How Do You Know Who You Can Trust?

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The nice thing about this industry is you actually don’t have to trust anyone! This may be true in other industries as well, I haven’t really put much thought into it, but in real estate investing there is very little that you can’t somehow verify. At least in my opinion.

We all know the gurus shouting from the rooftop about their mentoring programs, or their get rich in 30 days promises, or some are even just screaming their general opinions about who knows what. The gurus will often try to charge you a lot of money to learn what they know. I don’t think all those programs are bad by any means, and some of them may even be well worth the thousands of dollars you have pay for them. But the question always comes up, how do you know if you can trust who is pushing that expensive program? How do you know if the program will work?

Or maybe you aren’t looking for gurus, you are just looking for deals. How do you know what you’re buying? How do you know if you are getting what is promised? How do you know if you are getting a good deal, are there hidden tricks in there somewhere, or is the seller a total scammer?

I want to address two major points in relation to trust in this industry:

  1. Who to Take Advice From
  2. How to Verify Your Purchase

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Who to Take Advice From

The trigger for this article actually came from a comment I received on a blog I wrote on here a couple weeks ago talking about the big investors in the world, and I had named Robert Kiyosaki (author of Rich Dad Poor Dad and a huge name in real estate investing, for anyone not familiar). This commenter called Kiyosaki a name or two in the comment and then referenced a website from a guy who had written out all his negative opinions about Kiyosaki and what he teaches. So essentially, at least how it appeared from his comment, he was justifying saying Kiyosaki sucks because of what this guy had said about him (Kiyosaki). Maybe that’s not how he meant it to come across, but either way the reference to this particular website made me raise an eyebrow.

Here is the reality, and I use Kiyosaki as an example. There will always be a debate about whether or not Kiyosaki is worth his salt. I am openly a huge Kiyosaki fan, I have read a large number of his books, I follow the Rich Dad blog, and if I ever see his name attached to something I already know that I am going to understand and agree with the material. I have the same mindset he does. Not everybody does, and that is totally fine, but I do.

In terms of the negative things said about Kiyosaki, of course the guy sells seminars and tapes and programs. Because he can! He is very open about wanting to do financial education, so he does exactly that. He is very smart in this field and his ideas are worth sharing. The money he charges for those programs is money for his time. He is the brain behind everything in Rich Dad Education, he deserves to get paid for it. Another question I hear about him is whether he is even legit. If you go online and search Rich Dad or Robert Kiyosaki, you will find a ton of scam accusations by random people. It’s worth it to read some of them because you will quickly realize the majority of them are from people who are clearly upset they didn’t get rich overnight after taking a Rich Dad class. I would venture to say that the majority of people who pay the money for those classes don’t end up making it.

Why?

Because they went into it thinking they were going to learn all the answers and be an overnight success. Guess what, it doesn’t work that way. Those classes are just the start of the grueling time and effort you have to put into investing. The other reason people wonder if he is legit is because he has hit the headlines as having filed bankruptcy with one of his companies and what on earth financial expert would ever let that happen! My thought on that is, just because he is considered an expert doesn’t make him perfect. Think of the mistakes you and I make in investing. For every mistake we make, say we have five successes. If he follows the same numbers, he is going to have one mistake for every five successes too, but when you are at his level, those mistakes and those successes are huuuge compared to ours! Big enough to make headlines. So even if one of his companies flunked, that doesn’t mean that he doesn’t have five more that are raking in millions with no problem. Or even simpler, filing bankruptcy can be a very smart financial strategy in some cases, so he may have just been doing something slick. We’ll never know, but either way it doesn’t matter.

Saying all that doesn’t actually get to my point, but it’s worth mentioning. Mostly so you understand there are always multiple sides to every story and you should always be leery about whose opinion you listen to about anyone.

With that said, how do you know who is legit and who isn’t if you are trying to be open-minded about everyone? This may sound strange, but I really don’t think it matters who is legit and who isn’t. Here is why. Let’s say Kiyosaki actually is a complete con artist. He has no idea what he is talking about, he overcharges for worthless programs, and he’s just a sleaze. All I know about him is that because of all the books I read of his, the one seminar I went of his (only the $595 one), and everything I read from him, I have gotten myself out of my 9-5 job, I work for myself now from wherever I want and whenever I want to, I was able to buy five properties in less than two years only using creative financing, and my entire lifestyle has changed in such cool ways most people would never even understand. All because of what I learned from him. I read plenty of other books, but I can definitely say the huge majority of everything I have accomplished, and continue to accomplish, is because of things I learned from him specifically. So if he is a total con artist, maybe he is I don’t know, who cares? Because everything I learned from him worked! It may not work for everyone, but it worked for me. I will never sternly tell anyone that Kiyosaki is right, and I never bash anyone who says he’s wrong, because I don’t care if he is right or wrong and I don’t care what people think of him because he worked for me. That’s all that matters.

So in terms of finding the right mentors in this industry, or the right gurus, or just the right people, don’t look at it in terms of who is a scammer and who isn’t, focus on what you learn from that person. Did what you learned do something positive for you as an investor? If so, then go with it! If what you learned was sketchy, or unhelpful, or hurtful, then stay away from the person. My warning is to try to test these people out by reading their books and blogs and talking to others who have followed them before dropping thousands of dollars on one of their programs. You’ll definitely feel scammed if you pay that much for bad material. Bad is relative of course, because you can literally learn something from even a bad presentation. You just have to open your ears. I’d be most concerned with someone teaching you illegal things because those would have way more repercussions than just ‘off’ advice.

Thinking of staying legal leads me to my second point about trust in this industry, which is more related to buying deals or buying into deals.

How to Verify Your Purchase

I would say the two biggest things you need to confirm when buying into any real estate investment are- confirming everything is legal, and ensuring you are getting the deal you think you are. Everything related to these two things can be verified to some degree in any real estate transaction. I mentioned these things in a past article, Due Diligence on a Turnkey Property. I mentioned in there easy things you can do to verify what you are buying, both from a legal standpoint and a quality standpoint, and I’m going to say those things again here but in general, non-turnkey terms. My disclaimer of course is to say that none of these things will 100% guarantee something bad doesn’t happen with your property, but they sure are good first steps in protecting yourself against a bad purchase or deal.

1.       Confirm any contracts or written materials with a real estate attorney. It’s great to have a second pair of legal eyes on any documentation. A couple cautions though, 1. Some attorneys will go unnecessarily crazy on a document and do more harm than good, and cost you a ton of money doing it, and 2. Understand that even if you have a rock solid contract or agreement, you aren’t guaranteed to be covered if something goes downhill. Meaning enforcing contracts doesn’t always end up being cheap, easy, or effective.

2.       Always use a home inspector. Doesn’t matter what you are buying. A flip, a rental, a multi, an office complex, anything. Shoot, get more than one inspection done if you want. Few things cost an investor more than unknown maintenance a buyer didn’t know about ahead of time.

3.       Title insurance. If applicable. This will protect against title issues that may arise on a property later.

4.       References. You can always ask for references of people who have worked with someone in the past. Get their opinions. Will buying into this deal or company likely benefit you or hurt you? Ask others’ opinions.

5.       Never just nonchalantly hand money over. Make sure contracts are in place first, make sure you know where the money is going, and make sure you know how to get it back should you need to back out of the deal, or what are the contingencies for getting it back?

Remember, you never have to do something you aren’t comfortable with. There is another extreme to that where you end up paralyzed and not doing anything, and that’s not good either, but listen to your gut, don’t hand money over easily without good research, and use common sense. If it walks like a duck, it’s not always a duck.

Going back quickly to the guru idea, remember, it’s all about what you benefit from someone, not what others think about them. Use other’s opinions for reference for sure, but be your own judge. And don’t listen to anyone who says you can be rich in 30 days.

Can anyone add more precautionary measures that I left out that are helpful in protecting yourself?

I won’t be writing next week as I’ll be at an investors’ weekend in Nicaragua, but stay tuned for more when I get back!

Photo Credit: just.Luc

About Author

Ali Boone

Ali Boone(G+) left her corporate job as an Aeronautical Engineer to work full-time in Real Estate Investing. She began as an investor in 2011 and managed to buy 5 properties in her first 18 months using only creative financing methods. Her focus is on rental properties, specifically turnkey rental properties, and has also invested out of the country in Nicaragua.

30 Comments

  1. Nice article Ali. I see another fellow Engineer has left the industry. 🙂 I’m happy for you. I left my job 8 years ago in the automotive industry and have never looked back. I’d like to add that gurus like Kiyosaki do provide fundamentals and theory mostly. There is good information from all of them in one way or another, but it is up the the individual to take this information and piece it together so that it works for them. There is no, “one size fits all” solution and for the most part, intangibles are discussed that must be re-directed into action and results. In my opinion, if these gurus were really heavy real estate investors, they wouldn’t have time to go around the country and the world to do their seminars and teach. This is why their coaching programs (which are excessively priced), are probably not the best way to go about learning the business.

    I attended a seminar led by a guru a couple of weeks ago for the purposes of networking. During the seminar, the guru (I won’t mention his name) stated that in the early nineties, he made over $500 million on his seminar business in one year. Hmmm, that’s a whole bunch of training programs to sell to get to that level. I found that number far too high to believe and I was surprised that he didn’t say he made that amount in real estate investing rather than the seminars.

    If you want to learn this business, it’s better to go to your local REIA and network there. You will find the real players who are developers, rehabbers, wholesalers, commercial specialists, etc., and meet these people who are actually in the trenches every day. Find some common points of interest and see if you can learn from each other. This will get you to where you want to go much faster than just books, CD’s and seminars / guru coaching. It’s also much less expensive. Find other business networking opportunities and you will find the connections you need. It takes hard work, and very long hours but it’s worth it.

    I have met private lenders and wholesalers through seminars and website traffic. I’ve met partners on LinkedIn. I’ve found off-market deals with direct targeted marketing and my connections. I’ve gone to seminars which I was not even thrilled about going to at the time and I have met amazing people who are players in the business at these events. I would recommend speaking at seminars if you get the opportunity. Find business networking events that you can speak at (they don’t even need to be real estate related). They can be generic. Talk about what you do and you will be pleasantly surprised at how many questions will be asked. From some of these questions, new business relationships form. It’s an amazing result.

    I would like to end my comment by stating an important fact: Never, ever ask for money. You present opportunities to others by explaining what you do. By showing that you have the capability to get deals done, people will want to partner with you. This is a natural progression that opens up bigger possibilities and options.

    • Great comment, Alex. All of what you say is spot-on. I also agree about the not asking people for money straight up. You’d be surprised at how many people reach out to me, even on BP, straight up asking if I would like to fund their something or anothers. Huh? I don’t even know you. I’ve always been confused about why someone would think I would just fork over money to some random Joe, just that easy. No offense, if any of your readers are that person, but definitely focus on building relationships before bringing in the money part of it.

      Great puts.

  2. The best advice is never trust anyone, or maybe to soften this statement “trust but verify”.

    Or as I have always done, know the answer to a few of the simple questions you might ask, when you get the wrong answer or a lie you know to be on your toes.

    Kiyosaki is most likely not an investor, but then again most who teach in our universities have never actually been out in the real world. Selling information is a much better business model, no risk, no tenants. We all know the rich dad was a fiction so the basic premise of all that he teaches is based on a fiction.

    Most attending Kiyosaki’s events are there to feel good, most do not act on what they hear, or on any of the guru courses.

    I have read many articles where it is said people don’t get into REI because of fear, I don’t agree it is not fear, it’ the thought of doing the work that holds most back.

    Guru’s pray on folks who don’t want to do the work, this is why these folks flock to events. They are looking for the method or secret formula to get rich easy, somewhat like all those who spend thousands of dollars playing lotteries. I win the lottery every week by simply not playing.

    • Trust but verify is perfect. Very valid guideline that everyone should follow. Thanks, Dennis.

      I do believe Kiyosaki is most definitely an investor, no question, but yes there is a ton of money to be made from the seminars and that whole program, so makes sense he would do those. But those came after the investment experience too.

      • Michael Dorovich on

        This article is so good I had to reply twice. I had heard that Kiyosaki’s RE coaching wasn’t good, but a few years ago a friend invited me to come along to a session with a Rich Dad coach and the guy was actually very good. This same friend is now buying 50+ unit apartment buildings last I heard. (He also had many other coaches.)

        The one thing I am learning is that the people who are really successful tend to learn from all of the coaches and mentors they possible can. Some have had six or more different coaches. I’m not sure you can learn it all from one place, you need to fill in the gaps by seeing things from every angle.

        There is another local investor who owned 60 plus single family houses, and a $1000/hr coach told him to sell them all and buy only multifamily to achieve his goals. He is now buying large multifamilies and offers his own coaching for $25k. It is funny how, on the one had, once someone offers training for a fee, you tend to view what they offer with skepticism, yet it makes sense as an investment if you actually purchase $500k or more in real estate through the coaching.

        • Totally agree Michael. I’d would say more programs than not, for a fee, are totally worth the money if you utilize the material you learn. That’s where the downfall is, people don’t actually use it in full and don’t combine it with other knowledge. It’s just not a turnkey solution, you have to use it right.

  3. I attended few of his free seminar. I felt better, after hearing the presentation, that I know 90% of what they said. Remaining 10% will help me some day. People making presentation were pushing to get hard money and invest, very dangerous and most likely to be a failure. So books reading by Kiyisaki was better, seminar was a total waste, so do not go for it any more.
    BP is a better source, ask questions, and get free input from experienced people. Thanks
    kris

    • Definitely Kris. The point everyone should know is you will get different things from different resources. Books will teach you a certain level of things, the seminars will get you another, and BP folks another. Even the Rich Dad seminars I’ve been too where they try to sell you more, I just ignore that part and get the other information. It’s great. Know what you want to get out of something, get it, and get more somewhere else. Cheapest way to get the best info.

  4. Great article Ali! I always love a point of discussion that can be controversial because it helps me see so many different angles and stimulates new ideas. I’ve read several of the Rich Dad books and even attended one of the 3 day (basic) seminars that get people hooked to spend more. Like any system, it shows a general approach to things. I think one of the biggest thing I took away from the 3 day seminar was it fined tuned for me what areas of REI I wanted to pursue and gave me a good starting point to know what to search for in order to get more information to actually pursue those areas. Another thing to be aware of is that the Rich Dad training is owned by Tigrent Learning, may be a different name by now since they seem to change it regularly, who bought the rights to use the Rich Dad logo from Robert Kiyosaki for promotional purposes. This is the verify part of the seminar that I applied. Once I found out more, I decided to take the money they were asking for training and use it to increase my own education and build my business. You can learn from anything if your in the right mindset.
    Btw, Desiree’ says hi from up here in Alaska, she’s my business partner.

    • Ahhh tell her hi! Haha. I love the small BP world. Thanks for your comment, Roy and I think you’re right on about what kinds of things you can get out seminars. I did the same for myself with those.

  5. Great post Ali!

    You’ve answered a lot of the questions I had about turn-key investing. One question came to mind though. How do you know you can trust your property managers when it comes to repairs? Do they get bids from different contractors and submit to you for approval or does the PM decide who to go with? Should that even be a consideration if you currently have a renter since they most likely want any issues fixed ASAP?

    Take care!

    JD

    • You’d have to talk to your property manager JD to find out how they specifically handle those things. A lot of PMs will just hire contractors for every single job, which to me is a very expensive route. I prefer they have their trusted handymen because they are cheaper. Always good to get pictures of the completed jobs too for records.

      My guideline is- if I’m charged for repairs, if the costs seem nice and reasonable, I’m good with it. I don’t start questioning things until my bills gets seemingly high.

  6. Michael Dorovich on

    Great article!

    classic quotes:

    ‘Those classes are just the start of the grueling time and effort you have to put into investing.’

    ‘Don’t look at it in terms of who is a scammer and who isn’t, focus on what you learn from that person.’

    ‘Bad is relative of course, because you can literally learn something from even a bad presentation.’

  7. Excellent write-up, Ali!

    Learning how to read people is definitely a skill learned on the job. Despite how good the deal looks, I never work with folks I do not trust. I just recently walked away from a deal with major plumbing issues uncovered by my plumber.

    Going in, I had a weird feeling about the seller and felt there were some issues with the home not being completely addressed. Once my plumber went in there to address my concerns based on my own inspection, the issues were confirmed. Brought them up with the seller who wanted to re-negotiate the price but made the decision to walk away as it seemed it may be more of a headache than anything else.

    It does take practice to know how to read people. I recently saw a documentary about Warren Buffett and learned he bought a furniture business many years ago from the owner solely on trust and how he felt about the owner. He didn’t verify any numbers or do his own audit. His confidence in the owner during the meeting was good enough for him and they drafted a deal right there on the table. That was the deal that made him a billionaire. It definitely takes time and some practice to learn the skill of reading people but can be promising and rewarding in the future.

    Enjoyed the article, thanks for sharing!

    • Interesting story about Buffett I didn’t know about! I’ll have to read more on that one. Yes, reading people is very hard because so many people are so good at deceiving you. Tricky and risky to go off that, but it can help too. Thanks, Rachel!

  8. You hedge by saying “we may never know” if Kiyosaki was doing something “slick” with his bankruptcy, but I remember looking into it when the story broke and it was pretty straightforward. One of his many companies had managed to incur a debt of several millions of dollars in excess of its assets as a result of a court judgment, and therefore he had it declare bankruptcy. Kiyosaki is nobody’s sucker; as he himself has alluded to, that is the entire point of owning multiple companies and structuring things to limit liability. As you rightly note, it doesn’t affect the fact that he was, is, and will continue to be a high roller.

    People who made a lot of noise about it mainly didn’t grasp the difference between personal and corporate bankruptcy, and acted as if Kiyosaki himself had gone bankrupt.

  9. Ali –

    You bring up a subject that I myself have pretty strong opinions on. Sites like BP, my blog and dozens of other blogs and websites give content away freely. We do that I believe because we genuinely want to help other people to learn.

    But the fact is, there is absolutely nothing wrong with paying for products, courses, and coaching. It’s true that you can find everything you want on the internet for free. What legitimate folks are selling is:

    1. Information that is provided to you in an organized manor that you can learn from and make money quicker if you actually follow the course materials and do the work. You still have to do the work!

    2. That person’s experience, lessons that will keep you from making the same mistakes, and with (good) coaching you get someone with practical experience to help you along the path faster. A good coach can be worth their weight in gold. I don’t know one super successful person in this business that hasn’t paid for some of their education, and often times that is a very big number. Every high level coach also has coaches. The learning never stops in this business or any other business.

    The notion that everything should be free all the time is ridiculous. No one reading this site or any other site goes to work each day without the expectation that they will receive compensation for their work so they can pay the bills. Folks that create quality courses and products for real estate investors are no different. They are selling their knowledge and their years of experience.

    Are there some terrible worthless courses and coaches? Absolutely. But there are some also some awesome products and coaches out there that allow you to shave years off your learning curve. You expect to pay for college, and you should expect to pay for advanced education in this field.

    I recently had a person emailing me daily with questions; long lists of questions. I did my best to answer those questions. I also directed that person to resources both on this site and my blog for more detailed information. After a few days this person emailed me back and this is basically what she said:

    I really don’t have the time or inclination to read all of this stuff and watch the videos. I’m sure they are valuable but what I need is – and am going to paraphrase and give you a partial list to protect the “guilty” –

    – all of your marketing pieces so that I can “tweak them” for my business

    -screenshots of your marketing plan, database set up and any other things related to these topics

    -the forms and contracts you have and use regularly

    -and all of the other moving parts of your business so that I can get my business up and running quickly and profitably with as little hassle as possible.

    Once I got over being dumbfounded I sent her a reply that pretty much said … not going to happen.

    There is no “easy button” in this business. It’s a whole lot of hard work.

    Great post Ali.

    Sharon

    • Melodee Lucido on

      wow Sharon, that is just plain crrrrazzzzy! I love it, “Not gonna happen”.

      Since I’ve sky rocketed all the other businesses I’ve started in my many decades I thought that I’d be ringing in the Ca$$$h within a very short time frame. I learned that, as you said, this takes hard work—–and consistency and tenacity. But for me it’s fun hard work and super rewarding.

      There will always be people trying to feed off from others : <

      • Kerry Brooks on

        OMG and LOL Sharon,

        The sad part is you could give all that info to them, but with the attitude they have they would still fail. They have bought into the idea that this business is really easy, that there is some magic formula out there that you just press the go button and poof instant real estate investor. We all wish we could set it up and forget it and make millions, but not gonna happen. You have to love all the “fast and easy” questions we all see on Bigger Pockets. That attitude really backs up what Ali has said in the blog, most people will never do the work part of what they have learned. Most systems out there work, if you do what they say, how they say and are willing to be consistent and diligent.

        • Great comment, Kerry. Even if you hand someone the answers, they are likely to still fail. You have to build your own foundation or you won’t make it, no matter how many answers are handed to you.

    • Ahhhhhh, are you serious Sharon? That’s so crazy! Someone blatantly wanted you to just hand over all your work? Lol. Wow. Although props for being that ballsy, I guess? Geez. Sure, let me hand over all the results of my time and efforts I’ve sweated through. I’d love to do that for you. So crazy!

      I agree, a lot of the programs are excellent and would be worth the money. I think it’s all about finding the right combo of free vs paid information and using that to grow whatever business it is you are wanting to grow. Great comment, thanks.

  10. Steve Johnson on

    Great article here. I happen to fall in the same school of thought as Ali in regards to Kiyosaki. I somehow managed to evade all financial classes available in high school and college. Shortly after graduation and doing taxes by myself for the first time I realized how confusing and frustrating it was to pay back debt I didn’t understand (back when I took it in college and how it would affect me now) and where and why my money goes away for taxes. Kiyosaki’s books opened my eyes to understanding finances and investing and I’ve read many more of them. I’ve taken a few of his classes and have been quite pleased. From what I can tell they do a good job with the fundementals, which I badly needed the crash course on, and now on BP I can find the more detailed answers and more savvy techniques used.

    I definitely agree its a lot about how you use the information you receive. Even some books I’ve picked up by others have information I don’t necessarily agree with or is outdated but it helps to understand how and where we came from using that older information.

  11. Kevin Schermerhorn on

    Great article!

    Felix hit the nail on the head about Kiyosaki. It’s not like the guy’s sitting on a street corner with a tin pan, begging for change. The guy knew how to protect his personal life from his business life.

    Also, I like the fact that you say, “learn from that person” if they work for you, regardless if who they are. As long as you learn something of true value from them, then it’s worth it. Personally, I’d like to thank Kiyosaki for opening my eyes to a whole new world about a decade ago. Ever since reading Rich Dad Poor Dad, I’ve dreamed about money working for me instead of me becoming a slave to it.

  12. Melodee Lucido on

    Hey Ali,

    For me trust is a gut feeling—-really—after talking with someone or interacting with them online I get a distinct feeling in my gut about whether this person is real and whether I want to work with them—–or not.

    A lot of newer people that want to break into the industry might believe all the mud flying out there and be blinded by the dollar signs. Like the saying goes, “If this was easy everyone would be sitting on the beach sipping their fav bev while they heard the sound of their cash register ringing in the background” my paraphrase :>

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