I have to say that this is one of my pet peeves.  What the heck is up with real estate gurus hawking tele-seminars, web-inars and seminars of other gurus?  I mean really – don’t they make enough money selling us their own stuff?

It seems lately that I am getting more and more emails from well known “gurus” that are promoting someone else all together!  I have to tell you that since I am in this business and have my own real estate club – I know exactly what they are up to and I think it stinks to high heaven.  It’s only about the money baby.  It’s never about them caring about you so much that they “don’t want you to miss this opportunity to see/hear ‘their good friend’…blah blah blah.” That’s just malarkey! The biggest culprits of these shenanigans seem to be those who have the biggest rip-offs to sell.  Yes – believe it or not there are gurus out there selling overpriced junk as “educational product”. There I said it!  (I hope I don’t wake up with a horse head in my bed tomorrow.)

Do you think these selling wizards care about you spending your hard earned money on their product and being successful?  I really don’t.  I think they care about selling us as much expensive product as possible with absolutely no care as to whether it’s good or beneficial to us. And – the worst thing is that some of these Gurus are not even real estate investors themselves.  Sure some might have been at one time (some of them not at all!) – but from what I gather – many of them don’t seem to be working real investors.  They are just speakers and product pushers.

Personally, I have made the choice to never buy another product from someone who is not a real estate investor NOW.   Sure there are a couple of old timers who used to be major players in SFR who are now just too rich to do these types of deals anymore.  Ten years ago – I did their trainings.  That was back in the good ‘ol days of when you paid for a boot camp and it was just that – a pitch free/no selling/ strictly education boot camp. Those seem to be few and far between these days don’t they?  Now you go to a $5000 boot camp and you still get a pitch fest when you are there! This is so bad… (Don’t get me started.)

Now don’t get me wrong – I think it is extremely important for investors to have continuing education and training!  Heck I probably spend about 10-15K a year for my own continuing education.  And I understand everyone needs to make a buck… but for gods sake… do we really need to buy a new product every month from a Guru that we already spent good money with – and it’s not even his product that he is hawking?  I should say not!

Over kill, information overload, and over the top…. Give me a cotton pickin’ break por favor!

Image Credit: Kansas City Real Estate Investing Blog

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

Those who run real estate investment clubs have a big challenge in lining up speakers for each meeting.  Clubs do not usually have the kind of budget that would allow them to pay for speakers, therefore they need to do their best to locate those that will speak for free.  This invariably results in the talk being given by someone who has a specific agenda or something to sell.  This is not necessarily a bad thing, you just need to keep the speakers ultimate motivation in mind when you listen to the spiel.

Some of these speakers are quite good and their knowledge is obvious.  On the other hand, some of the speakers leave you scratching your head and wondering if they have ever owned an investment property.  Investing veterans have little difficulty in separating the fakes from those who are the real deal.  Novice investors may mistakenly assume that if someone is speaking to a group he must know something.  Hopefully they will learn before they are burned by one of these phonies. 

 My primary purpose for attending monthly club meetings is for the networking and resulting connections ( see: Getting the Most From Your Real Estate Club ), however I do enjoy hearing from good presenters. My local real estate club had two very well qualified speakers at a couple of recent meetings.  While both were very obviously qualified to speak about real estate investing, their styles and agendas were a world apart.  

 Guru #1

At our May 2008 club meeting we had a speaker who specialized in foreclosures.  Certainly a timely topic and on that I was looking to learn more about.  I had seen this speaker once before and knew that he was a good presenter and very knowledgeable.  After introducing himself and providing his background, he openly stated his agenda.  He was not there to sell books, tapes or home-study courses, in fact he didn’t have any of that.  The business model for his company was to purchase bank REO (foreclosures) properties in bulk.  He then sold these properties as-is or after light rehab to investors at wholesale prices.  To do that he needed two things, properties to buy from banks and investors to sell them to.

What he was pitching was a two day seminar on how to locate, buy and finance the acquisition of these properties.  He was charging $1800 for the seminar with the guarantee that he would refund your money after the first day if you didn’t feel it was worth it.  He then proceeded to spend the next hour sharing some of his knowledge of the subject.  He was truly impressive and it was a great example of what you would get in his workshop.  He had over twenty people sign up and most of them were veteran investors who are not easily impressed.

 Guru #2

At our most recent club meeting we had another speaker with impressive credentials.  He is currently featured on one the house flipping shows and has a real estate company on the east coast.  The club heavily promoted the meeting because they do not usually have a name speaker and the resulting attendance was much larger than normal.  Many of the regular meeting segments were cut short to allow this speaker to have as much time as possible.

This speaker had an array of tapes and course material displayed, so his agenda was obvious to anyone who was paying attention.  He began his talk with his background in real estate and talked about all of the mistakes he made when he began.  He kept telling us that he was going to teach us how to do this, that, and the other thing during his talk.  I kept waiting for him to actually “teach” something but all he really did was talk about what he was going to tell us.

As the talk progressed it was laced with sales pitches for a computer program, home-study courses and his five-day boot camp.  Some of the pitches were very subtle while others were blatant commercials.  After 90 minutes he closed with a final pitch for his boot camp.  The regular price was $5,000, but is you signed up now it was only $2,497.  But wait, there’s more! He would include a $500 credit for your travel expenses and the first few people to sign up would receive the $2,000 computer program for $1!

A handful of people did sign up.  From what I saw they were newcomers to the club or novice investors.  None of the veterans were impressed enough to part with their cash. 

The Bottom Line

Both of the gurus were qualified to speak about real estate.  However their value was very different.  One was geared to marketing courses and boot camps to novice investors.  Those who sign up would most likely gain valuable knowledge, but would it really be worth the price?  The second guru was targeting experienced investors with a desire to participate in the foreclosure market.  I spoke to several of the attendees who agreed that there was definite value, but it was not for everyone.

If you are ever inclined to sign up for some gurus course, do so with your eyes wide open.  Is the course geared to someone with your level of experience?  What do you hope to gain from the seminar or boot camp?  Will you be able to implement what you learn or are you just falling for a sales pitch from a smooth-talking speaker? Buyer beware.

The great difficulty in education is to get experience out of ideas.
George Santayana

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

I love reading other folks’ stories discovering how they got into real estate investing. Everybody’s path is unique and entertaining. Reading the BiggerPockets forum this week, there was a thread on exactly that and it gave me the idea for this article. In the vein of “still getting to know each other”, I thought my story would help and entertain you. So here goes nothing…

Those Damn TV Gurus

The year 1987…the town Cheyenne WY…

If you remember that far back, TV gurus were in full swing. There must have been a dozen late-night informercials. Dave Del Dato, Charton Sheets, Robert Allen, Tom Vu ( “I’m rich you not” …hilarious), and a guy named Sharkey..or Shackly who said he was a “former teacher turned real estate millionaire” all had infomercials running at the time.

But those infomercials did their job. I couldn’t stop thinking about real estate investing. I didn’t have the cash for their courses, so I went to the library…and guess what?

Every one of them had a book in the library! Plus I found a bunch of other real estate investing authors who were actually better writers but had yet to land an infomercial deal.

I read them all in a weekend - 6 books - and started looking at houses Monday morning.

The Hunt for the First Deal

I discovered a friend of my wife was married to a real estate lawyer in town who handled all the foreclosure filings for the big banks. He had picked up a small 2 bedroom home that was condemned due to “in the wall” gas heaters…you know the porcelain jobbers you light with a match?

Other than needing a new central heating system and a kitchen / bath upgrade, it was a great house.

This lawyer made the mistake of telling me he bought it at the courthouse steps. So I looked up what the bid amount was in public records and knew what he paid…$24,300. He had it on the market for $38,000. I decided to keep looking.

I must have looked at 60 houses. I wrote a few low-ball offers to no avail. At night the bleakness creeped in like a thief trying to steal my dream. During the day, my wife’s un-approving glances weighed on my shoulders eroding my resolve to keep trying.

Over the next 45 days, my wife’s glances became stares, and the stares turned into arguments. She was worried. Worried I’d “do something stupid” or “get into legal trouble” or (my personal favorite) “embarrass me or my family”. After all, I was listening to those “ridiculous people on the TV”.

I tried to ignore all of it, but it wasn’t easy.

Ask and Ye Shall Receive

Another 2 weeks came and went with no success. Then lo and behold my wife was talking to her friend, who mentioned her husband the lawyer had purchased the foreclosure house I’d looked at a few weeks back using a 90 commercial loan… and the note was coming due in 20 days!

When my wife told me the story I knew what to do. I waited another 10 days, and wrote an offer. Knowing what he paid…I wrote a contract giving him $800 over his purchase price. I can remember his reaction at his dining room table like it was yesterday. Pissed off is putting it mildly!

He slammed his hand down on the dining table simultaneously leaping to his feet shouting, “You’ve got to be kidding, right?”

I didn’t say a word. (Honest admission time; this was not a tactic. I was just exhausted due my fruitless hunt for property, my dissolving relationship at home, and I’d just driven 50 miles in a snow storm to present this offer. I truly didn’t care if he signed it or not.)

I got my coat and headed for the door…didn’t even get half way there before I heard….”Wait”.

He asked for a couple of lame face-saving concessions…which I agreed to…and he signed the offer.

Oh…did I mention…I’m a college student at the time…no job, no credit, no cash…no wonder this ‘power real estate lawyer’ was mad.

Well, by the time I got this deal under contract my mother-in-law who initially thought my investing dreams were silly was instantly converted to my biggest fan. She wanted in and ponied up the cash becoming my new 50/50 partner.

Long story longer, we doubled our money in 6 months!

What Did I Learn?

1. Get educated anyway you can…the library, BiggerPockets, and the Web in general is free so there is no excuse to go into investing not knowing what you’re doing.
2. Never listen to family or friends about your dreams. They’ll come around when you succeed.
3. Take the emotion out of your offers. Of course, I just stumbled upon this one. But it’s true. The one who cares more loses.
4. Find the deals and the money finds you. Partners and/or lenders come out of the woodwork when the deal is good. Focus on putting as much profit in your deals and you’ll never worry about finding the money.

Now Go Get’m…It’s Your Turn!

Tags: Learn Real Estate, real estate, real estate investing, real estate investor

Not too long ago I went to a neighboring town to check out an investment possibility for an investor I work with - rental subdivisions. The owner had built these homes in a college town 15 years ago and they were all basically the same style, cottages — some 2/2, some 3/2, 1400 sq ft and 1600 sq ft, respectively. This particular deal didn’t work out because the owner wasn’t budging on price and the numbers didn’t quite work out — I think he was basically satisfied to sell them one by one unless he could get his price for all of them, but it got me to thinking.

If it’s true that rentals will increase for awhile because of buyer caution and lender tightening, these, what I call rental villages, might be a good investment. Two reasons I think they might be a good investment are lower construction costs in this market and lower land cost. I looked online and found a cottage design that to me would be perfect — attractive and not too difficult or costly to build — and with the same basic design throughout the village it would be more efficient. My one concern was when you go to sell would all the cottages being basically the same style hamper sales.

The owner of the ones I looked at had already sold half of what he had, about 64 units, so it didn’t seem to hamper his sales. They were all painted in different colors (or not the same side by side) with minor differences among them, so they didn’t all appear to be the same house. It was actually an attractive “village” with nice trees and shrubbery about.

My thoughts were that a rental village of single-family homes would be more attractive to renters — I mean, if you are going to rent, why not rent in the best living environment possible. Most people don’t like apartments and the available rentals of single family homes is sort of hit and miss, at least here. I know that the vertical building of apartments is more cost effective because of land and construction costs of single family homes, but I looked at the prices of land slightly outside high priced land in town and they were attractive. I also think that when an investor goes to sell after holding them for awhile and letting the market improve, he/she might do better selling individual homes rather than one apartment building.

I think the key would be to make the village attractive with a common social area. I also think it would be wise to keep the properties in good condition and allow them to appreciate by putting the necessary money back in from cash flow to keep them updated and maintained. The owner I previously mentioned was getting top rent in his area and had such a demand he could pick and choose the most qualified renters who met his strict requirements. He had worked out sweet deals with businesses in town when carpet needed replacement or a paint job was due or appliances needed changing. He also had worked lease/purchases with some of the renters who needed time before purchasing.

I have put together a proposal for the investors I work with and wanted to pass this along. The numbers look good. The key is to be in an area where appreciation is likely to return in a few years. That’s the risk.

Tags: landlord, Learn Real Estate, real estate, real estate investing, rental village, rental-property, single family homes

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.

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