Gurus that require profit sharing - Unethical or par for the course? 31 posts by 12 users

Posted: 08/23/2008 at 07:57PM

A real mentor has their own deals going. If they have to take part of yours there is something very wrong.

Now, on the other question about liability. I strongly encourage anyone I mentor to get an attorney, accountant and other professionals and I state flat out, if your attorney (accountant, etc) says anything that contradicts what I tell you, they are right and I am wrong. They are the ones who must stand behind their advice. I will help, suggest and advise but the liability for acting or not acting on that advice always lies with the mentee.

Posted: 08/23/2008 at 08:24PM

Great feedback gentlemen.

I strongly believe in caveat emptor, but I cannot stomach being directed to perform certain steps, then splitting the success once they are profitable, and suffering the consequences of the advice if it does not work out.

Taz, I truly agree with your comments, I suppose the liability became even more galling given the profit split. Absent the profit sharing, I would not have issues so much with the liability component.

Mike, the interesting thing is that this individual actually presents at the local REIA. That said, I already have three properties, two of them I purchased with the advice of free mentors that I met in the REIA.

Again, great feedback, nice to have feedback from my online mentors

Posted: 09/05/2008 at 04:09PM

Wheatie wrote:
>This just seems like thievery.

Isn't someone who has knowledge entitled to benefit from his knowledge? I have mentored some one and taken 50% of the deal and they were quite happy.

This student wouldn't have been able to do the deal without my guidance. They had already taken a very expensive course and had no deal. I gave them hands on advice throughout the entire deal. Sadly this person ignored everything I told them and all of my predictions came true. Fortunately the deal still made money and the student was elated.

While on the surface Wheatie's comment seems valid but what of the mentor who truly cares, works hard with the student, gives them sound advice and the student ignores the advice and the deal goes bad. Is that the mentors fault?

I believe there are good mentors and there are crooks. (sadly a high percentage of crooks) How they get paid or even whether they choose to get paid has little correlation to whether they are any good.

PS: I mean no disrespect to Wheatie as he regularly gives outstanding advice here for free.

Posted: 09/12/2008 at 08:32PM

Taking a percentage of a students profits is a slippery slope. I have seen too many instances where newbies are brought into deals that the so-called guru or mentor is -- gee, what is a nice word for screwing them? My sig other and I consult with people who have been mentored into bad situations. We dont partake of our clients deals. They need a neutral third party.

That being said, many newbies WANT someone to partner or JV with them because they are not comfortable doing a deal alone. It is a typical newbie request. Every time I hear someone stand up in a real estate meeting and announce that they are a newbie looking for someone to mentor and partner with them, I shudder. They are walking victims. Some mentors are responsible and do the right thing but there are so many people out there calling themselves mentors who are just out for fresh meat. A good mentor will give their student the information and confidence they need to create good deals on their own.

Barbara

Posted: 09/15/2008 at 12:28PM

I smell a rip off.

Care to mention the nationally recognized expert?

Posted: 09/15/2008 at 07:07PM

Great comments everyone. I am still evaluating the guru because I REALLY like the model, yet, it is highly unlikely that I will proceed

Care to mention the nationally recognized expert

I would love to provide the name, but I don't think that it would be fair to post and not allow the guru the ability to respond to any comments.

Does his Mentoring program also cost you money to join it?

Yes. Five figures.

Some mentors are responsible and do the right thing but there are so many people out there calling themselves mentors who are just out for fresh meat. A good mentor will give their student the information and confidence they need to create good deals on their own.

Nicely put. I really think the guru has very good intentions, but I really cannot stomach paying such a fee upfront and splitting profits.

Posted: 09/15/2008 at 08:08PM

First off Scottish, paying a mentor a large upfront fee and then on top of that, splitting the proceeds on a deal 50%/50% is not only excessive, but you would be a fool to sign (no disrespect intended).
If, and I mean if, you pay top dollar for a mentoring program, you should be able to locate & complete a deal on your own. If the mentor wants 50%, he/she should be bringing something else to the table, i.e. the financing, the cash down, or both.
On top of all that, if you feel the need to pay tens of thousands of dollars for a mentor program, you better be getting truley advanced investing startegies/techniques (commercial properties) or else you are tossing $$$ out the window.
As far as what Ned has stated, I agree that a good mentor who can reduce/eliminate the fear factor and bring the newbie to take action, deserves financial consideration for the effort. I also agree that a person who has paid upfront for mentoring would be more inclined to follow through as they have some "skin in the game" however, that fact does not ever consitute the mentor receiving 50% share/no skin in the game/large upfront fee.

As far as mentioning the guru, there is no harm in doing so as anyone here with personal knowledge or experience with that person can give you some insight regardless off the fact that the guru is not present to defend themself. This is not a court of law, but a forum in which experiences can be shared with others. Hiding who the guru is does not benefit anyone here, including yourself.

Posted: 09/16/2008 at 09:08PM

Barbara points out exactly why each and every investor should hold on to their wallets anytime a guru is within a mile or two.

Posted: 09/23/2008 at 06:31AM

Edited: 09/23/2008 at 06:37AM by Jeff T.