Traveling is sexy, especially if you don’t do it very often. That’s why I was so excited to attend my first real estate investing seminar. I would soon learn everything I needed to know about how to get rich investing in real estate AND fly across country to do it. Okay, Phoenix to Denver isn’t exactly across country but it was still exciting nonetheless. The icing on the cake was I got to stay at a Holiday Inn – can you say free continental breakfast? Yes, I was a real jetsetter.
It was 2001. I’d just finished reading Robert Kiyosaki’s book Rich Dad, Poor Dad. His message was very clear – the only way a regular guy like me could achieve financial freedom was through real estate investing.
So I did what most newbie real estate investors do. I went online and found a weekend seminar. I spent money on airfare, a hotel room, meals and ground transportation. I listened to 8 different speakers in two days. By the end I dropped $600 on a lease/option tape set and another $600 on a foreclosure course.
A year went by. I closed two deals and pocketed about $8,000. Not satisfied with my results I did what most newbie real estate investors do, again. I spent more money ($2,700) and flew further away (Atlanta) for a weekend boot camp called How to Get Lenders Fighting to Give You Money.
Now if the title of this course doesn’t make you laugh out loud then there is something wrong with you. Who would pay $2,700 for something this ridiculous? The dope writing this post, that’s who.
Here’s what I was told to do that weekend, step by step:
- Find a small community bank.
- Schedule a meeting with the community bank VP.
- Show up to the meeting in a suit and tie.
- Explain to the bank VP that I own a real estate investment business.
- Ask for a line of credit similar to one a furniture store or car dealership gets to purchase inventory.
That’s it. The bank VP will then immediately draw up the documents for a $500,000 line of credit to buy an inventory of houses. Believe it or not I tried this – 7 times. Nobody was fighting to give me money but I could swear a few of the VPs I met with were fighting to avoid laughter.
I stumbled around in the dark for about another year. The lease-option-foreclosure thing was going nowhere. And despite my fancy suit and charming smile the lenders weren’t lending.
Out of desperation I called William Kozub, a local real estate attorney. He had just written an article about real estate investing and I wanted to pick his brain. William gave me the best real estate investing advice I ever got. He told me that if I was serious about learning how to invest in real estate I needed to stop wasting time and money flying all over the country attending these boot camps. He said you need to learn how to invest from someone who is doing it in your own backyard.
A week later I enrolled in a short sale-foreclosure course for Realtors. I met a guy in the class who connected me with a real estate investor that was buying houses at the courthouse steps. This investor gave me a shot working for him as a bird dog. My apprenticeship lasted about a year and I learned more (and made more money) than I ever did attending boot camps.
The lesson here is pretty simple. If you want to learn about real estate investing then find someone in your area that’s doing it. Make it worth their while to help you get started. Save the money you were about to spend on the boot camp and buy something worthwhile – like a nice suit and tie. It may come in handy some day.
{ 22 comments… read them below or add one }
Sometimes you’ve just gotta learn the hard way . . . .. . thanks for sharing your experience with the rest of us!
MH, that seems to be the only way I know how to learn. I can be pretty stubborn. I blame my parents.
Sounds like a great plan
Liz, that’s what I appreciate most about Bigger Pockets – you can find those investors here and they are willing to help.
Great article Marty. Why is it the best advice always seems to lead to the most elbow grease?
Kristin, I fell into the trap early on of believing that all you had to do to succeed in real estate investing was put up some bandit signs and a cheap ad in a small local newspaper. The next step was to wait as your phone rang off the hook with motivated sellers. It took me almost two years to discover that this doesn’t work – at least not in Phoenix. Thanks for reading!
I can’t really add anything, Marty; the advice is sound and what new investors need to hear. Hopefully more and more people take heed of local successful mentors vs. wasting their time on self-proclaimed gurus who offer little personal advice, and who often time are just marketers vs. actual, hands-on-the-ground investors. As you know, BiggerPockets creates a great environment for finding these folks. Another great post!
Josh, if only I would have found Bigger Pockets instead of that seminar in Denver when I was looking for education back in 2001! It would have saved me thousands of dollars.
We weren’t able to do that for you, but people are taking advantage of the site and are saving those thousands now . . . hopefully we can continue to expand our footprint and save millions of more people from throwing away good money that they could be spending on deals.
marty, i appreciate your honesty…my suspicion is there are lots more folks who blew money on these courses than would care to admit..good article
Bryan, my advice to anyone considering paying for real estate investing education is this – ask for recent HUD settlement statements from the instructor AND a P&L for each deal. If they can’t or won’t produce this information for you then find the exit.
I’ll admit me and the wife flew to Vegas for a weekend seminar, should have know when it was in Vegas. But the good thing is I had my business model already set up so we stayed for a week and wrote it all off a business education. Your right in hindsight about the information they give, but on the good side it gave me enough information to figure out which direction we were interested in pursuing and the terminology to use in order to know what to look for when I went to find out more info on my own.
It’s amazing how much the hype of a guru course can cause us all to spend wastefully when the answers are right in front of us in our local market. It’s a good lesson that opportunity is everywhere if you train your eyes to see it.
Matthew, I’m starting research for a new post about gurus. I will keep a list of all the catchy phrases they use to reel us in – like “we’re crushing it with XYZ real estate investing system and so can you!” If anyone reading here sees stuff like that please forward it on to me. Thanks!
Thank you for a great article, I know exactly how you felt attending to these kind of boot camps or seminars. From my own experience boot camps like this can sometimes make you feel less confident and confused. I’m European and I believe this approach is very american.
Good luck with your business
I’ll let Marty speak for himself, but I think he’s saying you don’t have to attend a bootcamp like that to realize success. There’s so much free education out there, especially from biggerpockets and its members. Instead of spending $6000-8000, I’d suggest spending 80 hours educating yourself by writing down your goals, coming up with a strategy, and learning all aspects of that strategy from articles, forum posts, and lunches with veteran real estate investors. Just my .02.
Great advice Mathew. It’s worth a lot more than two cents.
Marty,
I was wondering if you could provide any suggestions to a fellow Phoenician regarding how to network with established real estate investors to learn the business. I am brimming with an eagerness to get out there and learn but would love to establish a relationship with some local REIs.
I have identified local REI clubs as a starting point to network with those who are in the market. I’d love to work, as you did, as a bird dog in order to gain a better understanding of the inner workings. If you agree that attending these local REI clubs is a good starting point what would your suggestions be to me to broach this subject? Would something along the lines of offering splitting deals in exchange for expericen?
Any advice that you have is appreciated. Thank you very much.
Sincerely,
Geoff
Sorry that I am late to the party.
Curious. Kiyosaki’s message from 2001 was “the only way for a small timer to accumulate wealth is through buying real estate.” Since the residential real estate market went through a tremendous roller coaster (mostly down) starting in 2007, I wonder how Mr. Kiyosaki now views that advice?
It is true what you say and I am happy for you that you found the right way at the end. Honestly I learned what you learned without paying too much for boot camps as it is also written in the Rich Dad books. They say start small and in your neighbourhood and learn from people who are doing it. Good to hear that you learned from your mistakes and hopefully many people will read this before investing too much while starting out.
So what did you actually learn???? You make money when you buy, not when you sell!!!
Eat my dust Donald Trump!