A real estate seminar promoter promised to create 1,000 new
millionaires, but so far none are in sight. See what happened to his
believers.
By MP Dunleavey =
http://moneycentral.msn.com/Content/contributors.asp#Dunleavey
Like a lot of people these days, Marjorie Stark wouldn't mind making
a little extra cash -- or even a lot of it. So when she attended an
information session for Robert Allen's "Creating Wealth Through Real
Estate" seminar in New York last year, she was more than willing to
pay $2,495 for Allen's intensive three-day course on real estate
investment strategies.
Concerned about not having enough to retire on and wanting to pass
along some wealth to her kids some day, the 62-year-old New York City
educator said to me then: "I am convinced that real estate is the way
to go."
I was there that night, too, and I could scarcely resist the mouth- watering idea that those three days could make me rich. As the guy
leading the session announced: "We are on a mission to create 1,000
new millionaires in 12 months!"
A year later, Stark isn't any closer to being a millionaire. She
hasn't bought any new property nor made any money on real estate --
except for the rental property she owned before and bought "the hard
way" (with cash and bank loans). She even admitted that when she saw
Robert Allen's newest venture was in vitamin sales, "I thought I was
going to puke. I was very disillusioned."
But Stark is undaunted and still believes there are fortunes to be
made in real estate. She just enrolled in another seminar at a local
college on how to buy distressed and foreclosed properties, she
says. "With a full-time job, I'm not sure how I can do it, but, boy,
am I itching to go!"
There's something about real estate
Stark is not alone. The National Association of Realtors =
http://www.realtor.org/rodesign.nsf/pages/HomePage?OpenDocument
doesn't track independent real estate investment seminars or how many
people attend them, but their allure springs eternal like the get- rich hopes of those who sign up for these courses.
The odds of winning are not high. Robert Allen's "1,000 new
millionaires" never materialized in the last year, for example. Allen
operates what's called The Enlightened Millionaire Institute. Its
Millionaire Hall of Fame Web site =
http://www.millionairehalloffame.com/ lists only 50 millionaires
(defined as having generated gains averaging $2.6 million). A
spokesman admits not all of them exclusively used the Allen method of
real estate investing. (And, in a disclaimer, the site notes, "No
information has been verified or authenticated. Results vary. All
successes are subject to one's own knowledge and effort.")
Despite all that, the Robert Allen Institute =
http://www.robertalleninstitute.com/ still conducts two or three
seminars a week in different cities and says it reaches about 1,200
people each month. (That's 1,200 x $2,495 = $2.99 million a month, in
case you left your calculator home.)
Allen is just one of dozens of artful salesmen who preach fancy
financing, "no money down," flipping properties quickly and numerous
other strategies to get rich buying and selling real estate.
And the question all this preaching raises is, do these investment
techniques, systems and strategies really work? Can they actually
make you rich? After all, would people keep trying it if it couldn't
be done? Or are hundreds of thousands of people simply seduced by
expert sales pitches and swindled out of hundreds and sometimes
thousands of dollars?
Weighing the evidence
Like so many things in life, it depends on whom you talk to. Or whose
Web site you believe.
John T. Reed is a real estate investment coach himself, based in
Alamo, Calif. He's also a self-appointed watchdog for this industry.
He keeps the most exhaustive list I could find =
http://www.johntreed.com/Reedgururating.html of dozens of so-called
gurus, along with reviews of their techniques, books and other
products.
Although Reed's Web site = http://www.johntreed.com/, where you also
can buy his various books for $29.95, reads a bit like he has a chip -
- a very big chip -- on his shoulder, he was recommended by the
National Association of Realtors as a serious investigator in the
industry. Not that he's against real estate investment, or some of
the reputable folks who teach their own hard-won wisdom. But those
have been degraded by "the endless parade of B.S. artists coming into
the real-estate-investment-advice field. It is an embarrassment to
the good people in the business."
And many people believe his grousing is justified. Norm Bour is the
host of "The Real Estate and Finance Hour" on KLSX in Los Angeles, a
top talk radio station. He's worked in real estate as a mortgage
lender and describes the proliferation of real estate seminars,
workshops and scams as "a major pet peeve."
"Case in point: foreclosures," he begins. "Real estate in California
has gone berserk in the last few years so people are looking for
foreclosures to buy." The idea being you can buy a foreclosure more
cheaply than other property and potentially gain a windfall when you
sell it.
But, as Bour notes, "You can count on one hand how many actual
foreclosure properties there are (for sale). Yet there's no lacking
of people who are offering real estate foreclosure lists." One might
pay $35 for a list, but it may be peppered with properties in other
states. "It's not fraudulent, but it's certainly deceptive."
The shady gray area
Well-known personalities like Robert Allen or Carleton Sheets =
https://www.carletonsheets.com/ , who have extensive marketing
organizations, are a little different, Bour says. "They offer some
very solid basics, but the number of people who can do what they
propose is very small -- because they make it sound so much easier
than it is."
That's what Josh Kelinson, a freelance advertising consultant in New
York, found when he and two friends tried to follow the Sheets
method.
The three pals pooled their resources to master what Sheets preached,
which is similar to the Allen method: buying property with no money
down (or some other creative financing method) and flipping later on
for a profit.
One of his pals took the seminar, another bought the 8-CD set, etc.
Thus inspired and determined, they tried to buy a building suitable
for five apartments in Massachusetts, not far from where they'd all
grown up.
Kelinson says the actual experience of trying to buy an income
property proved eye-opening. "We spent a ton -- and I mean a ton --
of time on it. There was the approval process, the paperwork, getting
lawyers." It took two to three hours a day, not including weekend
travel time and unexpected snafus. "I found it impossible to do with
a full-time job."
Ultimately, the project bogged down because of a major zoning
problem. The building was in an area zoned for three apartments, and
the building had been illegally converted into five apartments. The
zoning authorities refused to grant an exception to the rules. Then,
the building owner refused to return their deposit. The three were
out $35,000.
Still, Kelinson doesn't feel misled or duped by the Sheets method,
and he and his friends are sure they can make it work with their next
deal. "There are a lot of other things out there that are scams, but
this definitely can be done," he says.
But investing in real estate is not nearly as easy as it looks, he
says. "Make sure you have the time to do it," he advises wannabe
investors. "If you don't allocate the time, it probably won't work."
We want the system to work so much
And therein lies the fundamental appeal, and ultimate trouble, of get- rich-quick (GRQ) strategies. "It's the jackpot mentality," says
psychologist Patricia Farrell, author of "How to Be Your Own
Therapist.= http://shopping.msn.com/search/detail.aspx?
pcId=14939&prodId=1987899&ptnrid=18&ptnrdata=1101040329" Just like
the schmoe who buys a winning lottery ticket -- every once in a
while, someone, somewhere really does use these edgy real estate
investment techniques to make millions.
"It's not the principles that are flawed," says Bour. "It's the
simplicity and ease that are overstated."
Most of these courses are so seductive, Farrell says, because they
operate according to a tried-and-true principle of behavioral
psychology called the variable ratio reinforcement schedule.
Basically, people (and rats) will persist in doing something, even
with little or no return, if they are given the tiniest bit of hope
of a coming reward.
So the fact that some people do succeed at "no money down" strategies
acts like a financial aphrodisiac for all those watching, waiting,
hoping.
So could the Starks and Kelinsons of the world be next? Is it just a
matter of reapplying the Robert Allen/Carleton Sheets techniques
until they work?
Mark Wilson, one of the millionaires created by the Robert Allen
Institute, would say yes. The president of Southeastern Housing
Partners in Hickory, N.C., Wilson started investing in real estate in
the late 1980s. "We were doing OK, but nothing to write home about."
Then in 2002, after hearing Robert Allen speak, Wilson paid $5,000 to
join a one-year intensive coaching course. It changed his life, his
business and, above all, his cash flow, he says. Although he'd read
Allen's "No Money Down" in college, the seminar focused more on
another Allen signature strategy: developing multiple streams of
income (from rentals, rehabs, buying foreclosed properties,
commercial properties, etc.). Now, Wilson says, he's about to close a
deal that will put his net worth at $8.5 million.
He believes anyone can make big bucks from real estate if he or she
is willing to take action -- not just sit on the sofa listening to
tapes.
Before you sign up, count to a million
Of course, Wilson admits that it was easier for him to take the
Robert Allen techniques and run with them. He had a lot of experience
in real estate already. Most people, Bour points out, don't have
those skills. And few people have the time or the diligence to
acquire them. ("Some skill sets you need to have -- and the course
can't teach it to you," agrees Kelinson.)
Bob Underwood of Stafford, Va., is one person who can testify to the
fact that investing in real estate is not for those steeped in
fantasy. Underwood bought an e-book from yet another author and
teacher by the name of Joe Crump. http://www.realestatemoneymaker.com/
Crump, who hails from Indianapolis, teaches a no-money-down
technique, but he told me that he does it "legally and ethically."
Underwood, 43, has a wife and family and a full-time job -- and no
time to muck about in real estate with no return. He paid Crump about
$500 for one-on-one coaching in 2002 and, after a rocky start, has
managed to buy three properties in the last two years. He's sold one
of them, made about $10,000, after taxes, in the process and is
hoping to rehab and sell another this year.
One deal Underwood did alone, the next was with a partner. He says
there's no cookie-cutter method that works. What works, he says, is
getting out into the market, investing the time to learn about the
business, not neglecting your wife and kids (or day job), learning
from your mistakes, making friends and getting advice from others as
you move forward. Slowly, steadily and not particularly wealthily.
"Remember, you have to pay capital gains (taxes)" on the profits, he
says, "so it's not a lot of money in the end."
But that, of course, isn't what people want to hear. "People are lead
to believe that all you need is the right plan and you'll make a
million, that if you use this system you'll be rewarded," says
psychologist Farrell. "They don't realize that the possibility of
getting that big reward is so remote."
**End of Article**
My thoughts: Learn the trade before you jump - Seeking unbiased
direction on Gurus and Courses can be most difficult at best, as it
becomes subjective to:
It's based upon if the student liked the teacher or not.
It's based upon if they where successful or not.
It's based upon if the student even had the aptitude to even
understand the lessons.
You and only you can make this decision and it's done by research.
I'm not talking posting in forums as you will get so many varied
opinions you will never get what you are looking for. I would
suggest taking a step back and set in your mind on two or three
strategies of real estate investing.
The best way to do this is use the REI forums and search subject
matter by reading all post on the subject of interest and evaluate
your own abilities and make a determination if you have the ability
and means to do it.
Next research your public library on the subject, study the
materials, and if it still peaks your interest
Go to a used bookstore and study even more materials on the subject
and if it still peaks your interest seek out the teacher that reaches
you deep down inside, the one that speaks to your mind and heart but
before you take the plunge for the mega course order the cheapest
item they have book, ebook or course and if it works take the mega
course.
I have people who want to take my mentor course all the time but many
can not even get past the application process! I look at it this
way - why let them spend their hard-earned money on something they
can not do or are simply not ready to do! They loose and I loose!
Simply not a WIN - WIN
You need to seek a teacher that can speak to your inner person not
just make you feel good, a teacher that has a passion for their
students and most importantly a passion for your success.
I do speaking for one Guru who's only passion is the money, not the
deals, not to help students but to profit from their lack of
education. Many ask why I teach his people? My reply is vary simple
because I know that what I teach is sound and if I reach a student
and they apply their newfound knowledge they will be a success.
I am not trying to plug me at all so please do not mis-read this.
Education works like this:
The university that I went to had some of the best professors around
so I chose the best professor for a subject from his credentials,
facility, staff and student recommendations and I failed - he did not
reach me so I had to repeat the same class but with another professor
with less credentials, not liked well from facility, staff and
students but you know what, this guy brought it home for me - his
teachings clicked with me and I learned more from this one man than I
ever did with most of my professors.
So, let me boil this down!
Finding the correct teacher, guru, course or book is all about trial
and error! Welcome to the world of real estate education.
"You will never do anything in this world without courage. It is the
greatest quality of the mind next to honor." By Aristotle, Greek
Philosopher
John Michael - "King of Bling"
Investor/Teacher/Mentor/Author
JMichael Investments, Stealth Trust, Stealth Educational Services Office - (775) 535-1341 or (417) 862-3164
Toll-Free: 1-877-225-5928 & enter 417862-3164
Fax - (775) 307-6541
Email: john@jmichaelrei.com or jmichaelrei@sbcglobal.net
Web Site: http://www.jmichaelrei.com/