Real Estate Investing Basics

Newbies: Don’t Fall for This Real Estate Investing Scam!

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Real Estate Investing Basics, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP
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Rear view of man gesturing with hand while standing against defocused group of people sitting at the chairs in front of him

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.

Related: The 13 Tell-Tale Traits of a Scammy Real Estate Investment Guru

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:

  1. 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.
  2. Read 15 real estate investing books.
  3. Engage in at least a hundred conversations on the BiggerPockets Forums.
  4. Take a dozen real estate investors out to lunch or coffee in your area.
  5. Analyze 100 real estate deals, walk through a dozen open houses, and attend at least three real estate meetups in your area.
  6. 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?

Comment below!

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.

    Tom Phelan Real Estate Investor from Miami, Florida
    Replied 6 months ago
    A well presented point-of-view. I think the bottom line is the cold hard fact that the majority of people just won’t put in the physical, mental and financial commitments to succeed. A friend who owned a Physical Fitness Gym once told me he had about 4,000 Members. He admitted that if more than 25 – 50 ever showed up at the same time his facility could not accommodate them. But, and a big but was the fact that over the years he had learned that no more than 25 – 50 Members ever showed up at one time to work-out. The fact was only a scant 1% faithfully used the Gym. Most people who eagerly buy these Guru Courses will never use them.
    Katie Rogers from Santa Barbara, California
    Replied 6 months ago
    The whole gym membership business model is based on members paying but not showing up. Meanwhile. I cannot get any gym in my community to give me a discount because I am not interested in any of their classes, or personal trainer or other perks. I just want to swim for half an hour.
    Mark Hentemann Rental Property Investor from Los Angeles, CA
    Replied 6 months ago
    Great post, Brandon! Yep, there’s increased interest in real estate investing now (it deserves it — there’s no better vehicle to grow wealth), but the gurus are coming out of the woodwork. All the education you need is available for free, on sites like BP. And love the list of action items. One additional one — if you listen to a podcast and like what a guest has to say, reach out to them. You’d be surprised how many will agree to a phone call, which will inspire and motivate you to take the next step! Mark
    Jerry Maze Flipper/Rehabber from Portage, MI
    Replied 6 months ago
    Hi Brandon! It’s not funny, but it sorta is, I did exactly what you said for the exact reasons you mentioned and spent $38,000… was the process worth it? Yes & no… yes in that it lead me ultimately to Bigger Pockets! I am not going to bad mouth the company I signed up with… they did and continue to do, what they promised… however, if I had of gotten tied into Bigger Pockets first… I would have never gone the route I did… like you said, everything and anything anyone needs is provided by Bigger Pockets including, access to awesome educators, contractors, marketing experts and systems, other investors and more… some at a cost to join their programs but, overall… far less expensive for what will ultimately be acheived… but, the contacts and available connections are priceless!
    Steven Lucarelli from Moab, UT
    Replied 6 months ago
    Thanks for posting this Brandon! With so much information out there constantly bombarding us, it is easy to get off track from time to time. As a newbie I find that I occasionally get discouraged and that can lead to a dip in my motivation. But videos like this (in addition to the podcasts) always get me back in gear and help me renew my focus. I think that these guru’s can often times be enticing to newer investors that are overwhelmed with the huge volumes of information out there. So they pay for these “education” courses believing that it will simplify the process and make it easy and straight forward. But there is no magic pill other than hard work, patience and perseverance.
    Drex Tanner Specialist from Mesa, AZ
    Replied 6 months ago
    This is amazing! I love how you spelled out their process letting people know what to expect and see if they can make that decision to spend the hard earned money on their own. I personally like the guru of “hard knox”. But to each their own. Thanks again!
    Farris Gosea
    Replied 6 months ago
    Hi Brandon, Couldn’t agree more with this post! Myself and wife are 25 and 22 and got right into investing. We own 2 SFH’s, a duplex and a four unit building. Next one we are looking for is eight plus. Real estate investing is very simple, but people for some reason think they need to over complicate it, they keep trying to “learn” more and never feel ready, they just have to dive right in and get going. Hope to be at 20 units plus and 100k passive by 26! Currently at 50k passive. Just got to keep putting in the 12 hour days. Love the show and you guys and am definitely going to try and get on a podcast one day!
    Al Reid from Houston, Texas
    Replied 6 months ago
    The challenge most new REI investors face is putting a system together that works. What most seminars and workshops do is to prove bits and pieces of a system but unless you purchase their mastery program, it’s not likely they will succeed. BP provides a great wealth of knowledge for all REI’s, whether they are just entering into investing or are seasoned investors. What I have often seen are desperate people who are broke and quite unable to even pay for a workshop… let alone come up with money to fund the basic costs of a REI start-up. No matter what path one chooses, they will need to invest some their savings to get started… and find a mentor! Too many one and done stories… over paying, over rehabbing, over pricing, using hard money at a high interest rate, and took too long find a buyer… which led to a Hugh lose. Investors trying to wholesale without a buyers list… and it goes on and on. Whether one uses BP or purchases an educational program, you have to have a system in place and affordable funding (I used my IRA) to succeed.
    Michael Pallesen
    Replied 6 months ago
    you absolutely nailed it. i went to a free seminar with my son and that lead to a $500 weekend. they tapped into the” rich dad poor dad crowd “. the speaker for legacy education painted him self as a profit lead all us children out of the wilderness. he played on peoples race to motivate them. big stories about how interest rate doesn’t matter. told people how they can use one credit card to pay off another. then tied it in to using that method for the class . which is 15,000 to 50,000. he even told an elaborate story about a guy . it had to do with removing his testicles from his wife’s purse. it was a 3 day sales pitch with little value. do the things that are mentioned above and you will be on your way. good luck
    Sharon Stephenson Rental Property Investor from Peekskill, NY
    Replied 6 months ago
    Thanks Mr. Turner for these actionable advice. I plan to use your advice to take my real-estate investment journey to the next level. Several years ago, my spouse and I went to a free real-estate seminar. I went with cash in pocket for a meal and transport. I left my credit/debit cards behind. My spouse, he was already turned on because a coworker had gone to one and had bought into a lot of their product. By the end of the seminar I was done. I did not learn anything more than I had already been reading at the local library. I had started a personal project to read all the recent books on real-estate and real-estate investing. Most of the information was over my head but much of it was enough to know when a deal was over my budget. My spouse went as far as to make a deposit on the next 3day course. I refused to commit the time to the course sight unseen (no syllabus provided before the purchase), It wasn’t worth the time off from my paid job for those three consecutive daysx2. I would go, if my spouse would pay me for the time off from my paid job. He cancelled the purchase before we left. He realized, he did not believe the information would translate into a profit for him nor cover the cost of paying me to be there too. Also, if he wanted to learn more, there was plenty of free books at the library and the research I was collecting in my personal binders. We were able to have fun testing out themes: buying short sales out of state, renting them out, attempting to fix one up (cash buys/no mortgage) . I was still new to credit markets and shy about debt. We learned about being landlords and hiring property managers. We learned slowly, cap rates, things like that. Asking questions along the way. Eventually, we learned to get mortgage deals, low rates, creating good credit scores etc… I’m positive that the real-estate investment courses were a bad idea. Our co-worker never got to buy her investment property. She just got a lot of credit debt. My spouse and I we made three purchases in that the time period.
    Ron Baxter Rental Property Investor from Ormond Beach, FL
    Replied 6 months ago
    Great info, Brandon. I too became a victim of the Real Estate guru and I’m not shy about mentioning his name…Phil Pustejosky. I think that’s how you spell it. I spent $10,000 on my credit card and started with my first phone call into the freedom mentoring program. I was assigned to some young girl who was supposed to give me advice. On every call she was rude and condescending and her attitude really turned me off. I think that was the intention, make me go away and keep my money. It left a really bad taste in my mouth for real estate for several years. All I got for my money was a lot of hype, several big binders full of information that I could get on Bigger Pockets, and I never talked to the “Guru” who I thought was supposed to be my “Mentor”. I’m back investing again and listening and learning from Bigger Pockets and gaining more confidence every day. Thank you!
    Frank Bragg
    Replied 6 months ago
    This has to be the most informative site and YouTube post. Matter of fact I first got interested into real estate back in my mid teens however that’s when I also came across alot of what you call here the guru trap. And that did kinda give me a bitter pill to swallow for some time however with what little information they did give and thanks to the birth of the internet. I was able to find out more and more. Now fast forward to my 40’s I’ve played with different investment strategies and have had more successes than failures (not big ones but there was positive gains). Now I find myself back into real estate and it’s actually nice to find someone out here willing to give real information and help point people in the right direction. As for Brandon’s advice for watching 100 podcast, heck if you pick the right ones and have a good head on your shoulders you could start rolling with say 10-15. Thanks to Brandon and bigger pockets I’ve been busy getting everything rolling on my end and soon if all goes well be starting my path on real estate investing.
    Ken Bailey Contractor from yucca valley, ca
    Replied 6 months ago
    Thanks Brandon, Unfortunately I’ve been branded multiple times. For me fortunately it hasn’t broken my will or the bank. Every word you said is exactly how they do it. Also, one well known scam artist had several stations in the back of the room weeding out people one by one. They tell you at lunch time to call all credit card companies during lunch and ask for increases of your credit line. They promise things and don’t deliver them, just ignore them on purpose. After lunch is the weeding out period and at the end of the day they go after those who can afford there ridiculous fees (hard core especially when they know you have money based on forms you fill out and people in back review to find the money well they promise the moon in the morning, but afternoon is only about money) with false promises, I know only to well. Yes, I learned the hard way. Won’t ever happen to me again. Great dead on fact to a tee. Thanks again Brandon.
    Sharon Rosendahl Investor from Stanwood, Washington
    Replied 6 months ago
    I talked to someone who went to one of these free seminars. She was gushing but in over a year they had taken no action. Luckily, I don’t think they paid for anything further. The 3 things she seemed to have gathered. 1. Buy and hold real estate investing is the key to wealth. 2. It is easy to accomplish if you follow the plan we will sell you. 3. You need to inspect your units every month and make sure that you write into the contract that you do that so you don’t ever need to give your tenants notice. I only own 4 units but I know that real estate investing can be the key to wealth. (I don’t need to pay anyone to tell me that.) It is not easy but is rewarding. I would never barge in on my tenants with no notice (which in most places is illegal) and never would I infringe on their right to privacy on a monthly basis. When you have screened well every 6 months is ample and can be couched as a maintenance checkup so no one feels accused or negative about it. After hearing her story I realized that these seminars had nothing to offer me and I would be better off spending my time and money going to meetings, purchasing useful books (especially those mentioned on BP) and being here on the BP site.
    Elizabeth W Radigan
    Replied 5 months ago
    Thanks for the information. I am a newbie and really appreciate the list of 6 things to do versus spending useless money on seminars. I’d rather spend my time on this and learn and line my own pockets! Looking forward to growing my future.