Reader Question: Are “get rich in real estate” classes worth the money? We are interested in learning more about real estate. At some point, we may want to do some investing. There seem to be many options; classroom, seminars, online, DVD packages and more. The common threads with many of these offerings promote the concept of becoming a millionaire. Many of these events are quite expensive. Thank you. Trevor and Joni P.
Monty’s Answer: Most education can be helpful; some much more than others. To attend a high-cost event or buy a DVD kit with a textbook and the idea of getting rich quick is the wrong reason to attend. Investing in real estate is neither easy or a get-rich-quick endeavor. There are more cost effective methods to garner information similar to what you will learn in such an event.
Television shows today glamourize the promoters and portray transactions in such a way it looks easy. Many viewers do not seem to realize there is a director behind the scenes orchestrating these made-for-TV events. The few clips I have observed just make me chuckle, but Hollywood is famous for dramatization. While get-rich-in-real-estate promotions are not new, television shows appear to have helped energize new entrants across the country into the get-rich-quick in real estate business.
For more than a century stories of fake experts have been published in the U.S. Real estate is only one sector in the scam industry which include sectors such as travel, sports tickets, trading stock and many more. Here is a link, http://bit.ly/1IWuZQJ, to an article written in 1919 about the “Pirates of Promotion” that describes how hucksters bilked many Americans out of their U.S. Savings Bonds.
Validating promoters
It is improbable to keep up with every promoter of real estate investing education. There are many legitimate educational courses. A writer I do not know named John T. Reed appears to have gathered much information to critique the most popular gurus on his website at http://www.johntreed.com/Reedgururating.html. While he writes about real estate investing, he discloses the identity of property he has owned or owns. He appears to be an honest critic. This link to a Forbes Magazine article about real estate scams and how to avoid them. An internet search for “critics of getting rich quick in real estate promotions” generated 958,000 sources in less than one second. While it takes some effort, many promoters can be checked out on the internet.
Red flags
There are many warning signals that are precursors to a “ Big hat – no cattle ” experience. Here are some red flags that should create caution:
- Promoted as tax deductible and combined with travel.
- One-day seminar held in a hotel or meeting facility.
- High cost to attend.
- Expensive training material or manuals.
- Claims that give the impression that investing is easy or anyone can do it.
- Photos of the promoter standing in front of a private jet or a mansion.
This is not how legitimate educators promote their products.
Green flags
Look for technical college courses, a state-approved licensing course, publications about real estate and real estate investing. Another source is courses endorsed by major real estate organizations such as the National Association of Realtors or the Urban Land Institute. Public libraries typically have a plethora of real estate related material. There are also a sizeable number of real estate publications available.
Common sense
We have a tendency to feel compassion for the victim, but the victim sometimes can bear part of the responsibility. The one common thread in most every scam, except charitable giving scams, is greed. The “ victim ” was promised exceptional returns and bit on that promise. If it sounds to good to be true, it probably is.
Success in real estate begins with a solid understanding of the real estate appraisal process, patience, and discipline. This success also requires determination, common sense and a strong desire to succeed. The investors that appear to do well and have “made it” in real estate have invested capital, their time and risk-taking for twenty or more years.