Last week I wrote an article about “Lucky”, the wanna-be real estate tycoon (article). The article was meant to be a tongue-in-cheek story, yet many people took it seriously. The fictional character “Lucky” was a composite of many people that I have met over the years. He was portrayed as someone who wanted to get rich quick, yet was too lazy to work for it. He kept looking for short cuts and was certain that getting rich in real estate was easy if only he could get someone to reveal the secret formula.

There are many companies out there that prey on these people. They offer a free seminar that is nothing more than a sales pitch. They look to sell books, tapes, sales courses, boot camps and mentoring programs. They hold themselves out to be experts in the field of real estate investing. What they really are is experts in marketing. When someone buys a program the company is generally looking to upsell them, or get them to buy additional programs.

While there are a lot of trainers who have something valuable to offer, many of these “gurus” have little or no investment experience. The company may target those who are looking for easy money, but regular people get caught as well. People who are legitimately trying to learn something can easily get burned. My character, Lucky, was shown as someone who couldn’t make it as an investor yet claimed to be an expert who could teach others.

The Not So “Lucky” Ones

Like many works of fiction, the story of Lucky does have a factual basis. I know of a couple who got burned by a “Lucky” type guru. They were hard working people who wanted to invest for their future. They had done well on their own home and wanted to try their hand at investing in real estate. The market was flying but they didn’t know where to begin. They wound up going to a “free” seminar where they ended up enrolling in a boot camp program. While they did learn a lot, they were still uncertain. At the boot camp they were convinced to sign up for the mentoring program. It was a lot of money but they were assured that they could make it back on one deal.

This couple was looking to invest in the Las Vegas real estate market when it was very close to the peak. Their so-called mentor coached them through the purchase of a house at a price that wasn’t any better than what they could have done on their own. The idea was to use the property as a rental while they waited for the inevitable appreciation. The rent didn’t come close to paying the mortgage let alone the other costs involved. They were almost $500 in the red every month. They were told not to worry because they would make all of this back and more.

The Sad End

Unfortunately the ending to this story is all too common. The real estate market collapsed and the house dropped to a price that was significantly less than the mortgage balance. They couldn’t keep up with the payments and let the property go into foreclosure. They lost the almost $20,000 for the training and mentoring program as well as the down payment on the house and two years of negative cash flow. The total loss was almost $100,000. To make it worse, a lot of the money had come from a home equity loan on their personal residence.

It turned out that they had no legal recourse because there was no fraud involved. They just followed bad advice from someone that was supposed to be an expert. They were not looking to get rich quick, they just wanted a better life. They were well aware that they didn’t have the proper knowledge and tried to acquire it. Unfortunately they just trusted the wrong person.

Do Your Homework

Before engaging the services of a mentor or enrolling in some course or boot camp, do your homework. Has the person you are looking to learn from actually been a successful investor? Have you checked references before turning over your hard-earned cash? Ask the hard questions and verify the answers. Be careful because “Lucky” is out there.

If you're new here, you may want to subscribe to our RSS feed or sign up for our real estate social network. Thanks for visiting!

Tags: gurus, Learn Real Estate, real estate, Real Estate Fraud, real estate guru, real estate investing, real-estate-scam, training

This is the saga of “Lucky” the newbie investor. Lucky has big dreams of being an ultra successful real estate mogul. He is addicted to all of the flip-and-grow-rich TV shows, he just can’t get enough. He sits in front of the TV night after night watching property escalator, real estate jocks, flip this flophouse and various other fantasy shows.

He gets so excited that he can’t sleep, so he stays up watching the late-night infomercials featuring the latest real estate gurus. His mind is racing a mile a minute. “This is so easy,” Lucky thinks to himself. He’s just trying to figure out how to get started. There has to be a really easy way to do this.

The Morning Paper

The next morning Lucky is sitting at the kitchen table having coffee and reading the daily newspaper. As he’s perusing the disappointing results from the racetrack pages, he sees a full-page ad on the page opposite the one he’s reading. The headline screams at him Do You Want To Be Rich? – “yup ‘, Dreamed Of Making It Big In Real Estate? – “uh-huh”, Is Your Credit Score Hovering Around Absolute Zero? - “that’s me”, Would You Like To Learn How To Do Deals With No Money? - “hell yeah!”, Come To Our Free Seminar, - “awright!”

Lucky is so excited. He is sitting at the seminar with hundreds of other tycoons in the making. One guru after another is doing a flashy presentation and telling them all how rich they are going to be. All they have to do is buy the various sets of books and tapes and all of the secrets will be revealed to them. Lucky is pumped! He figures that if he sells his Pokeman collection and Star Wars figurines, he can raise enough cash to buy the program. After all, its only $3,000, what’s that compared to the millions he’s going to make? Heck, with these programs you don’t need any cash or credit to do deals.

Deals Everywhere

Lucky reads through the material and listens to the tapes. He is so excited that he immediately starts looking for that first deal. He has to buy something right a way before he misses out. The gurus said that the current downturn is nothing more than a great buying opportunity. There is nothing to fear because real estate only goes up and the market is going to turn around any minute. Just get out there and start making offers. So he does.

He calls a real estate agent and says he wants to buy a bunch of houses quickly. The agent asks him about his investing experience and if has been pre-qualified. He also wants to know how much he has available for down payments. To all of this Lucky responds, “What do I need that for? I’m going to buy with no money down!” The agent hangs up.

Undeterred, Lucky heads down to the courthouse for the weekly foreclosure auction. He signs in at the registration table where he is asked about having certified funds ready. Lucky is confused. “Why do I need a check? I’m going to buy with no money down. Isn’t that how it’s done?”

There Has To Be A Better Way

Lucky heads down to the next meeting at the local real estate investment club. He’s chatting with several of the successful investors and explaining his frustration with doing a deal. One of these investors takes pity on him and tries to point him in the right direction. He tries explaining that investing in real estate takes a lot of hard work and success doesn’t happen overnight despite what the gurus say. There are no shortcuts on the road to success and it is extremely important to take the time to get educated. Lucky gets irate and blurts out that he’s got more than enough education, “I’m a ninth grade graduate” he yells as he storms out of the meeting. Heck, if he wanted to do that much work he’d just get a job like his mother keeps telling him to.

I was watching TV one night wondering what ever happened to Lucky. As I’m surfing through the channels I can’t believe my eyes. There he is pitching his program, Lucky’s Way to Real Estate Riches. Once again this just proves that those who can do, those who can’t teach!

Tags: gurus, Learn Real Estate, real estate, real estate guru, real estate investing