Newbies: Don’t Fall for This Real Estate Investing Scam!
The other day I was driving in my car listening to the radio and an advertisement came on about a certain popular real estate investor coming to town to teach a free seminar about building wealth through real estate. “It’s 100% free to attend!” the advertisement said.
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I’m sure you’ve probably heard these ads, as well, or maybe you’ve seen some pop up on your Facebook or Instagram feed or before a YouTube video.
So, what’s the deal with these?
Put simply, it’s a very common and effective way for these real estate educators to make a LOT of money. But here I’ll break open the secret world of real estate education and explain when you shouldn’t—and when you should—pay for it.
The No. 1 Real Estate Investing Scam
Here’s how this “guru trap,” as we like to call it, works.
First, you get invited to one of these free seminars. Almost all the time, the real estate celebrity whose face was all over the advertisement won’t actually be there. It’ll just be someone on stage who is really, really good at selling.
Keep in mind—they aren’t actually teaching you how to invest. Instead they’re simply showing you what’s possible.
They want to get you to thirst after a better life. They know all the right buttons to press, all the right emotions to tweak, all the psychological tricks to get you to do one thing: sign up for the “next level of education.”
This usually is in the form of a weekend boot camp that costs a few hundred bucks. This, for the real estate educator, is a way to filter out all those who don’t have the funds to make a larger purchase, which is what the weekend boot camp is usually about.
Attend and you’ll likely learn just a bit more, but much of that event is focused on the next upsell—the $30,000, $50,000, or even $100,000 coaching or education platform they’re offering.
And let me tell you, they are really good at getting people to pay it! Now—is any of that wrong?
Not necessarily. I know a number of investors who have become successful after paying a hefty amount for coaching and training. But I also know many more who have succeeded wildly without the help of the “guru crowd.”
What drives me nuts is the number of individuals I hear from who spent that $30,000 or $50,000 or $100,000 to learn how to invest, and then they discover that the information they learn is already out there, usually for free or for the price of a book, podcast, or a Google search.
Some of these individuals were pressured into putting this expensive training onto credit cards—even being pushed to negotiate with their credit card companies to raise their limits.
But here’s the thing I’ve noticed: every single person who I know that has succeeded with the help of expensive training, I believe would have done so without.
And here’s the real kicker, something that might make you a little uncomfortable to hear. I believe most people who pay for expensive coaching and training do so because it makes them feel like they are taking action. It makes them feel like they are making progress and are closer to their goal.
But are they? It’s debatable (and likely just not the case). Here’s what I recommend doing instead: prove to yourself that you have what it takes by taking REAL action.
Do these six things:
- Listen to 100 episodes of real estate podcasts. Obviously I highly recommend the BiggerPockets Podcast, but there are a lot of great real estate shows out there.
- Read 15 real estate investing books.
- Engage in at least a hundred conversations on the BiggerPockets Forums.
- Take a dozen real estate investors out to lunch or coffee in your area.
- Analyze 100 real estate deals, walk through a dozen open houses, and attend at least three real estate meetups in your area.
- Be sure you are living responsibly by spending only 70% of what you earn.
After all that, if you still think you need coaching and training (and you have the money—in cash, not credit—to pay), then go for it.
To conclude, I’ll leave you with one of my favorite quotes from the late, great Jim Rohn: “If you really want something, you’ll find a way. If not, you’ll find an excuse.”
Watch my video above where I go into further detail about gurus, whether or not they’re worth it, and alternative ways of educating yourself and beginning investing.
Have you attended costly seminars, boot camps, courses, or something similar? How did it pan out?