing this or know anything about REI if not for Clayton.

Good luck!

 Just looked at her website. So that's a 2 hour drive though, dont think I can make it for this trip. On her site she talked about the economy there. Sounds good. What are the stats on properties there, price and rent range. She is TK as well, how does she have her business set up. All in house? What's your take on the company and the market there? Rent steady, equity,... since you seem to have done your research already and vetted her. 

Thanks, another playground to investigate. If the concept proofs to be right, though some speak against it being feasible for the long term, there are multiple markets in the midwest to look into. Another company I'd be interested in is Smartland in Ohio I think. 

Well, will see how Indy turns out. 

Missy is one of the top 10 turnkey operators in the US..  she also does a lot of New Construction these days..  

[Will Zena]

Yes I hear alot about Missy. I purchased my first property from a TK in Columbus that she mentors and I have been very happy. They know how to rehab properties and Missy from what I hear is among the best.

One thing I learned so far is you may find other TK that can offer a higher ROI but when its a bad rehab or bad tenant placement with bad mgmt then its a loser. I think for passive buyers it is best to find a quality TK company that do true rehabs on properties and more importantly manage the property at a high level. Even if the ROI is 1% or even 2% lower than others offer because you will actually see the return.

With many TK providers the higher ROI they show the more skeptical you should be and even more research you need to do.

[Tyler Jahnke]

WOW BP...it's been a solid 3 months since I last updated you all on my crazy, insane, twisty-turny investing story with Morris Invest.

Where did I leave off? Oh yeah:

-My Morris Invest property was FOUND vacant without any notification from Morris Invest.

-I hired a new property management company (@Todd Burton and IPM THANK YOU!)

-I re-keyed all doors and secured the garage of my Morris Invest property

Next steps were to assess repairs needed and decide if I should:

-Repair and Rent

-Repair and Sell

-Sell "As-Is"

Well, considering my renovation quote came out to $16,000+ on an asset I did not foresee positive long-term returns with...I DECIDED TO SELL. And I SOLD it a few months ago.

At the SAME TIME I was selling this property, I also purchased and closed on My Second Property. This one was NOT purchased through Morris Invest. I found it on my own through the help of an agent I met in Indy last year. The original asking price was over $100K, but I got it for $86K. It’s only a 2 Bed/1 Bath, but it’s 1,450 square feet with a laundry room (which could be turned into a 3rd bedroom), has a bonus sunroom, and 2-car garage. Structurally it’s in very good shape. The roof and gutters are only a year and a half old. The siding is all brick. Water heater 3 years old. Electrical and plumbing all updated within the last 4 years. It's currently renting for $995 to two married Med School students with good income and good credit scores.

The biggest point here: NEVER WORK WITH MORRIS INVEST. And, through learning and living through this real-life course in investing, I'm so much better prepared for the future. This second property is in a MUCH improved neighborhood, which draws in a better class of tenant, it's professionally managed by a trusted company, and it's structurally sound with recent major improvements.

WHAT'S NEXT??

If you know me, I'm not stopping. I just got an influx of cash from selling my Morris Invest property (remember, I bought it all cash), so now I'm looking for My Third Property. I'll have an update for you in the next month...but the Indy market has been HOT....I just lost out on 4 offers...

Lastly, I'm hoping you found my writing over the past year and a half VALUABLE. Or at least the on-going conversations and topics that were brought up.

Happy Investing All! Wow...it's been quite the ride so far...and I'm not getting off this roller-coaster anytime soon :)

-Tyler

[Jason Howell]

Originally posted by @Tyler Jahnke:

WOW BP...it's been a solid 3 months since I last updated you all on my crazy, insane, twisty-turny investing story with Morris Invest.

Where did I leave off? Oh yeah:

-My Morris Invest property was FOUND vacant without any notification from Morris Invest.

-I hired a new property management company (@Todd Burton and IPM THANK YOU!)

-I re-keyed all doors and secured the garage of my Morris Invest property

Next steps were to assess repairs needed and decide if I should:

-Repair and Rent

-Repair and Sell

-Sell "As-Is"

Well, considering my renovation quote came out to $16,000+ on an asset I did not foresee positive long-term returns with...I DECIDED TO SELL. And I SOLD it a few months ago.

At the SAME TIME I was selling this property, I also purchased and closed on My Second Property. This one was NOT purchased through Morris Invest. I found it on my own through the help of an agent I met in Indy last year. The original asking price was over $100K, but I got it for $86K. It’s only a 2 Bed/1 Bath, but it’s 1,450 square feet with a laundry room (which could be turned into a 3rd bedroom), has a bonus sunroom, and 2-car garage. Structurally it’s in very good shape. The roof and gutters are only a year and a half old. The siding is all brick. Water heater 3 years old. Electrical and plumbing all updated within the last 4 years. It's currently renting for $995 to two married Med School students with good income and good credit scores.

The biggest point here: NEVER WORK WITH MORRIS INVEST. And, through learning and living through this real-life course in investing, I'm so much better prepared for the future. This second property is in a MUCH improved neighborhood, which draws in a better class of tenant, it's professionally managed by a trusted company, and it's structurally sound with recent major improvements.

WHAT'S NEXT??

If you know me, I'm not stopping. I just got an influx of cash from selling my Morris Invest property (remember, I bought it all cash), so now I'm looking for My Third Property. I'll have an update for you in the next month...but the Indy market has been HOT....I just lost out on 4 offers...

Lastly, I'm hoping you found my writing over the past year and a half VALUABLE. Or at least the on-going conversations and topics that were brought up.

Happy Investing All! Wow...it's been quite the ride so far...and I'm not getting off this roller-coaster anytime soon :)

-Tyler

I know its probably easier said than experienced first hand, but everything happens for a reason. You've shown other investors the value of keeping your head high, persisting, evaluating your OPTIONS, and picking the one that sets you up for success as you move from a bad situation to a better one. Especially choosing the option to get OUT instead of showing how you can turn it around... in the end, that obviously was the right direction.

All the while, you learned valuable lessons that you will carry with you on all of your investment opportunities going forward, many of those hard learned through experience and those stick with you even more than those you read about. And your willingness to share the journey with everyone here has literally LITERALLY saved people thousands of dollars along the way. Bravo, and looking forward to your continued journey here. I really hope you'll continue to keep us updated. After all of this, we are invested in your journey too! Cheers. If you ever wanna talk Indianapolis REI, hit me up. :)

[Jay Hinrichs]

Originally posted by @Jason Howell:

Originally posted by @Tyler Jahnke:

WOW BP...it's been a solid 3 months since I last updated you all on my crazy, insane, twisty-turny investing story with Morris Invest.

Where did I leave off? Oh yeah:

-My Morris Invest property was FOUND vacant without any notification from Morris Invest.

-I hired a new property management company (@Todd Burton and IPM THANK YOU!)

-I re-keyed all doors and secured the garage of my Morris Invest property

Next steps were to assess repairs needed and decide if I should:

-Repair and Rent

-Repair and Sell

-Sell "As-Is"

Well, considering my renovation quote came out to $16,000+ on an asset I did not foresee positive long-term returns with...I DECIDED TO SELL. And I SOLD it a few months ago.

At the SAME TIME I was selling this property, I also purchased and closed on My Second Property. This one was NOT purchased through Morris Invest. I found it on my own through the help of an agent I met in Indy last year. The original asking price was over $100K, but I got it for $86K. It’s only a 2 Bed/1 Bath, but it’s 1,450 square feet with a laundry room (which could be turned into a 3rd bedroom), has a bonus sunroom, and 2-car garage. Structurally it’s in very good shape. The roof and gutters are only a year and a half old. The siding is all brick. Water heater 3 years old. Electrical and plumbing all updated within the last 4 years. It's currently renting for $995 to two married Med School students with good income and good credit scores.

The biggest point here: NEVER WORK WITH MORRIS INVEST. And, through learning and living through this real-life course in investing, I'm so much better prepared for the future. This second property is in a MUCH improved neighborhood, which draws in a better class of tenant, it's professionally managed by a trusted company, and it's structurally sound with recent major improvements.

WHAT'S NEXT??

If you know me, I'm not stopping. I just got an influx of cash from selling my Morris Invest property (remember, I bought it all cash), so now I'm looking for My Third Property. I'll have an update for you in the next month...but the Indy market has been HOT....I just lost out on 4 offers...

Lastly, I'm hoping you found my writing over the past year and a half VALUABLE. Or at least the on-going conversations and topics that were brought up.

Happy Investing All! Wow...it's been quite the ride so far...and I'm not getting off this roller-coaster anytime soon :)

-Tyler

I know its probably easier said than experienced first hand, but everything happens for a reason. You've shown other investors the value of keeping your head high, persisting, evaluating your OPTIONS, and picking the one that sets you up for success as you move from a bad situation to a better one. Especially choosing the option to get OUT instead of showing how you can turn it around... in the end, that obviously was the right direction.

All the while, you learned valuable lessons that you will carry with you on all of your investment opportunities going forward, many of those hard learned through experience and those stick with you even more than those you read about. And your willingness to share the journey with everyone here has literally LITERALLY saved people thousands of dollars along the way. Bravo, and looking forward to your continued journey here. I really hope you'll continue to keep us updated. After all of this, we are invested in your journey too! Cheers. If you ever wanna talk Indianapolis REI, hit me up. :)

Keep in mind though in all fairness in the beginning every month Tyler would pop on and say he got his check on time and for the full amount there were other folks that invested based on that.. no matter what others of us were saying at the time.. it goes both ways. Tyler is very LUCKY .. some of these other folks dumped 300 to 500k into this stuff IE their lifesavings and or their entire 401k.. those are the sad cases... I suspect tyler got a 20k education or so.. and down the road he goes..  

[Cory O'Dell]

It was a lot to catch up on, but definitely found the thread valuable and appreciate you taking the time to frequently update the community. Best of luck in the future!

Cory