The 10 Great LIES Told to Newbies

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The 10 Great LIES Told to Newbies

Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

10 Great Lies Sold to Newbies

  1. You can make money “wholesaling” with no capital, experience, or knowledge

  2. Your brand new business entity can qualify for credit even if you personally can’t qualify

  3. When you identify a great deal money will follow and you can own it all with no investment capital on your part

  4. If you own 100 “doors” you’ll never have to work again

  5. Owning residential multi family property is a “passive” investment

  6. Hard money lenders will lend you the gap between an institutional loan and the purchase price

  7. And per 6 above, transactional lenders will lend you the earnest money

  8. You can successfully wholesale MLS listings

  9. 90% of the wealthy made their money in real estate (it’s actually 7% and declining!)

  10. If I can do it, anyone can do it (numerous gurus and other snake oil salesman)

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Ryan BrownPro Member
Real Estate Agent · Louisville, KY · Member since 2022 · 65 posts · 16 votes
1d

@Don Konipol, great list. I'd add #11: "The rent will pay for everything."

On paper, the tenant pays the mortgage, the taxes and the insurance, and you collect the difference every month. In real life, the water heater goes out in month three, the tenant who looked great on the application stops paying in month seven, and the unit sits empty for six weeks while you paint and clean between tenants. Newbies see a $300 a month cash flow number on a spreadsheet and think it's guaranteed income. Then one bad month wipes out a year of it.

Rentals are one of the best long-term wealth builders out there, but in the short term they can get expensive, and the pro forma never shows the bad months. The investors who last are the ones who buy with reserves, budget for repairs and vacancy before they need to, and don't count the cash flow as theirs until it's actually in the bank.

A close runner-up for #12 is "The cheapest house in the cheapest neighborhood has the best cash flow." Ask anyone who bought one how that worked out.

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  • Richard F.
    Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
    2d

    ...and MY personal favorite: Section 8 is guaranteed rent!

    2Reply
    • James Wise
      Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
      1d

      It is tho. Where is the lie on that one?

      0Reply
    • Richard F.
      Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
      1d

      Tenant does not pay their portion, for months. Your option is file an eviction, or complain to Housing who then is likely to remove them from program, leaving you to still file an eviction to remove them on your dime.

      Any major issue (crime, violence, unauthorized additional residents) reported to Housing typically ends the S8 portion of rent and contract as well, and S8 to my knowledge never removes the tenants...it is up to the LL to file the eviction. Since most LL's assume the S8 "screening" is sufficient (it is not), there is little hope of ever collecting unpaid rent, much less any legal expenses incurred.

      S8 determines responsibility for defects at annual renewals. Sometimes they appropriately assign that to Tenant, other times wrongfully to LL, and they stop all rent payment until cured. Sometimes they "catch up" after re-inspection and passing with a temporary hold, sometimes they do not and it is lost rent. This does vary by locale, individual inspectors, and the actual defect originally noted, which is why it is critical to have you/your rep and the original move in condition documentation AT that annual inspection to challenge the inspector in the moment.

      I had a case where a Client closed on a property that had multiple S8 tenants. We were not involved or even aware of the impending purchase. S8 was not notified timely, and paid the seller after closing. Our Client had no recourse, and S8 would not make adjustments, and the Seller refused as well. Another time, an S8 family moved with no notice after we had been paid by S8. This was paid into our normal Client Trust Account, where all Client's funds were deposited. We disbursed it with the NET rental to the Client that rightfully owned the property before learning they had vacated. S8 "clawed back" the funds indiscriminately from our Client Trust Account, effectively stealing it from other owners. Our office had to make up the short fall, which was never recovered from S8. Hence my recommendation for those that take any direct deposits from S8 (which I believe ALL are now) set up a separate account for that purpose and sweep the funds from it daily.

      1Reply
    • Henry Lazerow
      Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
      1d

      This is 100% true. Many risks people do not understand and gurus who lie to trick people into thinking sec 8 is guarenteed money.

      1Reply
    • Ed O.
      Investor · Statewide, MO · Member since 2011 · 822 posts · 428 votes
      15h

      @Richard F.

      Having cut my teeth in Section 8, I always chuckle when people think it is, even seasoned investors. When people say section 8 rent is guaranteed, it is a clear indication they have never had a section 8 rental property, or maybe had ONE and got lucky.

      1Reply
    • James Wise
      Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
      8h

      I dunno man. I've had 100's of Section 8 tenants throughout the years, and they are dirty filthy savage animals. No doubt about that. But - Not getting the rent is the 1 problem we almost never deal with.

      0Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      6h

      section 8 tenants get kicked off the program all the time.. the rent it self is government funded.. but the tenant is not guaranteed to stay .. they f up all the time as we know

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    • Don KonipolBusiness Member
      OP
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      6h

      You're probably a better PM than I am or hire a better PM, the one Sec 8 I owned (24 units) had numerous problems with government not picking repair issues and with holding rent as a result; further the poor souls living hand to mouth would lose their (often) part time no benefit jobs and paying their share of the rent became a problem. The bigger problem was the ongoing expenses above a more middle class oriented property for management, security, repairs, maintenance, and turnover. Although my ROI looked pretty good, I was glad to sell out to UT - Arlington to tear down and build campus addition.

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    • Mel White
      Specialist · Redmond, WA · Member since 2026 · 22 posts · 5 votes
      1h

      So many controversal responses to this - I wholeheartedly agree with a majority background in institutional property management. It's so crazy how different everyone's experiences have been. For example, a site I have right now with majority section 8 residents (>50%) has ~$150k delinquency to $120k net cashflow. or around 50% delinquency. Renewals are at 30% Month over Month. At a site 5 minutes away exact same finishes, similar site age, less occupied on average,same PSF, I see <1% delinquency, 70% renewal rate M/M. The difference? It has 1 section 8 resident. Do we change anything about our practice? NO! We do not discriminate based on source of income. Some of the natural marketing trends are very trackable - we have a strong resident referral platform that drives MOST of our new leases, we are in close proximity to major tech employers on one, but closer to grocery and bus lines on the other. One community is vehicle friendly and the other markets as transit oriented development.

      What we've discovered is that community-embedded, vehicle friendly 3 bedroom apartments see more section 8 tenants due to the lack of supply in our market. Smaller floorplans attract more professionals, but once you hit studio you are catching students or high turnover residents.

      (This is outside of a major city)

      0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1d

    If you pay me $10,000, you will be a part of t

    Our family and you will become financially free

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  • Ryan BrownPro Member
    Real Estate Agent · Louisville, KY · Member since 2022 · 65 posts · 16 votes
    1d

    @Don Konipol, great list. I'd add #11: "The rent will pay for everything."

    On paper, the tenant pays the mortgage, the taxes and the insurance, and you collect the difference every month. In real life, the water heater goes out in month three, the tenant who looked great on the application stops paying in month seven, and the unit sits empty for six weeks while you paint and clean between tenants. Newbies see a $300 a month cash flow number on a spreadsheet and think it's guaranteed income. Then one bad month wipes out a year of it.

    Rentals are one of the best long-term wealth builders out there, but in the short term they can get expensive, and the pro forma never shows the bad months. The investors who last are the ones who buy with reserves, budget for repairs and vacancy before they need to, and don't count the cash flow as theirs until it's actually in the bank.

    A close runner-up for #12 is "The cheapest house in the cheapest neighborhood has the best cash flow." Ask anyone who bought one how that worked out.

    [email protected]502-889-0122
    3Reply
  • Richard NeesePro Member
    Rental Property Investor · South Vinemont, AL · Member since 2026 · 37 posts · 9 votes
    22h

    Love the list and the honesty/humor connected to it. People believe what they want to believe. I stopped listening to Gurus selling courses a long time ago. I try to talk with those that are actually doing it. Thanks for the contribution to the community . Nice to break it up with a little tongue in cheek humor.

    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    15h

    >90% of the wealthy made their money in real estate (it’s actually 7% and declining!)

    Not sure where you got your 7% of wealthy made their money via RE and that it is declining. Also not sure what definition you use for wealthy.

    Forbes states 25% of billionaire used RE or RE development as their primary source of their fortunes. The 90% number I believe comes from 90% of millionaire own RE; this does not imply they primarily made their money via RE.

    >If you own 100 “doors” you’ll never have to work again

    I could argue this could be true in many markets simply by 1) selling the RE investing the profits in something passive 2) hire someone to manage all the units. In my market, if you own 100 doors, you definitely would not have to work if you did not desire to work. The reality is if you acquired 100 doors in my market, you do not need to work but work is likely ingrained in your persona.

    >You can make money “wholesaling” with no capital, experience, or knowledge

    I believe you can, but you can also when LOTTO. Virtually all the successful RE wholesalers have large budgets to achieve deal volume.

    In general I agree with your list.

    0Reply
    • Don KonipolBusiness Member
      OP
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      12h

      This is from Forbes

      Here are the the top 10 biggest industries for billionaires in 2024:

      DATA IS AS OF MARCH 8, 2024

      1. Finance & Investments

      427 billionaires | 15% of list

      Richest: Warren Buffett ($133 billion), chairman and CEO of Berkshire Hathaway.

      2. Technology

      342 billionaires | 12% of list

      Richest: Jeff Bezos ($194 billion), founder of Amazon and owner of the Washington Post and rocket company Blue Origin.

      3. Manufacturing

      328 billionaires | 12% of list

      Richest: Reinhold Wuerth & family ($33.6 billion), chairman of screw and fastener maker Wuerth Group.

      4. Fashion & Retail

      285 billionaires | 10% of list

      Richest: Bernard Arnault & family ($233 billion), chairman and CEO of luxury goods company LVMH and the world’s richest person.

      5. Food & Beverage

      210 billionaires | 8% of list

      Richest: Zhong Shanshan ($62.3 billion), chairman of bottled water company Nongfu Spring. He also controls the publicly-listed Beijing Wantai Biological Pharmacy.

      6. Diversified

      201 billionaires | 7% of list

      Richest: Mukesh Ambani ($116 billion), chairman of Reliance Industries, which holds interests in petrochemicals, oil and gas, retail and telecommunications.

      7. Healthcare

      197 billionaires | 7% of list

      Richest: Dilip Shanghvi ($22.6 billion), founder and managing director of Sun Pharmaceutical Industries, India's most valuable listed pharmaceuticals company.

      8. Real Estate

      190 billionaires | 7% of list

      Richest: Lee Shau Kee ($27.7 billion), Sun Hung Kai and Henderson Land Development, two of Hong Kong’s largest property developers.

      9. Media & Entertainment

      104 billionaires | 4% of list

      Richest: Rupert Murdoch & family ($19.5 billion), chairman emeritus of News Corp., one of the world’s largest media conglomerates.

      10. Energy

      98 billionaires | 4% of list

      Richest: Harold Hamm & family ($18.5 billion), founder and chairman of Continental Resources, one of the biggest independent oil companies in the U.S.

      Owning 100 doors CAN provide enough cash flow so that one doesn’t have to work - the lie is that just owning it doesn’t if the leverage used to acquire it is so high that typically cash flow isn’t much beyond break even.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6h

    I think my fav Guru presentation is the ( I lived in my moms garage or basement) and once i found this system I was able to be financially free in a few short months/years. they all start in the basement.

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    • Daniel O'Neill
      New to Real Estate · Bristol IL · Member since 2018 · 25 posts · 10 votes
      5h

      This one kill’s me. Or when BP interviews someone who slept on the couch to house hack. I’m like hey I have a wife and kids my HH days are gone I need other options. (Hint there really aren’t many lol)

      0Reply
    • Don KonipolBusiness Member
      OP
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      5h

      The original “gurus” were not great marketers and salespeople with little knowledge or track record of success in real estate investing as they are now. Just for fun here is a history of “gurus” in the real estate investing field

      Prior to 1957 there was no “marketing” of real estate as an investment class for the small or even moderately wealthy investor. Real estate investment was something done by “the rich”.

      In 1957, Bill Nickerson, a former 30 year telephone company employee who had built a small fortune buying and "trading up" SFR. Duplexes, and apartment buildings wrote a book "How I Turned $1,000 into a Million in Real Estate in My Spare Time”. Thru numerous updates and publishings, this became the bible of real estate investing and the start for many investors (including me!).

      In 1977, Robert Allen published his first book “Nothing Down”, which became so popular he began doing workshops in most major metropolitan areas. Allen’s typical workshop was Friday afternoon followed by all day Saturday and Sunday. Allen only appeared Friday and had an instructor deliver the course on the weekend.

      Somewhere around 1978 Allen started the Robert Allen Nothing Down clubs (RAND) in each city he visited. The clubs were very myopic in that they dealt only with “nothing down” scenarios and excluded the vast majority of real estate “deals”. Further, “success” was defined by how little one invested in buying a property to the exclusion of everything that really determines profitability. When I pointed this out to the Houston RAND club I was literally booed off stage!

      Albert Lowry was a primarily California SFR investor living in Utah with a large following in his church (Latter Day Saints). As California property soared in value due to NIMBY legislation + inflation in the late 1970s Lowry found himself successful and with the belief that his success was attributable to his own hard work and genius rather than the good fortune of timing and inflation. So he wrote a book that contains both good solid real estate information AND ridiculous assumptions about future valuations. The book sold and he decided to do the mentoring/workshop/seminar/ deal. Allen then did 2 things that were marketing “genius”. First, he put his lectures on tape, and added workbooks. This became the famous “books and tapes” sold in the “back of the room” at investment meetings. Second, he convinced Bill Nickerson to partner with him, and the Nickerson - Lowry seminaries were formed.

      Lowry also had a hand at establishing real estate investment clubs in major metro areas. These clubs were much more “solid” in teachings than the RAND clubs, and in Houston, Texas for example the RAND club was folded into the Realty Investment Club of Houston, which survived 42 years until COVID did it in.

      Two of the great gurus of that era that I had personal friendships with were the great note mentor/investor/teacher Jimmy Napier (Invest in Debt) and tax sale - foreclosure sale expert John Beck. Both gave GREAT value for what was a relatively minor amount of money; neither ever employed anyone to speak for them, delivered all seminars and workshops in person, answered all question in person, and were extremely knowledgeable about all aspects of real estate investing. As a side note, John Beck “broke bad” in the late 1990s, signing up with a promotion firm out of Provo Utah. He was sued by AG for fraud with his “program” (heavily advertised on late night “infomercial”) and lost an extremely large judgement lawsuit. After the verdict he was last seen walking away from the courthouse never returning to his parked vehicle, and has never been seen or heard from again! Who says real estate’s boring?

      What followed was the total garbage gurus appearing in infomercials, never having had any success as real estate investors, but promising riches while standing in from of bikini clad models, hot sports cars, and multi million dollar mansions.

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    • Richard F.
      Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
      3h

      Ahh, the Good Old Days!

      I attended a Robert Allen seminar in the early years, but I did not "go all in" for the major course that was pushed hard at that Book event. There were a couple of similar Gurus in town over the next few years, but one I really liked was Gary Shields, peddling his Cover Your Assets book about Land Trusts. He may have been more of a regional guy, based in KC, but was active in Omaha as well. I toured a couple of his projects in KC. He liked to acquire 1940's brick multi-fams, gut them completely...I mean completely! to 4 walls and building them back out. They were some great looking projects. He retired in the 90's, and passed about 10 years ago I believe.

      Around the same time, the Realtor I was working with (as a client) was into All Things Sales, and she took me to lunch one day where I met Zig Ziglar and received some fantastic motivational gems!

      Now, I'm sure there's a Tool for all that...

      0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    6h

    I don't see that many gurus anymore, not like it used to be. But we have a new problem, that is much more dangerous and persuasive: millions upon million of social media posts from 10 years ago. And dozens of books written 10 years ago. It all creates a narrative that is based on market fundamentals that have shifted massively: Milwaukee home prices have doubled in the last 10 years, rents have not - and people expect the math to still work the same: "just find a better deal" does not change that

    1Reply
    • Don KonipolBusiness Member
      OP
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      5h

      Good point. I hadn’t thought about that

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    4h


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    Grant Cardone

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  • John Leland
    Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 161 posts · 55 votes
    2h
    Quote from @Don Konipol:

    10 Great Lies Sold to Newbies

    1. You can make money “wholesaling” with no capital, experience, or knowledge

    2. Your brand new business entity can qualify for credit even if you personally can’t qualify

    3. When you identify a great deal money will follow and you can own it all with no investment capital on your part

    4. If you own 100 “doors” you’ll never have to work again

    5. Owning residential multi family property is a “passive” investment

    6. Hard money lenders will lend you the gap between an institutional loan and the purchase price

    7. And per 6 above, transactional lenders will lend you the earnest money

    8. You can successfully wholesale MLS listings

    9. 90% of the wealthy made their money in real estate (it’s actually 7% and declining!)

    10. If I can do it, anyone can do it (numerous gurus and other snake oil salesman)

    The one that bothers me the most is

    "You can pay full price for a house on the MLS by taking it as a "SubTo" and you can pay the real estate agent by borrowing the money from a "gator lender". You don't need any money or credit.

    That's still going around, but I see plenty of people who have tried, now trying to get themselves out of the trouble that approach has put them in.

    0Reply
  • Travis Cooke
    Investor · Spokane, WA · Member since 2024 · 12 posts · 9 votes
    1h

    I like this list. REI is like most things in life - oversimplifying it such as having a mindset of "Owning residential multi family property is a 'passive' investment" is going to produce mediocre or less results. As many of the veterans of these forums repeatedly tell us - it takes time in the trenches, persistence against adversity, making and learning from bad decisions, and standing back up when you get punched in the face.

    0Reply
  • Juan Hasbun
    Lender · Fort Lauderdale, FL · Member since 2020 · 38 posts · 6 votes
    1h

    As someone on the lending side, I'd say there's a lot of truth in this list.

    One of the biggest misconceptions I see from newer investors is the idea that a great deal automatically solves the capital problem. A great deal certainly helps, but lenders still have to look at experience, liquidity, reserves, credit profile, and the viability of the exit strategy.

    Another big one is the belief that hard money or private lenders will finance every gap in a transaction. Most lenders want to see the borrower have some skin in the game. When a deal relies on financing the purchase, rehab, closing costs, carrying costs, and earnest money with little or no borrower capital, the options get much narrower.

    The "money follows deals" statement is directionally true, but what often gets left out is that money follows well-structured deals presented by prepared borrowers.

    I've also seen plenty of investors chase door counts as a goal. I'd rather own 10 profitable properties with solid cash flow and manageable debt than 100 units that constantly require additional capital and attention.

    The common theme behind most of these myths is that real estate gets marketed as easier than it is. The reality is that successful investors usually win through good underwriting, conservative assumptions, adequate reserves, and repetition over time.

    Real estate can absolutely create wealth, but it's still a business. The investors who treat it like a business tend to last a lot longer than the ones looking for shortcuts.

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