All Forum Posts by: Paul Choate

I am a bankruptcy attorney. Most of this discussion is for chapter 7s. Chapter 13 is more complex as it is generally filed to save the home. The issues in a 13 post discharge are probably not too difficult but a 13 lasts from 3-5 years. Assume I am talking about a 7 going forward. They are more common.

Bankruptcy takes away the debtor's in personam liability (legal term for liability against the person). It does not deal with the In rem (liability against the property) rights of the debtor.

Debtors can leave a bankruptcy under chapter 7 still in the house and current on their payments. They do not personally owe money on the house but it is legally their house and the lien of the mortgage holder is still valid. They have to continue paying under the terms of the note or surrender the property. This can happen any time before the loan is paid off.

The mortgage holder's only remedy is to foreclose for non payment if the debt was not reaffirmed. If it was reaffirmed, the debtor is personally liable for the debt again. There is no judgment against the debtor for personal liability after a bankruptcy discharge of the debt.

So, to your original question, what are the benefits?

1. PP stated it. No foreclosure on their credit report.

2. If they reaffirmed, they will not get personally sued.

3.  An additional issue is what are called "zombie mortgages". When the value of a property becomes a negative, some lenders will not foreclose. Nothing requires them to do so. You can have a situation where a debtor has filed bankruptcy, abandoned a home and get a tax bill or nuisance notice three or four years later.  They assumed the bank would take care of the house and the bank did not. The Debtor is still the legal owner of the property. They could be potentially liable for the debts arising post filing and not even know it.

The reality is there is little incentive for the bank to do a short sale after bankruptcy. The reason is all of the legal issues someone in bankruptcy is dealing with. The bank is taking a chance that the title will be clean in the short sale process. There is little question in a foreclosure. The bank should get good title. They have already lost the right to go after the debtor and have already spent money on legal fees.

I would love to hear of individuals who have done this successfully. There is a lot of public info in a bankruptcy filing that would allow you to target potential leads. However, I don't see the motivation for the banks. 

I don't have specific advice, I have not done developments. I just want to give you my vote of encouragement. I bought a trailer park last year which took me way out of my comfort zone. I spent weeks reading regulations and visiting the state agency I would be dealing with. I learned a ton in a short amount of time. Everything did not go as planned and is taking longer to stabilize than I originally thought. Just make sure you have the reserves needed.  I would do it again in a heartbeat. Good luck!

Btw- love the Pensacola area. Just got back from a vacation there a couple weeks ago. 

@Jay Hinrichs

You have hit the nail on a number of heads! 

It is my understanding that real estate is a very inefficient market and that inefficiency provides the opportunity for those who are able to learn and willing to do the work. Frankly, I am uneasy with how easy it would be to learn the things it took me years and thousands of dollars of mistakes to learn on my own. I kinda want to shut my mouth and let people waste their money on a guru course or coach. I will be competing against less money since they won't have it anymore. 

I am not particularly concerned about those who are getting the money since they are probably not active in the market anyway;). My concern is the bad actors out there. If an industry is not self regulating, the government will step in at some point to correct it. I like the freedom of REI. I don't like watching people get ripped off.

Getting back to the original question of the worth of these courses-

OP asked for professional opinions as to the course's value. There is not one testimonial in this thread from someone who made it in real estate because of a guru/coach. Some have said it helped. I don't deny there may be some value in some of them. I maintain you can get it here cheaper.

 @Joe Villeneuvewhere are the defenders of the guru path? You say that we are not good sources. I agree we do not prove the value. I and others are proof it is not necessary. I am doing it without spending more than $30 on any one book. Most of my books were bought at garage sales when I was a college student. (I did drop $50k on a law degree but that is tangential.) My phone number is at the bottom of all my posts. You or anyone else are welcome to search the county records of the properties I have purchased, sold and currently hold. The beauty of BP is all of the smoke and mirrors are burned away in the sunlight. 

I get it makes some uncomfortable. I want to make more money. If someone can prove to me what they have works, I will gladly pay for it. I get internet marketers calling me every day promising to put my law firm on the first page of Google. I would pay $10,000 a month for it if it were true. Its not. I have spent some money on it but I researched and studied and learned the game. There is no short cut.

As to my experience with fraud (and I generally view gurus/systems/coaching as fraud at least in the way it is marketed to newbies), I have looked into the face of individuals who were currently being scammed over the internet and told them they were being ripped off. I, a licensed attorney sitting right in front of them, have been completely ignored as they continued to send money to thieves. A few of them knew me personally. I have filed bankruptcy for dozens of individuals who have been ripped off in all sorts of ways. I understand the power and allure of the shortcut. Due to family and friends, I have been exposed to multilevel marketing and in college considered participating. I have been to a REIA where a lady popped up in the back during the sales pitch testifying because she spent her $5000 in savings on a coaching package she just went on a cruise six months later. I saw the looks on everyone's faces. I was revolted.

I hope those who are new will please listen- everyone else is trying to get everything they can from you all of the time. Everyone is getting something out of this. When someone tells you different- watch your wallet.

@Jay Hinrichs

I should also add you are playing in a different ocean then many of us!

@Jay Hinrichs

I would love to hear the real stories of those who use the coaching/guru model. If this thread does anything, I hope those who are involved with this will share their stories. I think the podcast is a great way to do it. A blog would be great as well. They should be prepared for fact checkers.

Real estate courses do not make any claims as to what you can do with them beyond passing the state mandated tests. They are approved by a regulatory agency and their content is reviewed. They are a known commodity and market priced. I don't think they are comparable. The same goes for all of the courses you mentioned involving professional associations- even the high priced ones. There is a place for experts and their training courses. I do not dispute there are some highly technical forms of real estate investing (multifamily and commercial come to mind) which would benefit from an expert. That is not what I see being sold to the average individual getting into real estate.

The problem as I see it, is the coaching/guru model preys on ignorance and hides in the shadows. They don't give hard numbers and rarely give names. They package up the basic info Josh and Brandon have put into free and low priced books and sell it like they have some secret no one else knows about. I would argue their information is more likely to be outdated since they are in the business of selling instead of doing. Plus they are rarely subject matter experts.

I would love to hear one original idea or strategy a coach or guru could teach me. Could they help motivate me to get my butt in gear and work harder? Can they provide accountability? I am sure they can do this and more. I just think people should know what they are paying for.

BTW- my last property was $11,500 all in and rents for $450 a month. I am local and manage my own so I am not suggesting it is easy to replicate for those on the coasts. For many new people, they could take the money a program would cost them and see if this is for them. If it doesn't work out, they could have something to show for it when it is all said and done.   

[B.S. qualifier- I have never paid for a coach and like BP because I view it as anti-coach/guru. I am not selling anything either.]

When I listen to the podcasts and read individual's stories, I have yet to hear one individual attribute their success to a coach/course they bought. I have heard them speak of mentors which I feel is a different relationship.

I have heard someone talk about the great cruise they went on because they gave all other money to the "coach" during the sales pitch. Of course they provided no actual numbers or even a name to verify their claims.

I do recognize a common theme from those who step up with a name and a face- taking action. If the coach/course is going to drain your ability to act, it is a waste of money. 

The information is out there. There is no secret to this business or shortcuts. It is work and it is not easy. Read, study and talk to actual investors doing it every day. Get involved with your local investor community.

@Mark Nolan

Thanks for spreading the word!

@Rhett Tullis

 and @JJ Gritts

 explained this group better than my book. If you want to go to a place and talk about your plans and ideas without everyone thinking you are crazy, this is it. Thanks everyone for the great response.

@Frank B.

Yes, all of the meetings have been and will be on the fourth Tuesday at noon. (Tuesdays are when I am in OKC for court :)) We will discuss a better meeting place this month for the future.

@JJ Gritts suggested adding a quarterly evening meet up for those who cant get off work. We will talk about that as well. I like the idea but my family commitments limit my evenings severely. Everyone please bring your ideas and suggestions. 

My first four offers were accepted. I was too concerned about the perception I was making with my offer and I did not go low enough. Do not be afraid to hurt someone's feelings!