Beware of the Real Estate Guru Trap: What to Look for & How to Protect Yourself

120 Replies

Blogger Andrew MacDonald, yesterday posted an article on the BiggerPockets Blog that is an absolute MUST READ for anyone considering spending their money on a real estate guru.

The article breaks down both the typical sales flow for these gurus (how the hook you) and 4 key tips for how to avoid getting suckered trapped.

Check out the article and please leave some feedback!

The Real Estate Guru Scam - How It Works & 4 Ways to Avoid It

Great article,
What should someone look for when finding educational materials, or to find people that will help someone get their initial experience and help with their first deal?

Aaron, I think when trying to find someone to help get experience on your first deal, look for someone who is not selling their ideas, but employing them. What I mean by that is to try and find someone in your local area who has the experience and knowledge you are looking for. Talk to them and see if there is any way you can work with/for them, or if they are willing to sit and talk with you every once in a while and answer some questions you have about the business.

Not only will you spend a lot less money on education (and have more to put towards actual deals) you will get local answers, as the investing environment is different in every city (and different parts of cities).

Also, there is enough free information out there that I really do not see much of a reason to purchase education materials. If you can find a mentor and continue to utilize the hundreds or free articles, forum posts, blogs, etc, you will gain the knowledge and experience you need to become a successful real estate investor. Remember...gurus are salespeople; they are interested in you purchasing their product regardless of whether or not is in your best interest (at least most of them).

Aaron,

James did a great job of rollling all the info up. I would just add one thing.

Gurus tend to speak in generalities - they use words liks "mindset", "goals", "networking", etc, but don't offer a lot of specifics on "how to".

James made a great point that I would like to echo, try to work with a local investor, or at least try and get them on the phone (not as hard as you might think).

A couple of ways to find these guys:
* RE Agents - If they are a seasoned agent they usually know a few players in the area
* Mortgage Brokers - Same
* Hard money lenders - Same
* Local REIA
* BP - look at member's profile pages

I hope that helps!

AG

One thing that was left out of the initial free seminar portion was the part that the "guru" gets the audience to say yes at least 50-75 times. Then when it moves on to the hard sell stage they are so used to saying yes they grab their checkbook or credit card and run to the back to sign up for the "boot camp"

Originally posted by Aaron R.:
Great article,
What should someone look for when finding educational materials, or to find people that will help someone get their initial experience and help with their first deal?

Aaron - if you are looking for initial experience, I would say that you are in the toughest group to find really good quality material. I am not against spending money and firmly believe that it costs a lot less to educate yourself with material than it does with experience. I bought Carlton Sheets when i first got started and although looking back over 8 years I now laugh at it, when I started it was very, very helpful and I credit that course with helping me do my first deal and not sound like an idiot! So don't shy away from buying courses simply from fear of being duped. Ask for others opinions and take that into consideration, but don't think that all courses or gurus are the same and scams. Don't be scared to educate yourself.

James and Arthur give great advice as well and there are a ton of resources like BP, library material and books at book stores that can help you very very inexpensively.

Best of luck!

Very well written!! That is so true. There are some decent folks out there spreading the word, but unfortunately, they do not make the money of the big time guru's. It was reported last year that Armondo Montologo did over 40 MILLION in his education business! My question is How do you spend that much time teaching and still do deals. I work non stop on my real estate so I only have room for a handful of students at a time. Maybe he could give me a course in balancing the two, LOL!!

Ditto!! Find someone that is ACTIVELY walking the walk if they are selling a course.
Like Rob stated, I only work with a handful, as I'm too busy working my business.
Look for a teacher, not a salesman.

I agree with the posts and I am a firm believer in education. I go to seminars for a variety reasons such as keeping up to date in current market trends and also to network. You never know who you will meet at the event.

I have been disappointed at some events where it is all sales and no real "meat". My approach is try to take at least one nugget of information from the event and apply to my business.

Curious to know from others:

What makes you sign up for an event?
Did you feel the Guru added value to your business?
What would you do differently?

I have attended many of these meetings and have some have even pointed me in the right direction but the presentations have always been quite predictable and transparent. I often wonder how they get anyone to particiapte. I try to attend many of these free seminars when they come to my area,and occaionaly pick up ideas I can use. The most interesting and productive part of attending is the people I meet at the seminar. I have kept contact with some of these "students" of real estate but have not been aware of any success stories.

I have no objection to paying to learn but for the most part all I see is a High priced program that over promises and under delivers. The sad part is that many who are sold on particiapation will be sadled with unessesary debt and be discouraged because they were led to believe that all you have to do is blindly follow some secret investment strategy that was really a slick sales pitch not a true educational opportunity.

Very good article. I went to a cheap Rich Dad seminar and it was exactly like this with all the aspects that you mentioned there.

I learned a great deal from the seminar and didn't end up buying anything else from them. This seminar actually sparked my burning desire to get into real estate for real.

You can learn a great deal from these free or cheap seminars. Just make a commitment before you go to not buy anything and you will be fine. No one is going to make you give them their money. Just go and soak up all the free/cheap knowledge.

A very simple sell to an experienced local investor would be to approach them and tell them you are looking to get educated. You can then tell them you are going to advertise for new deals using your own money and have the investor split the deal with you somehow in trade for getting the education needed. As you work deals together you'll get educated and the investor won't have to risk money to procure the leads.

In the process of doing things this way you can also learn how to advertise and how expensive it really is to find quality deals. To me this seems like the path of least resistance for people just starting out. Look for someone at your local real estate club.

Yeah, don't get suckered into their products. These people are really good speakers and are very motivating. Also whey they say they are going to mentor you, don't believe them. They usually have a student or employee who does that part. They aren't available by email or phone. Big Waste. I found my mentor who was actually doing deals and we became friends. Do your research first and find out what others have to say first.

I was at one seminar and the speaker said it was going to get everyone out of their comfort zone. The room was so hot and uncomfortable, was very hard to focus, throughout the pitch. He said the AC broke down and apologize for the inconvenience and said they had workers trying to fix it right away. The last day of the seminar they finally fixed the AC. To this day I still think it was all part of their sales pitch...haha

Great read... and it came at a great time because I was considering becoming a member of a real estate investing mentor program. I'll be attending the workshop soon and I'll be sure to keep these things in mind.

Just tossing out (with fear of getting mauled :)
I find most of the educational courses are not criminal or unethical. If you are from Atlanta you know the flip that house scandals and such.

I find that many of these courses have educated me beyond, and with more relevance, than the 40 thousand dollar social studies degree.

I also agree with all of those above, that all of these resources are free at your library and on the internet. The positive to these courses is that everything is packaged with flow, relevance and clarity. (Again I realize some of these guys are not legit.)

@Joshua
Perhaps some blog reviews that are entirely subjective from BiggerPockets that looks at these courses and can call out the ones definitively to stay away from and the ones that are informative?

These posts may exist and I am unaware of them.

@Jared Orme - There are many threads on our Guru Reviews forum about the various gurus out there. In order for BiggerPockets to put together reviews from our team of the guru courses, bootcamps, and materials, we'd need to take the time to review all the content, attend the bootcamps, and so on -- bottom line, that's just not something we're looking to do.

That said, the beauty of this site is that our members are out there helping one another by sharing their insight. I'd take heed to the advice that they give on the topic of gurus in general and on the various individual ones that they have reviewed on the site.

I had been an active investor for over ten years before I attended my first "guru" boot camp. At that stage of one's career it is easy to think you know everything, but if you honestly self-assess you realize that there is always room to learn.

During the class, I learned lessons that if I had previously known, it would have saved me tens of thousands of dollars over the years. But you know what? If I had taken the course at the very beginning, the lessons would have been meaningless to me.

There can be some great information out there but the true value is recognized when you receive the right information at the right time. In the beginning obtain your knowledge on the cheap. If you must spend big dollars on the boot camps, fine, but do it after you have achieved enough success that you can pay for it out of your profits without breaking the bank. By that point, you'll get more out of it anyway because you can couple the concepts with your past experience.

I think there are great gurus and crappy ones. Personally I've charged thousands for the exchange of my time. I don't do it any more however I absolutely see the need in hiring a trainer. Heck the few thousand I charged was a loss leader.

The test of a great guru is first and foremost are they buying houses within the method they preach. Secondly are they profitable. Third are they honest about why the teach.

Why so many have to trash them is amazing. There are great trainers. We shouldn't lump them all into the same f'ed up bag. It's like we need a different name for the crappy ones. And josh your our leader it starts with you. I consider myself a guru. You can't hire me but I can certainly teach a lot. And I know I give freely and share. Guru shouldn't be a bad word

It's unfortunate that the good ones get lumped in with the bad ones, there are certainly few enough good ones and LOTS of bad ones.

Before you ever buy a course or bootcamp, I'd suggest talking with local investors at the REIA's and finding people who have purchased their course. Ask how many deals they did as a result of their purchase. And if it was what got them going, or if they were already doing deals but simply used it to increase their knowledge.

Also, be aware, some of the gurus are hiring their students to be "local coaches". There is nothing wrong with that, but the local coach may be getting commission on any new recruits, so be aware of their possible motivation. I would simply ask if they are getting paid commission.

Originally posted by Michael Quarles:

The test of a great guru is first and foremost are they buying houses within the method they preach. Secondly are they profitable. Third are they honest about why the teach.

Why so many have to trash them is amazing. There are great trainers. We shouldn't lump them all into the same f'ed up bag. Guru shouldn't be a bad word

Michael - I took some lines from your post. I have been saying this for quite a while on different posts on "Gurus" which I think is a ridiculous word and often lumps excellent coaches and trainers in with the obvious scam artists. I think at times it is easier to jump in and talk about how easy it is to learn everything about this business at the library and on a great site like Bigger Pockets and that is simply not realistic. These are great resources, but for some people, the learning process is facilitated better and faster with a teacher and a laid out teaching program.

@Brian Burke makes a great point too about being open to learning new things and constantly updating what you know. I attend different bootcamps and have even purchased programs at these events that I want to study. Sometimes I pull something out of them and put that into my daily practice. Other times they are great reminders of the basics that I need to keep focused on. We even send our staff to different events around the country.

I think its important to remember that it does not matter how much you spend or do not spend on your education. If you get it all for free or you spend $25,000 on a coaching program. You are wasting your money and your time if you do not do something with the education you are getting. It is money flushed down the toilet if you do not take action. If accountability is the only reason you hire a coach - then be accountable! Just don't waste your money or your time if you are not going to use what you learn. Then you can decide for your self if it was worth it.

@Ann Bellamy - I meant to mention yo in my post as well. Great advice that should always be heeded. You have to do due diligence before you purchase and if you hear good things or even mixed reviews, you still have to make sure you are going to use what you purchase.

Great stuff -

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