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Evaluate this mentorship deal

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Andrew M.

Feb 08 '13, 01:17 PM


I don't know if these kinds of deals are common. What I will say is these guy's aren't gurus. They don't have any books to sell or cd's or speak at REI meetings.

The two guys offering this program are local wholesalers and rehabbers. I found the program while I was on their site looking for properties to buy.

The program is setup like this. I would pay $5k upfront.

In exchange for this I would get 2 things. Obviously all of it would be laid out in a contract.

1) Approximately 35 hours of instruction. According to them half of this would be reviewing their methods and how they structure their deals in their office. I would get access to all their contracts and scope of work documents and written materials they use for evaluating and estimating costs on properties.
The second half of the instruction would be a series of tours of their current rehab projects ( they said they generally have 10 to 15 going at any time) and properties which they are considering purchasing as flip projects.

2) Guidance through 5 flip projects. I would have to find out exactly what this includes but basically they will help me select a property ( they are also wholesalers so they can also help me source property) , evaluate rehab costs, get comps, manage contractors and market the property at sale time. They can also help me go through the process of getting hard money.

We would split profits on these rehab projects 50 /50. If i finish the full 5 rehab projects with them, I will also get my original 5k investment back.

I have very mixed feelings about this. I know anything where you pay up front is a red flag but I would imagine if it was specified in a well constructed contract it could be safe.

On the other hand I have talked to them on the phone and they were very professional. I would be able to visit them at their office and speak with references they provide of other people who have done the program.

I believe that they are extremely experienced rehabbers and know their market as well as anyone, it's more of a matter of how seriously they are going to take the partnership and if they are going to take the time to work with me step by step on these deals.

Anyway I'd like to hear any thoughts as to how I should approach this or if you think I should just avoid this right off of the bat.

Thanks!



Will Barnard Verified Moderator Donor

Real Estate Investor from Santa Clarita, California

Feb 08 '13, 01:23 PM
3 votes


So, $5,000 for 35 hours of instruction which is $142 per hour, then they get 50% of your profits on the first 5 deals you do!
Tell me where to sign!!!

This is a horrible deal for you and a grandslam for them. Think twice b efore even considering such an offering.



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com - For all Southern California House Flippers, Agents, and Wholesalers


Karen Margrave Moderator

Developer from Orange County, California

Feb 08 '13, 01:34 PM


An Ma Run.... not walk away! It's a scam.



Medium_tmg2Karen Margrave, The Margrave Group
E-Mail: [email protected]
Telephone: 949-933-3955
Website: http://www.themargravegroup.com
Licensed Brokers & General Contractors R.E. Developers (Parlay Investments). Orange County CA


Wayne Brooks

West Palm Beach, Florida

Feb 08 '13, 01:37 PM
2 votes


So, they have 10-15 flips going. Is that their flips, or 10-15 "students" doing one each?

Research the properties for sale on their site, find who the owners are. If they use a consistent name for their "own" flips, it should be easy to check their track record. This may tell you everything you need to know.



James Vermillion Donor

Real Estate Investor from Lexington, Kentucky

Feb 08 '13, 01:42 PM
1 vote


First off, I agree with Will. I do have a question though, it says they will guide you through "the process of getting hard money"...does that mean you are responsible for financing 100% of the deal?

Lets say you make 15K on all 5 rehabs...you just paid almost $40K and had to finance the deals by yourself. That is a great deal...for them!



Don Konipol

Hard Money Lender from Houston, Texas

Feb 08 '13, 02:08 PM
1 vote


"What I will say is these guy's aren't gurus. "

They are the definition of gurus!



James H.

SFR Investor from Texas

Feb 08 '13, 02:12 PM
1 vote


Man, there is so much interest in paying for mentorship. I think I need to offering RE advice for a fee. But how would I get started? Are there mentors that I can pay that will show me how to mentor for pay?



James Vermillion Donor

Real Estate Investor from Lexington, Kentucky

Feb 08 '13, 02:15 PM
2 votes


Originally posted by Brian Hoyt:
Man, there is so much interest in paying for mentorship. I think I need to offering RE advice for a fee. But how would I get started? Are there mentors that I can pay that will show me how to mentor for pay?

Be very careful Brian...with all this hype it seems the mentorship bubble is about to burst. I would hate to see you get caught up in that. If you must however I will be willing to mentor you on mentorship...but first I will need to take a quick class on how to mentor future mentors.



James H.

SFR Investor from Texas

Feb 08 '13, 02:26 PM
3 votes


Thank you @James Vermillion! What a life saver. Just think how much faster I will be able to start making money once you get trained.

Is there anyone willing to train james to train me to train?!



Josh Dotzler

Real Estate Agent from McKinney, Texas

Feb 08 '13, 04:01 PM


An, I wouldn't dismiss this coach so quickly. Half the people that just posted on your question have previously said that instead of paying for a "coach" you should just find a mentor and simply work for free for that person... to me that seems like you are giving that mentor just as much. It depends on how you value your time and effort. Talk with their students, see if they are for real. 1/2 of 5 deals is better than all of 0 deals (or worse). Good luck.



James Vermillion Donor

Real Estate Investor from Lexington, Kentucky

Feb 08 '13, 04:08 PM
1 vote


Originally posted by Josh Dotzler:
An, I wouldn't dismiss this coach so quickly. Half the people that just posted on your question have previously said that instead of paying for a "coach" you should just find a mentor and simply work for free for that person... to me that seems like you are giving that mentor just as much. It depends on how you value your time and effort. Talk with their students, see if they are for real. 1/2 of 5 deals is better than all of 0 deals (or worse). Good luck.

I would think working for a mentor for free is a little different than funding their deals. That is the part of this that really makes this a bit ridiculous to me. Also, I would much rather work for free for someone and do my own deals than to pay someone and fund deals while giving them half the profits...especially for FIVE deals.

Lets just say they charged for their time, to reach $40K (even at the insane hourly rate @Will Barnard pointed out, that is 281 hours, or 35 full work days.



Karen Margrave Moderator

Developer from Orange County, California

Feb 08 '13, 04:28 PM


@Josh Dotzler An Ma You won't see me telling anyone to work for free, and you sure won't see me agreeing someone should agree to be robbed.
@Will Barnard Brian Hoyt @James Vermillion @Don Konipol

1. How many of you have paid for a mentor?
2. How many of you worked for free for a 'mentor?
3. How many of you have mentored anyone for a fee?
4. Who has mentored people for free?



Medium_tmg2Karen Margrave, The Margrave Group
E-Mail: [email protected]
Telephone: 949-933-3955
Website: http://www.themargravegroup.com
Licensed Brokers & General Contractors R.E. Developers (Parlay Investments). Orange County CA


James H.

SFR Investor from Texas

Feb 08 '13, 04:43 PM
2 votes


Originally posted by Karen M.:

1. How many of you have paid for a mentor?
2. How many of you worked for free for a 'mentor?
3. How many of you have mentored anyone for a fee?
4. Who has mentored people for free?

1. I have not paid for a mentor
2. I have not worked for a mentor, paid or free
3. I have not mentored for a fee
4. I have shared my knowledge freely with anyone who has asked. Since so many people have been willing to share their knowledge with me (for free), I only feel right passing on what I know. Truth is, most people say they want to know and then they get distracted with a shiny object.



Daniel Fisher

SFR Investor from Atglen, Pennsylvania

Feb 08 '13, 05:36 PM


If I read the OP correctly, the original 5K gets returned when 5 deals are completed.
Why is this such a horrible deal?



Dell Schlabach

Rehabber from Canton-Akron, Ohio

Feb 08 '13, 06:21 PM


I have not paid for a mentor, but I have paid around 10,000 for a few bootcamps.

I have not worked for a mentor for free, however if had it most likely would have saved me a total crash that cost me around 500,000

I have mentored a few people for a "fee"

Fellow 1. 2,500 per deal up front, I find the deal we use his lenders money, we split profits 50/50 on the first three deals. I stage the houses, we use my realtor to sell. Top retail realtor in area, $1500 selling

Fellow 2 and 3. 2,500 per deal up front, when he closes on a house, on the buy side. If he makes over 15,000 we split 50/50 above 15k. I stage, he pays for the materials and he gets my realtor deal.



Dell Schlabach, BenchMark Properties
Telephone: 3304326927
Dell Schlabach BenchMark Properties


Karen Margrave Moderator

Developer from Orange County, California

Feb 08 '13, 06:36 PM


@Dell Schlabach They provide the financing AND pay you a fee? Seriously? Anybody want to be mentored on developing multi million dollar commercial office buildings? ;)



Medium_tmg2Karen Margrave, The Margrave Group
E-Mail: [email protected]
Telephone: 949-933-3955
Website: http://www.themargravegroup.com
Licensed Brokers & General Contractors R.E. Developers (Parlay Investments). Orange County CA


Josh Dotzler

Real Estate Agent from McKinney, Texas

Feb 08 '13, 07:30 PM


James, you are right in that it does seem like they might be greedy asking for 50% on 5 deals... maybe just one or two deals or up to a certain profit. Also, while biggerpockets is a great tool, nobody here has a vested interest in the success of a fellow member, but a coach paid on the profit of a deal does. The coach gets a measly $5k if the student is a complete failure, that's hardly "funding" any deals, but if they are able to help the student succeed on a few different deals and avoid costly mistakes, I think it could be worth it. Again, a key piece of information that is missing is whether or not this coach's students have been successful. If their students have turned into a James Vermillion, a Brian Hoyt, a Karen M, etc... I'd pay $5k and 50% on a deal or two. Just my 2 cents, trying to give perspective from a newbie and not an experienced investor who already knows the ins and outs of the business.



Karen Margrave Moderator

Developer from Orange County, California

Feb 08 '13, 08:03 PM


@Josh Dotzler I know people that don't know the business are anxious to try to get in on the market while they believe there's opportunity, and they're trying to find a way to learn. It just bothers me that there are people that take advantage of them. The truth is, it depends on the market in the area where they doing the deals, and if there's actually real opportunity, together with the experience of the 'mentor', as to whether or not there's actual value in paying for mentoring.

Why not try to get a job working for a contractor or real estate investor or agent that does the types of deals you want to do?



Medium_tmg2Karen Margrave, The Margrave Group
E-Mail: [email protected]
Telephone: 949-933-3955
Website: http://www.themargravegroup.com
Licensed Brokers & General Contractors R.E. Developers (Parlay Investments). Orange County CA


Dell Schlabach

Rehabber from Canton-Akron, Ohio

Feb 08 '13, 09:01 PM


Karen M

Yes they do. If they do not have their own money or a lender I teach them how to find a lender. Figuring out how to get the money is an essential part of learning how to be a good rehabber.

I believe the value in a good mentor is to helps the student strengthen/solve his areas of weakness.

Some guys biggest challenge is being able to find money , some have plenty of money but cant put accurate financial projections together and get talked into buying terrible deals by clueless realtors in short skirts. Some know how to do the construction well, but have no flair for layout, design, color, staging, or for getting the house sold.

There are many areas that a wannabe rehabber can break down, the value of a mentor is huge in my opinion. He is there to help solve whaterver problem comes up, and they come up. With some guys everyday.

One of the fellows, before he hooked up with me and paid my outrageous price. He had done two previous deals, his first deal he spent about 6 month working on the house himself an ended up meeting about 4000 dollars, his second deal he ended up losing around 10,000 dollars.

His first deal that he did with me, it he had done about 6 weeks and made about 13000, after he had paid me 2, 500. His second and third deal he made a little over 15, 000.

The others mentor deals have similarly interesting stories, each very different.

I sense people on here think what I charged is excessive, I think its peanuts for the value recieved, and is not remotely as profitable as rehabbing if you figure out how to do it well. The amount of wannabe rehabbers, some pretty competent contractors and people successful in other businesses, attempting the rehab business that I have seen crash and burn and give it up, is significant.

I have also seen people pay a premimum and not get anything valuable in return. One friend paid 5, 000 for a RichDad Coaching, what a waste.

I have many times wished I had hooked up with someone successful locally, and paid them five or ten grand, or worked for free to learn the ropes, instead of spending it on the boot camps learning a few things I needed mixed in with days of stuff I was not interested in and afterwords being all excited to push projects and having nobody to ask when I ran into problems. Running trial and error for a couple years, crashing and burning, and only then figuring it out, a half devent mentor could have saved me a helluva lot of time money and grief.

Maybe its excessive, but I think it very much depends on what a persons experience, support group, and needs are.

Although my "fees" may seem excessive, The time and energy spend on a "mentee" unless they were highly competent in some area of the business, I wouldnt take another one on for that price.

Karen M, if the mentorship offer is available in the middle of 2015, ill have my five crews solid, and the systems fully implemented and functioning. I may be looking to venture into commercial, thats the area of buy snd hold thst interests me the most. ill see if you mentorship offer is still available ;-)



Dell Schlabach, BenchMark Properties
Telephone: 3304326927
Dell Schlabach BenchMark Properties


Brandon Turner Verified

Real Estate Investor from Montesano, Washington

Feb 09 '13, 12:32 AM


It might be a guruish business, but at least it isn't the $40,000 training some guys are charging now days for a once-a-week group phone call.

I do like that they have a vested interest in seeing the student do well, like @Josh Dotzler said. 50% of five deals does seem kind of high, but then again, if each deal was $20,000 - that's $50k more than An Ma had to begin with. I don't care if someone else makes money - as long as I do also.

So for me, it comes down to:

A.) is the $5,000 something you are willing to risk, and
B.) How motivated are you to complete the deal?

Just my 2 Cents! Thoughts?



Medium_bp-squareBrandon Turner, BiggerPockets
E-Mail: [email protected]
Website: http://www.BiggerPockets.com
REInvestor & VP of Growth @ BiggerPockets.com | Follow me on Twitter! @BrandonAtBP


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