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New Investors Beware: Real Estate Education can Cost Big

Don’t lose $24K the way this man did…

It’s sad, but I sit down with individuals on a regular basis who have spent $20,000+ on guru real estate education and they still don’t have all the tools to properly invest. I just spoke with a man who, after spending $24K on boot camps and seminars, is at the end of his financial rope and still is unsure how to properly invest (which is why he contacted me). I wish he had contacted me first.

You would think that $20K worth of any education would be enough to get you going, but if you read what I’ve detailed below you’ll understand exactly what went wrong (and how you can avoid this yourself).

This is an excerpt from “The 7 Great Lies of Real Estate Investing” on how the gurus operate. I’m releasing this information because, regardless of whether you ever buy the 7 Lies book or not, I want you to understand what you’re getting into when you attend a free guru seminar at your local hotel. This will save you a lot of time and money…

————–begin excerpt (reading time 7 min)—————-

The Guru Experience

Many people, realizing they need education to succeed in real estate, turn to any number of real estate professionals who sell real estate investing education. These professionals are often collectively known as the “real estate gurus”.

You can spot a guru by their mode of advertising and selling. You may see them on web sites or late night television selling CDs and DVDs about real estate investing. They often travel the country delivering seminars and boot camps. When one of them is coming to town you’ll see full-page newspaper advertisements and commercials on TV inviting you to attend a free (or nearly free) workshop about how to make millions in real estate investing.

These workshops sound like the complete package because they use a combination of the 7 lies to bring you in, each of them promising to teach you what you need to know to start creating wealth immediately.

I enjoy going to these workshops. They are, if nothing else, very motivational. Are they a waste of time? Of course not–especially not for a beginner. What purpose would it serve a guru to waste your time? These workshops usually have very good information on the reasons why you want to get into real estate investing, they go over fundamentals of investing itself, and they are very effective at giving you the big picture of what lots of money can do for you personally.

They’re a lot of fun. You’ll meet some good people and, unless you’re an experienced investor already, you’ll learn something new. They are very good at getting you interested in starting a career in real estate. Will you know everything you need to know to be successful in real estate after attending this workshop? Not a chance. Even though they said you would? I’m afraid so.

What to watch for

Do you know how you can tell? At the end of the workshop they DON’T say, “Thank you all for attending. You now know everything you need to know to be successful in real estate. Take care!”

No, they don’t say that. At the end of the workshop, what they say is “Thank you all for attending. We hope you’ve learned a lot. Now if you’re ready to make a lot of money in real estate, you’ll want to sign up for our 2-day seminar happening next month at this same location. It’s usually $9,500 but today we have a special price of only $3,000 for the first 100 people that sign up. At this seminar we’ll teach you (insert very impressive sounding subjects that you realize you need to learn). If you’re serious about making money in real estate sign up for this right now.”

Now they’re usually a lot more persuasive than that, but if that’s what they say then you know you haven’t been taught everything you need to know to be successful in real estate.

You’re not done yet…

So a month later they come back to town and you attend the $3,000 seminar. You learn a lot of good stuff and you’re getting a clearer idea of how to do real estate. You’re feeling more confident but then at the end of that seminar they point out that you are totally lacking knowledge in the area of (insert another important area you need knowledge about). Luckily they’ve got a 3-day $5,000 boot camp coming up in 2 months (discounted from $12,599!) that covers that exact topic. They’ll take good bit of time to lay out very clearly why you would be nuts not to attend this boot camp.

So you spend $5K to attend the boot camp, and it was fantastic! You’ve learned some awesome things and you’re excited to get going until they tell you several horror stories about new investors who used this information to do a real estate deal, and everything was going fine until something unexpected happened and they didn’t know how to complete the deal and they lost tons of money. If you don’t want that to happen to you, there is a $4,000 package you can buy that allows you to speak with a personal investment coach twice a week for 3 months so you’ll be able to solve unexpected problems that will inevitably pop up.

So with the coaching program in hand you’re ready to boldly go out and invest–right? Your coaching sessions are going well, but then the coach can’t stress enough that you need to attend the upcoming 2-day $2,500 workshop because “it’s essential to making money in real estate and it would be a mistake of gargantuan proportions to miss it.”

So in this situation you’ve spent $12,000 on education with a lot of good reasons to spend another $2,500. Has it all been a rip-off so far? Not necessarily. You’ve learned some very good things and you now have a much better understanding of real estate investing.

Do you know how much more money you’ll need to spend with them before you feel confident to start? No–each seminar you go to promises to give you the secret to unlimited wealth, but each one ends with another up-sell.

Should you quit? By this point you’ve invested so much into this that it’s hard to justify quitting now.

Have you invested in real estate yet? Maybe, but it’s unlikely that you have.

The Guru Dilemma

You see, there is a natural dilemma here. The gurus stop making money from you the moment you feel that you have everything you need from them. Gurus are traveling salesmen, and out of necessity their system is set up so that after they’ve taught you something it is in their best interest that you still feel like there is more you need to know to be successful. If, at the end of a seminar or boot camp, you do feel you’ve got all the information and tools you need to invest with confidence, they haven’t done their job correctly.

So, continually feeling that you’re lacking something vital, you’re inclined to postpone action till the next time the guru comes to town. Because the fact is, and this is key to their success, you ARE lacking something vital. The gurus HAVE left out important information. They do this so they’ve got something that they can create another boot camp/workshop/seminar around.

Can you see why people can spend tens of thousands of dollars learning about real estate but never have the confidence to go out and do it? Can you see how there’s over a 95% failure rate? I’ve actually met someone who has spent $60,000 on education but hadn’t invested in anything yet. Some people spend so much time and money just trying to learn what they need to know that there’s often no time or money left to get started with!

The gurus do, I am certain, sincerely want you to be successful in real estate. They’re not the bad guys here. The simple fact is that they are the ones who built the real estate educational system and they built it in their favor. It’s a business, they’re very good at it, and they’ll use whatever words and promises they need to get you into their system and keep you there as long as possible.

Is this a sad state of affairs? Yes. Do a lot of people give up before they get started? You bet. Is there a better way? Absolutely.

Let’s get into it…

——————–end excerpt————————-

This is only the beginning. This isn’t the only way that gurus operate–there are more things to watch out for, other tactics to be aware of, and additional tools of persuasion that gurus employ to entice attendees to buy their education.

Don’t get me wrong–I don’t hate the gurus. They do, in many ways, fill a necessary role. I just don’t approve of their sales and marketing tactics because they’re usually not up front about things and often tell outright lies to get people to buy their programs. Those lies are the basis for “The 7 Great Lies of Real Estate Investing” book that this excerpt was taken from.

You can get great education through the gurus if you know how to find it, know what questions to ask before you buy, and know how to see through the sales tactics and hype. I’ll teach you all of that.

When you’re at that stage where you’re considering buying education, please grab a copy of the “7 Lies” Guidebook first so you know how to beat them at their own game.

Because I could live happy for the rest of my life if I never receive an email like this again:

“I wish I had read this before (guru)* found me!” (*guru name removed)“(Guru) has been my worst experience of my life. for some reason my husband & I really fell for the whole smear campaign, which is very intense. we spent big $ to come into his program w/mentoring, the vault, getting our llc., tax consulting, seminars, & chasing the tax sale dream.

I just wanted to thank you for the real report, for answering my questions, & to thank you for being a real person, not computer generated!”

Dani K.

How to Add Millionaire Investors to Your Network

Your network is extremely important. I’m always surprised at how many struggling investors I meet who are trying to break into the real estate game without the support of experienced investors.

For some of them it’s not for lack of trying. Many of them have gone to networking events and REIA clubs and have passed out business cards, but they find that the only people willing to work with them are other novice investors.

So how do you get the experienced investors to take notice of you? How do you get into their inner circle? How do you get to the point that #1) they actually take your call when you call them and #2) they actually know who you are and will work with you?

Because when you approach an experienced investor you probably realize they are very busy, but what you might not know is that they get approached fairly regularly by new investors who want to learn real estate from them. Here’s an excerpt from an email I received yesterday:

“I am very interested in real estate. I am a new real estate wholesaler and would like to work under other investors guidance to learn all aspects of the business. I am a hard working person with a good work ethic…”

I get a couple of these emails a week. A lot of investors do. Everyone one of these people describe themselves as “hard working”, they’re a “team player”, they “learn quickly” etc… Those are important qualities, but they won’t make you stand out.

If you’re interested in expanding your network, here’s a little tip that got me got me some face time with some amazing investors.

They’ve gotta eat, right?

For an average of $10, I sat down with several amazing investors and got to pick their brains for an hour. This was when I was very first getting started and brought nothing but my enthusiasm to the table. And I brought lunch…

If you meet an investor you’d like to get to know, ask them if you can take them out to lunch. Before you invite them to lunch, I suggest you find out a little about them first and use it to stroke their ego a bit. Here’s what happened the very first time I tried this:

I was new at a networking event, and I asked a new acquaintance named Norene “Who do you know here that is doing really well?”

Norene said “Matt, the guy over there, is doing well. He’s in the middle of a $25 million land deal in Hawaii right now.”

Using this information, I approached Matt.

Me: “Hi Matt. I’m a friend of Norene’s and she was telling me that you’ve been doing pretty well in real estate.”

Matt (you’d have to know him to appreciate his answer): “I’m doing all right.”

Me: “From what I’ve heard you’re doing better than all right.” He chuckles. “I’m new here and I was wondering if I could take you out to lunch?”

I figured if anyone was going to turn me down, it would be him. But he accepted, and for a $6 sub sandwich (he chose the location) I got to pick his brain for an hour and a half. It was awesome.

I did this several more times and sat down one-on-one with multi-millionaire investors for an average of $10/hour, and new investors have done this with me since. It’s amazing what most people will do for food. If you offered to pay me good money to sit down and teach you real estate, I’d likely decline. If you offered me pizza, I would probably take you up on it. I really can’t explain why.

This is a great way of getting your foot in the door of an investor’s network. It’s a great start, but here’s the problem you run into: One lunch is not going to do the trick. Even after an hour of face time, they’ll likely forget your name after a couple weeks and you’re back to square one.

Lunch is just a first step–it’s just an introduction (by the way, don’t quiz an investor about real estate strategies when you sit down with them–ask them about themselves and how they got started, and then perhaps specific deals that they’ve done. You’ll get some great info and they won’t feel you’re just out to get free real estate tutoring–you do, after all, want to form a good relationship with this person).

There are a couple more steps you should take after that to cement the relationship, including simply saying the one thing that would be music to the ears of any investor (that they basically never hear from beginning investors)…

I’m not going to go into more detail here. I’ve saved those next steps for the “The 7 Great Lies of Real Estate Investing” Guide. Visit
the 7 Lies page here to learn more.

Real Estate Investing – One of the Oldest Lies in the Book

You may have heard that wealthy people are wealthy because they make decisions quickly. This is true, and it is one of the most misused “facts” out there.

Don’t Believe Them
I’ve heard this used in a number of settings, but most often at guru real estate seminars. The presenter at the front of the room will inform you that one of the defining characteristics of the wealthy is that they make decisions quickly. Thus, if you want to be wealthy, you’ve got to stop thinking about whether or not you can afford to go to the seminar or boot camp that they are selling and you must go to the back of the room RIGHT NOW to buy their seminar or boot camp. Because the wealthy jump on opportunities when they see them, right?

Let’s shed some light on this situation, shall we?

Not long ago an acquaintance of mine gave me a call and asked if I’d be interested in helping him fund a resort project. That’s not what I do particularly, but I could certainly look it over and give him a quick decision or pass it on to others in my network.

He then told me about a deal where I could invest in a gold mine in the Congo. That’s right–gold in the Congo. The rate of return was great if I were to put money in it, but what in the world do I know about mining gold in the Congo? Absolutely nothing!

A 20-year real estate veteran can look at a house and decide if they’re going to buy it within a few minutes. Place an opportunity to buy into a gold mine in the Congo in front of them and they won’t make a split decision on it. If they wanted to expand into gold mine investing, they’ll study it out over days, weeks, or months before they start making decisions involving money.

Moral of the Story
The wealthy only make quick decisions in areas they are experts on. If anyone is trying to pressure you into making a quick decision and you don’t have the experience to know if it’s good or not, the decision should likely be “no”.

I can’t think of a single time I’ve regretted turning down someone who pressured me into making a purchase (especially a large purchase). If I’m at a real estate seminar and they cut their seminar price by 80% and start laying on the “once-in-a-lifetime” pitch, I’ll go home and think about it. Most of the time I wake up the next morning glad I didn’t jump at that opportunity. If I still want what they have a week later, I can always fly to the next city they’re presenting in and get the special price at that time. You will always have another chance at a good thing.

Your First Deal
This includes your first real estate deal. Sometimes beginning investors are so gung-ho about getting their first deal under their belt that they dive at the first opportunity they find. That’s admirable, but there’s a higher than likely chance it won’t turn out well.

It’s okay to make decisions slowly. Yes, good deals will pass you by at first but guess what? As you get better at this you’ll find that the deal of the century comes along about once a week. It’s true, but it’s only after you’ve studied many deals that you will be able to tell the difference between a great deal and a mediocre one.

You want to make your first deal a great one. It’s worth the wait as your knowledge and experience catches up to your ambition.

Real Estate Investing Wealth: the first step

The first step to real estate wealth starts with your mindset.

So how do you know if you’ve got the mindset of a wealthy person or if you’re traveling the path of the poverty-stricken? Let’s see if your brain is in the right place with a simple test…

The Situation:

Even though you may know nothing about real estate investing, I walk up to you and say “I’ve got a real estate deal that needs $20,000. What do you say?”

What would be your response?

Poor mindset response: “I don’t have that kind of money, Jarom.”

99% of the American population would come up with some version of that statement–”sorry, I don’t have the money so I can’t do it.” That is why 99% of the people in this country are not wealthy and never will be.

Do you think Donald Trump ever says “I don’t have the money”? Does Warren Buffet every say “I don’t have the money”? Did Henry Ford, Charles Schwab, or John D Rockerfeller ever say “I don’t have the money”?

No! And it’s not because they have the money either.

They’re wealthy because even if they were dirt poor, they wouldn’t respond “I don’t have the money.”

So how would they respond? If you’ve read Think and Grow Rich (pick up your free copy on our recommended reading list if you haven’t), this is how you would respond:

Wealthy mindset response:

“What would this deal make me?”

People in a wealthy mindset don’t ask how much it costs, they ask how much it will make them.

This is important–let me put it another way.

Wealthy people (or those who are on their way to being wealthy) don’t look at opportunities based on price. They look at the benefits and then decide if the price is worth it.

You see, the wealthy know that if the deal is right then they can find the money. It doesn’t have to be their money.

If you asked me “What would the deal make me?” and I replied “$30,000 in six months” do you think that, if you didn’t have the $20,000, you could find someone who did and offer them $27,000 in six months to borrow their $20,000? And you’d make $3,000 in the middle for doing a little money-finding leg work.

The whole reason I’m asking you for $20,000 in the first place is because the deal will make me $40,000 and I’m willing to give up $30,000 of that so I don’t have to use my own money.

If I use my own money, the number of deals I can do is limited to how much money I have. If I tap into other people’s money, I can do as many of those deals as I can handle.

Donald Trump and Warren Buffet know this, so when a new investment crosses their desk that makes sense to them, they don’t look at their bank account to see if they have the money. They grab the deal and then find the money to make it happen.

After all, if your first response is “I don’t have the money” how would you ever know if the deal was a good one? You wouldn’t.

The whole point of this exercise is that big opportunities are going to cross your path. If you’re in the mindset of poverty and scarcity then you’re going to miss them. But if you prepare yourself by learning how the wealthy think and work, you’ll be in the mindset of abundance and wealth.

Then you’ll recognize opportunity when it knocks, and you’ll be ready to take action.

How to Invest in Real Estate with “No Money Down” Part 1

If you read the previous article you know that you’re not going to do real estate without money. Every deal will take money and every business venture will take money. It does take money to make money, but it doesn’t have to be your money.

So having said that, where can you find money that isn’t yours so you can use it to go faster and farther than you could have using only your own resources?

Credit Cards: A lot of people are afraid of credit cards, but you don’t need to be if you understand how to play by their rules.

If you pay your minimum each month on time, isn’t a “15 months at 0% interest” card the same as a free loan? It is, and if you don’t want to pay interest after 15 months, how hard is it to find another credit card that will offer you another 15 months of 0% interest on balance transfers? Just transfer it to another card.

Just be smart about using credit cards and your credit score will actually go up as your total credit limit increases from acquiring new cards.

401K/IRA’s/Stocks: Tired of getting 5% in the stock market (or losing money)? You can self-direct your retirement plan and actually use that money to invest in real estate instead of the stock market.

Sound illegal? It’s not–we’ve been doing it for years. It’s your money, for crying out loud. Why should someone else decide for you what you do with it?

Sound risky? I thought it did too till I realized that the senior citizens who are now working at Wal-Mart and McDonalds likely had their retirement in a safe and secure index fund for 40 years, but after retiring they found out that they were going to out-live the money they had saved and were forced to go back to work.

Take charge of your retirement–don’t leave your future in the hands of a mutual fund manager.

HELOC’s: Got your own house with some equity in it? Borrow against it. That’s not wise if you’re buying a boat or a big-screen TV with the money, but that money is just sitting there in your house doing nothing for you if you’ve got real estate deals you could be doing with it.

Business Lines of Credit: Besides personal lines of credit like credit cards and such, there are business lines of credit available to businesses.

Since it can take a while for a business to build enough history to qualify for a line of credit, it’s a lot easier and faster to assume the lines of credit from an existing business.

The way to do this is to find a business owner that has recently discontinued doing business and assume control of their legal business entity and all attached lines of credit. You’ll have to work out a deal with them, but if they’re not using that business any more then what else are they going to do with it?

Hard Money Lenders: At the very least there are hard money lenders (professional lenders who let you borrow money based on your track record and the deal you’re doing, as opposed to your income and credit score like banks require).

They can be expensive, but often it’s better to work with them than let the deal flop. Hard money lenders are very often the fastest and most reliable money source you can find.

The Verdict?

All these things require you go into debt. That causes some people’s stress level to go up. So here’s your gut check:

Gut Check:

–If you’re willing to go out on a limb and into debt in order to excel in finances and life, give yourself an A+.
–If you’re saying to yourself “I don’t like going into debt–I’d much rather pay for things as I have the money” then you’re going to move at a snails pace creating success for yourself. A job with a 401k is probably a better fit for you.

If you’re going to make money in real estate, get comfortable with debt. All debt is not created equal. There is a difference between Good Debt and Bad Debt. Real estate investors are in a lot of debt, and the more debt we go into the wealthier we become because we know how to make debt work for us.

Just getting warmed up

So far so good? This is just the beginning of where to find money to invest with. The fun part is we haven’t even started involving other people in your investing yet. Stay tuned for part 3 of How to Invest in Real Estate with “No Money Down”.