Are any of these gurus actually for real?

Question

I'm curious. I read about these guys all the time and have pretty much decided that if they are advertising, they probably are snake oil. I'll give them a shot and then quickly find I either already know way more than them and it's obvious or they are just doing that high pressure sales crap (sorry I was an advertising exec, not gonna work). Anyone know of any that actually are worth paying for the information?

I'm at that odd stage where you have a bunch of rentals (mainly single family and duplex types) and want to move into commercial since I can see the ease you can make some real money by making a decent complex into a great one. After reading a bunch and slowly figuring out the terms like Cap rates, etc, and some legal pitfalls like getting sued over faulty deal (wow I didn't know that was a thing). I'm slowly realizing this is a whole different ball game and would love to find out more info before I jump in and hope. I've done a bad deal with a duplex once and I know full well that a lousy deal can be a money pit. I can't even imagine screwing up when you're talking 7 figures. I like to be sure I'm not doing something dumb. I'm too old to screw up my retirement now.

So any of these guys for real? It's about the only way I see to start navigating that commercial real estate world. There's just so many things and I keep finding new ones all the time that go on my due diligence checklist. Any thoughts are welcome.

Stuart Udis · Answer

From what I’ve seen, the gurus who “help” investors get into large multifamily or commercial deals are some of the worst actors in the industry. No course is going to grow your balance sheet, your creditworthiness or give you the experience that's required to properly manage these buildings and handle the adversity that is unavoidable in this business. All they actually teach is underwriting and capital-raising tactics that are frankly disingenuous and often tiptoe right up to the line of misrepresentation.

I do believe some students join with good intentions. But the moment their websites go live showcasing deals they had little or no involvement in but displayed in a way that makes the average person believe they own those buildings, they become just as complicit as the gurus who taught them. These groups are easy to spot.  Most list the guru as an “advisor” on their website, and a simple Google search of the guru’s name plus “advisor” or “advisory board” turns up a trail of nearly identical sites.

I’ve scrutinized these programs extensively in these forums. Some students get defensive; the gurus never respond. I despise these programs more than most other “education” models because they teach unqualified people how to misrepresent their experience in order to raise capital. That puts others capital at risk, not only their own. Many of the people selling Section 8 or low-barrier real estate programs are icky as well, but that damage is often contained to the student.

There’s nothing wrong with the pace you're moving. You’re following the normal progression. Now that you’ve owned singles and duplexes, consider purchasing a quad, a 6 unit or even build a 2-4 unit building.  That's the normal progression. The people I’ve seen successfully move into larger projects quickly usually fall into two groups. The first are those who spent years working for real estate development/related organizations, learned the business while earning a salary, saved money, and built real capital relationships they’re ex employers allow them to tap into.  IN many cases they JV with their ex-employers on their first deals when they leave to start their own business. The second group are contractors possessing both financial means and wherewithal who already run profitable construction businesses and eventually decide they’d rather build or renovate for themselves. They can make that jump because they still have meaningful income coming in—something most investors can’t rely on if they quit their jobs to chase full-time investing.

Doug Smith · Answer

Interesting story about that. Right after the last crash, we were operating a successful fund that bought severely distressed commercial loans out of banks. I had been a banker for years and we had 2 other bank executive with special assets experience, so we were doing well. I had met some of the gurus at conferences, but none of them actually had experience doing what they were trying to teach. I would listen to them talk and it was obvious that they were much better at selling courses that doing what they were teaching. One of our investors was a nationally-known economist that had published to best-selling books on the economy. He had a massive following on a newsletter that tens of thousands of people paid monthly subscriptions for. His publisher wanted to do a real estate-based "course" and have him teach it. To his credit, he said "I don't know enough about the subject, but I know the guy." I met with the publisher and they wanted me to do these weekend-long courses on buying non-performing loans. They wanted me to create a fund full of crappy assets to sell to my "students". I felt really dirty just being in the room. There is no way I can teach someone what it took me 30 years to learn with the backing of big banks in a weekend. I would be leading lambs to slaughter. I said no and they got a "guru" to do it. It didn't last long. A few years later, I was contacted by a woman who was getting into the space. She was taking courses from a guy that had no credit background, but learned by taking another guru's course. I was speaking at an IMN conference and she approached me after my first talk. The next day I was on a panel and I saw her in the audience along with other students. The guru was sitting in the audience near her with a legal pad taking furious notes. I've yet to meet one that really knows their stuff. Perhaps I should bypass my moral compass and you and I can go in business together "selling courses". LOL. Maybe someday I'll teach for a reasonable price...when I'm retired...but for now I'll be happy managing this company. If you know your stuff, it's more profitable to do than to teach. I've yet to meet a guru with a great background, so whenever I hear "just last year I was flipping burgers at a fast food restaurant, but I found the secret to making money in real estate," I roll my eyes.

Chad Clark · Answer

Interestingly, I did make enough off a "few" rentals to quit my job.   All out of necessity.  The COVID thing hit as I was finishing up on my 2nd rental.    I only got into this as a friend wanted to find a rental so his kids wouldn't have to change schools.  So I bought a place and we fixed it.  I did it again because I ended up turning a house that was 32k auction find into a 260k appraisal.  The 3rd was a desperate bidding war over a house that turned out to only need plumbing really.   I made off like a bandit with a cheap rental.  My 4th was a nightmare duplex, but I worked by myself during the covid thing until it was done.  All 4 ended up with over 400% ROI.   Probably mostly luck and incredible accidental timing, but it was a thing.  So I'm jaded into thinking you can make a fortune off one house.  I did. Four times in a row.   I'm also a research madman.  I'll read into all hours of the night sucking in info like a good book. So I hear about these guys and know it "can" be done.  I just haven't seen another like myself do it.  Commercial just seems to have a information vacuum.  I can barely find anything useful about it at all.  No one seems to know anything.  Mortgage experts have their limits.  Bankers won't say much or don't know.  I don't see how you get into these huge places.   Is it literally just 20% down on a few mil?   I can do that, but I was hoping there was another way.  I don't want to sell out of my houses only to fall into a commercial "money pit".  I was really hoping one of these wasn't just "selling courses" of snake oil.   You'd think there'd be at least one who was serious.   I did run into some seriously decent people on this little journey, just none in this field.

Henry Clark · Answer

Start small and make your Big Mistakes Early.

You already have all the basics down.  Commercial you just need to expand and weigh some more or less.

Sounds like your worried about to little detail.  Identify the ones that kill you and hammer those.  If you mess up with the wrong color paint in a bathroom, no big deal.

Commercials main issues to stress:

1.  Zoning requirements.

2.  Market analysis.  Occupancy, rent levels, amenities.  Example if your section 8 is there a grocery store or bussing within walking distance, little parking, etc.  If your young professional- swimming pool, gated, workout facilities, parking, etc

3.   Financing- downpayment 25% down, 5 year balloon with say 20 year amort, versus FHA, etc for SFR.

4.  Insurance-

5.  Scaling from an operations standpoint-  there is a point where you need your own on site team, maintenance, accounting, etc.

6.  Location, location, location-  what in the area pulls your type of tenants? Section 8, families, young professionals, retirees to your area?  7.  time for lunch.  You will have to get more due diligence items by posting your list and asking for input.

Henry Clark · Answer

Maybe one of you BP folks can tell me how to use the Bidet thing.

I think this floor tile will only work in Sicily so I wouldn’t try in a U.S. STR.

Henry Clark · Answer

OP on your financing keep it all under one lender.

1. Dont chase 1/2 point.

2.   Make sure their Federal Lending Limit is large enough for you to grow.

3.  Then you can cross collateralize assets.

4.  See if they will do construction loans or working lines of credit, interest only.

The fish and Ravioli were great.

Henry Clark · Answer

Last trip was Croatia.   This trip did Xmas

Market in Strausborg France for a week.  Doing 6 days in Sicily in Sciacca.  So different time

Zones.   The above was lunch at a small town traveling. Near the Palermo airport stayed at a great Resort.  About 15 minutes away.  Loved their construction and landscaping.  BP please put in a landscaping forum.  Also an STR decorating forum.

Love their modern post rafter, I Beam and cut block walls.

Jules Aton · Answer

@Chad Clark that is so awesome. Did you pay cash? Are you in a VLCOLA?  I’d need 5 doors netting over $4,500 a month before I would consider quitting my day job. Even then I’d probably drop to 0.5FTE and double dip.

Are any of these gurus actually for real?

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