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!

[Bill F.]

@Steve K.

Steve, My previous post was more aimed at what causes people to ignore all the signs of a poor investment and less arguing that MI thought through all of these facts before hand. Most of those misjudgments could apply to any scam, guru, or sub optimal investment, not just OOS TK. 

You seem to have done far more research into the specifics of the case than I have so I’ll defer to your expertise; however, I’m still not sold 100% that this started out as a scam from the get go. It’s obvious MI didn’t put a lot of thought into this at all. It seems to be a right time right place right (or wrong) people combined with greed to make this happen and less a Dr. Moriarty character running Clayton like a puppet. After all real criminal masterminds don’t leave voicemails threatening to kill other PM’s. That’s called motive in our system of jurisprudence.

p.s., +1 for the phrase Faustian bargain.

[Son D.]

@Steve K. Maybe when Clayton Morris started the company he wanted to be a legit TK company and used Bert Whalen as the on the ground partner. I find it hard to believe that he would start out REI with the intention of building his name only to then scam as many people as he could so he could quit his lucrative, stable TV anchor job. Even OP had some defenders here on BP when the complaints first started coming out. Somewhere along the way Bert probably thought he could make more money being the seller rather than just a contractor. Clayton was content with making $6500 a pop without doing any dirty work. It's like wholesaling but with buyers coming to you instead. Like @Jay Hinrichs have said over and over many times in different threads, it is clear that Clayton knew his business turned ugly years ago but the money was too good to pass up.

CM stopped putting his own name on contracts a long time ago. My contract was signed by Natalie Bastin. If I was to go solely on documents provided by the title company, you wouldn't know who MI was. Natalie was said to be the manager for Oceanpointe who was supposed to provide answers to investors but hid behind the frontline of phone operators. 

You may be right about Bert Whalen as he seems to be like a ghost on paper. The difference is hundreds of investors currently know who Keyser Soze is and what he looks like. He was even shown on a deleted MI youtube video. Lawsuits need to name both MI and OP as defendants as they're both complicit on this fraud.

For those who are following this saga for entertainment here's an update:

"An Ex-Fox News Host Pitched ‘Financial Freedom.’ His Clients Want Their Money Back."https://www.nytimes.com/2019/03/25/sports/fox-news-clayton-morris-indianapolis.html

[NA NA]

LOL the heat is definitely turning up on our boy Clayton

https://www.nytimes.com/2019/03/25/business/fox-ne...

https://www.indystar.com/story/news/investigations...

So I wonder when Fox and Friends will be Fox and he's not our Friend.

[Patrick Shawn Faherty]

Sorry for everyone who is having bad experiences with Clayton and Co. I feel really fortunate that I didn't move forward them a few years back when I had my first call with one of their staff.  I was wondering if this would make main-stream media and I'm glad NYT has picked up on it. I wonder if Fox & Friends will...? 

[Jay Hinrichs]

Originally posted by @Son D.:

@Steve K. Maybe when Clayton Morris started the company he wanted to be a legit TK company and used Bert Whalen as the on the ground partner. I find it hard to believe that he would start out REI with the intention of building his name only to then scam as many people as he could so he could quit his lucrative, stable TV anchor job. Even OP had some defenders here on BP when the complaints first started coming out. Somewhere along the way Bert probably thought he could make more money being the seller rather than just a contractor. Clayton was content with making $6500 a pop without doing any dirty work. It's like wholesaling but with buyers coming to you instead. Like @Jay Hinrichs have said over and over many times in different threads, it is clear that Clayton knew his business turned ugly years ago but the money was too good to pass up.

CM stopped putting his own name on contracts a long time ago. My contract was signed by Natalie Bastin. If I was to go solely on documents provided by the title company, you wouldn't know who MI was. Natalie was said to be the manager for Oceanpointe who was supposed to provide answers to investors but hid behind the frontline of phone operators. 

You may be right about Bert Whalen as he seems to be like a ghost on paper. The difference is hundreds of investors currently know who Keyser Soze is and what he looks like. He was even shown on a deleted MI youtube video. Lawsuits need to name both MI and OP as defendants as they're both complicit on this fraud.

For those who are following this saga for entertainment here's an update:

"An Ex-Fox News Host Pitched ‘Financial Freedom.’ His Clients Want Their Money Back."https://www.nytimes.com/2019/03/25/sports/fox-news-clayton-morris-indianapolis.html

the Indy star has two pieces now.. the second one is very thorough.. I suspect that this does not end well for Mr. Morris.. you can spend your way out of civil litigation.. but the AG's in NJ and IN  sink their teeth in and there are criminal complaints.. He will be deeding his home over to his defense team.. I wonder when he is going to get a cease and desist. ??  

[Steve K.]

Originally posted by @Son D.:

@Steve K. Maybe when Clayton Morris started the company he wanted to be a legit TK company and used Bert Whalen as the on the ground partner. I find it hard to believe that he would start out REI with the intention of building his name only to then scam as many people as he could so he could quit his lucrative, stable TV anchor job. Even OP had some defenders here on BP when the complaints first started coming out. Somewhere along the way Bert probably thought he could make more money being the seller rather than just a contractor. Clayton was content with making $6500 a pop without doing any dirty work. It's like wholesaling but with buyers coming to you instead. Like @Jay Hinrichs have said over and over many times in different threads, it is clear that Clayton knew his business turned ugly years ago but the money was too good to pass up.

CM stopped putting his own name on contracts a long time ago. My contract was signed by Natalie Bastin. If I was to go solely on documents provided by the title company, you wouldn't know who MI was. Natalie was said to be the manager for Oceanpointe who was supposed to provide answers to investors but hid behind the frontline of phone operators. 

You may be right about Bert Whalen as he seems to be like a ghost on paper. The difference is hundreds of investors currently know who Keyser Soze is and what he looks like. He was even shown on a deleted MI youtube video. Lawsuits need to name both MI and OP as defendants as they're both complicit on this fraud.

For those who are following this saga for entertainment here's an update:

"An Ex-Fox News Host Pitched ‘Financial Freedom.’ His Clients Want Their Money Back."https://www.nytimes.com/2019/03/25/sports/fox-news-clayton-morris-indianapolis.html

 Complete circular firing squad now and hopefully the judges and jury’s involved will be able to see through all the blaming/ motions to dismiss  and realize this entire business and everyone involved was fraudulent starting with the over-promising video producers, continuing with the bait and switch sales team, and of course the fraudulent sales contracts, fake rehabs, fake tenants, incompetent property managers, etc. Hard to feel bad for anyone involved on the MI/OP side, even the sales people should probably go before a judge and jury.

[Will Zena]

It finally happened.  Took long enough but now news appears to be spreading like wild fire.

[Jay Hinrichs]

Originally posted by @Will Zena:

It finally happened.  Took long enough but now news appears to be spreading like wild fire.

A good litigating attorney will roast Morris in a depo..  because he was either lying then or lying now.. as one attorney stated cant have it both ways.. and for sure it was selling a massive amount of real estate with NO license  LOL 

[NA NA]

Jay I only saw the one article from the Indy Paper would you mind posting the link to the 2nd.

[Jay Hinrichs]

Originally posted by @NA NA:

Jay I only saw the one article from the Indy Paper would you mind posting the link to the 2nd.

https://www.indystar.com/story/news/2019/03/26/fox-and-friends-clayton-morris-investment-real-estate-scheme/3128857002/ 

[NA NA]

Oops just saw this one.

https://www.usatoday.com/story/news/investigations...

[Jay Hinrichs]

Originally posted by @NA NA:

Oops just saw this one.

https://www.usatoday.com/story/news/investigations...

all the out lets are picking it up..  the end Is Nigh..  

the one with the baby passing away that will be something..  you know they will lawyer up and be going after everyone. 

[Will Zena]

Originally posted by @Jay Hinrichs:

Originally posted by @NA NA:

Oops just saw this one.

https://www.usatoday.com/story/news/investigations...

all the out lets are picking it up..  the end Is Nigh..  

the one with the baby passing away that will be something..  you know they will lawyer up and be going after everyone. 

 Oh wow. That could take this to another level as well. That's terrible. I need to read this one. Now I can't keep up with all the news articles about this.

[NA NA]

This seems to be coordinated the stories are basically the same but the outlets have everything correct. I agree 100% the passing of a child is sure to draw the ire of the AG and the Feds. Clayton better get that home sold and to a non extradition country no matter how many LLC's you've got criminal conduct isn't shielded from that.

[Michael Tadros]

Thank god for the BP community and the investor friendly investors (pun intended) who help each other.  As a virgin RE investor looking for his 1st deal I came awfully close to pulling the trigger on a MI deal.  I can’t express how thankful I am to all of you for helping to NOT make my 1st deal my last deal!

[NA NA]

Why don't we all go onto YouTube and flag their videos? They're still trying to scam people wouldn't that help to keep the damage to a minimum?

[Jay Hinrichs]

Originally posted by @NA NA:

Why don't we all go onto YouTube and flag their videos? They're still trying to scam people wouldn't that help to keep the damage to a minimum?

I would if I new how   

[NA NA]

When you go on to YouTube underneath the subject line

You'll see the thumbs up thumbs down icons, share, save, then three dots that'll look like this … click on the three dots and you can report spam and scam broadcast. Also we should go on Wednesdays when he runs his live feeds and let people in the chatroom know what the heck is going on. Just a thought.

[Jay Hinrichs]

Originally posted by @NA NA:

When you go on to YouTube underneath the subject line

You'll see the thumbs up thumbs down icons, share, save, then three dots that'll look like this … click on the three dots and you can report spam and scam broadcast. Also we should go on Wednesdays when he runs his live feeds and let people in the chatroom know what the heck is going on. Just a thought.

 do you have to have an account with U tube to be able to leave a comment I never can leave comments on any of the sites I visit I suspect because I don't have a log in ??? maybe ?

[NA NA]

I think anyone can flag offensive content.  Also what about reporting his FB page, and Twitter?  The News articles alone should show he's public nuisance. 

[Steve K.]

Originally posted by @NA NA:

Why don't we all go onto YouTube and flag their videos? They're still trying to scam people wouldn't that help to keep the damage to a minimum?

Plus one on this. I’ve been reporting their channel for months with no results but maybe if enough people do it YouTube will finally pay attention. Sad to think people are still signing contracts with MI and they don’t have the common sense to stop taking people’s money even though it’s abundantly clear they can’t be trusted with it. Even Clayton’s mom got scammed, how is he justifying taking people’s money when he allowed his own mom to get scammed?

[Will Zena]

I just reported it and sent links to the articles in NY Times and a couple others.

[NA NA]

 So his Mom almost lost a house for 10k at a tax sale and had to take a loan? You mean to say you steal 5 million and won't give your Mom 10k..... I think that says all we need to know about these jokers. I don't believe for a minute they lost a penny because of OP. They gained 5 million if anyone anywhere near to them lost a penny I'll eat my hat. His whole family works for him and LOL they're sales force is growing? I liked the part about the astrologist and psychics telling them to keep going and everything will work itself out. His kids are old enough to read to know what is going on you know the other kids at school know as well. I guess when you go to Europe every month it really doesn't matter living high on the hog on other peoples money.

[Rick Imby]

I have watched several Morris Invest youtube videos.  With the volume of his videos and his viewers he is making a really good living just off his youtube channel.  I was suprized when I posted a comment he responded almost immediately but now I understand why.  They have virtual assistants that are looking at all posts and deleting anything negative as soon as it hits.

I am so disgusted with Morris invest.  Their youtube channel income and 50 rentals paid off could have provided them with a king's quality of life.  

Funny how this thread started as a probably testimony of how a MI investment was a good idea.

[Tyler Jahnke]

WOW.

I can't believe it's been 3 YEARS since I started my journey in the real estate investing world, and subsequently...I started this POST.

Obviously, I moved away from the monthly updates I used to give concerning the first property I invested in. I've been busy! I've learned A LOT these past 3 years. And my life has changed for the better.

If you remember, I started this post when I was in the middle of buying a <$40k house in Indianapolis, all the way from the comfort of my home in California.

A LOT has happened since then. Here's my investing journey in a nutshell:


-bought a cheap house in a bad neighborhood

-bought a second house in a better neighborhood

-sold my first house

-bought a duplex in a nicer neighborhood

-invested in an 80-unit apartment complex in Louisville as a limited partner

-invested in a 164-unit apartment complex in Phoenix as a limited partner

-I was interviewed on a couple of podcasts

-Now, I’m on the general partner side of a 94-unit in Phoenix that closes in October

So, where the heck am I going with this post?

I guess it’s to touch on a few things...

You’ll never know where the road will take you. I never imagined myself being where I am today. But these 5 things have led me to a world of OPPORTUNITY and they can do the same for you:

1. Network! Networking has been the single most important factor in my investing journey. Email, call, text, and meet people every day.

2. Learn from every single challenge. Every negative has a positive. You either win or you LEARN!

3. Have a vision for your life. And think about that vision every day. You are your thoughts!

4. Figure out what your unfair advantage is. And embrace it.

5. Understand what your best skills are. Go all-in on those skills and leverage them to provide value for others.

I wish you the best of luck on this journey!

-Tyler