How to Become a Real Estate Investor…in 5 Easy Steps!
A couple of weeks ago, the FTC announced that it was acting to shut down a real estate training company in it’s many different forms. Nudge, LLC is a Utah based company that promotes big TV stars “including Scott Yancey from A&E’s “Flipping Vegas,” Doug Clark from Spike TV’s “Flip Men,” Drew Levin and Danny Perkins from HGTV’s “Renovate to Rent,” and Josh Altman from Bravo’s “Million Dollar Listing Los Angeles.” They promised to teach you all the secrets of real estate in a 90 minute “FREE” seminar. Surprise, surprise! This is just an upfront sales pitch, not really an informational seminar.
Reading the FTC complaint (https://www.ftc.gov/news-events/press-releases/2019/11/ftc-acts-shut-down-companies-operating-real-estate-seminar-scheme) is like reading a business plan that I’ve seen, worked for, and, I’m embarrassed to admit, even thought about carrying out myself. It goes like this:
Part 1: Offer a “Free Seminar”
This seminar is really a sales program. You give something of value away. Over the years this has been a different thing. Books, MP3 Players, signed copies of books, or maybe even a personal experience from a “Reality TV Star.” Attendees show up. Some are incredulous. Some a bit skeptical. But what the sales guys are looking for are the folks with hope. They see hope like a lion sees the injured gazelle. You folks with hope are the prey.
…A word about the guy giving the seminar. These men (some women occupy this position, but it’s rare) are stone cold assassins. These guys and gals are the sharks and lions of the human race. Most of them have little formal education, but have PhD level sales skills. They can smell a sale like a fat kid smells cake. And good luck if you get in their sights! They can quote every line of Alec Baldwin’s sales meeting in “Glengary Glenn Ross” ABC Speech https://www.youtube.com/watch?reload=9&v=Q4PE2hSqVnk . They see Ben Affleck’s character in Boiler Room as inspiration https://www.youtube.com/watch?v=JfIKzReNDF4 . They close deals when most mere mortals would have had an “I’m not ready,” or some other answer. I’m telling you, as one long time sales guy, beware. You better not come around these guys with any credit cards that you don’t plan on maxing out. They look good. They smell good. They SPEAK words so beautifully that they will convince you that without them and their system, you are as good as dead. I don’t like getting around these folks myself, because I have such a hard time saying no! If you’ve ever been to a time-share sales pitch, or seen the manager at a car lot, it’s THAT GUY on steroids, HGH, and meth. These muthas are good! You’ve been warned!…
If you have hope of a brighter future, and just haven’t found the system, the tools, the network, don’t worry! Nudge, LLC (allegedly) had the answer! A 3 day weekend seminar, remarkably close in geographic location and just around the corner on the calendar! Nudge’s typical 3 day seminar ran for $1,147. Others will cost you $994, maybe $1,079. From a business standpoint, this 3 Day sale is all marketing. The majority of the money these companies make cover the marketing costs of getting you there, including paying the high priced traveling sales assassin. Once you’re at the 3 day event… oh boy… are you in trouble!
What about all the answers they promised in the marketing and sales calls that got you to this ‘free event’? Well, all you have to do is sign up for the 3 day, and you’ve got it! If you just sign up, you’ll leave with some poorly (or maybe nicely) made manuals that you really don’t understand how to use. They don’t really deliver on any promises, but you feel so good! All the secrets, the network, the easy access to easy profits? They’re at the 3 day workshop… So you sign up!
Part 2: 3-Day “Workshop”
This event will be a combination of 3 things… Motivation, a little education, and a lot of “upselling.” Upselling is the term used when you have a customer that has already bought something. Statistically speaking, someone that has already paid you is much more likely to pay you to get more. More product. More information. More of what you promised the first time but haven’t quite delivered. We’re a trusting group, us humans. Typically it’s in our best interest to trust one another. These folks know that and use it. They also wear. You. Out. They will parade presenter after presenter, until late at night. You will get tired. You will also most likely drink alcohol. Not a great combination to make an informed decision… But these are not really about making good, logical decisions. These folks are preying on your emotions.
Right away you’re going to learn that there’s easy money out there that you just aren’t tapping into. All you need to do is fill out this financial freedom handout, and you’ll learn how you get out of debt by going even deeper into debt. Simple, right?!
This handout has many different names, but you will disclose vital information. Remember those sales assassins I told you about? They are now in the back of the room. While the stars are on stage, getting you all worked up and star struck, those savages are watching the pack. Why? Because the next sale is the feast. They’re gonna hit you with a $20,000, week-long event. This exclusive opportunity has everything you REALLY need. But it’s not for everyone, you’ll learn. Nope. It’s only for you suckers that are willing to apply for, receive, and then MAX OUT new credit cards. You can’t get enough? Call your wife/husband. They don’t believe in you? Call your brother/best friend/former cell-mate. You do whatever you have to do because without this week long seminar, you’re dead in the water. You have no hope. Did you really expect to get everything you need in a 2,000-5,000 seat ballroom in Vegas? This requires a more intimate setting in Palm Springs, or Ft. Lauderdale. These events are called “Intensives,” or “Advances.” You may even get to be in a mastermind with one of the coke snorting celebrities you just fawned over. (Look, I don’t know that they ALL snort cocaine, but I bet at least one of them does 😉 you guess which!) By the way. You better sign up at the event or else the once-in-a-lifetime price is GONE!! Until, that is, you don’t sign up, get home, and now you’re on their telemarketing list. They will never stop calling you. Ever. They’ve already helped you get the credit cards for it, so they know you have the funds available. What? You thought you’d use those credit cards to fund deals? What deals? You don’t even know how to get a deal yet!! You thought you’d learn that here? In just 3 days? What are they… magicians??!! Get to the “Advanced Intensive” and everything will be just fine…
Part 3: Weeklong Event (AKA Advance, Intensive, or some other Hyped Name)
At the week-long event, you’ll get access to private money, private deals, and hookers and cocaine. Just kidding. They don’t offer deals. They WILL offer you houses that one of their partners has bought, remodeled, and has ready for you to buy at market value, or maybe even a little more than market value. They will be in parts of the country you would never have thought of buying… Detroit, Akron, Cleveland, and other rust belt areas that are still depressed, from a real estate standpoint. The good news? They are turn key. Often they are already rented out. That credit app you filled out? It’s already in the hands of a mortgage pro that is willing to do practically anything to get you in your first deal, so you can now say with confidence “I am a real estate INVESTOR!” Everything you need to make it big as a real estate investor is now at your fingertips..
The week-long event will also feature real life experts. These events will bring in CPA’s, Attorneys, Real Estate Brokers, and a little of the celebrity. The experts come in hoping to grow their business with future clientele. They are the real deal. This is your one shot at getting anything of value. This is a very expensive marketing/networking event. You’re most likely going to leave here with a basic sketch of how to go about running a real estate business… VERY basic.
But don’t worry… there’s one more step in the sales process to help you along the way. They include: one-on-one coaching, group coaching, mastermind groups, subscription based services. You will figure out, if you haven’t already… you are in their sales funnel. You will be asked to buy stuff, sign up for events, and pressured into more and more for the rest of your existence.
So here’s the breakdown on what this startup will cost you.
3 Day Seminar- $1,147
Hotel for seminar- $600
Food, Travel, etc- $1,000
Weeklong ADVANCE Seminar- $20,000
Hotel For Advance- $1,500
Food and Travel- $1,500
One-on-One Coaching- $12,000
If this sounds like a good way to start your real estate business, but you’re worried because it looks like Nudge isn’t going to be available, have no fear. There are others. They go by different names, have different sales folks, different celebrities, and different retreats. At the end of the day, they all look the same. I went to my first weekend workshop almost 20 years ago. I went as a guest, as I was already a successful real estate agent/investor… or so I made it seem. I was able to get out without maxing out my credit cards. In 2010 I took a job working for one of these companies (that has since been shut down by the feds for the same reason) in Draper, Utah. We sold stuff featuring Armando Montelango, Carlton Sheets, and others. I lasted 3 weeks. I couldn’t handle the level of deceit it took to be good at that business… and I’m a convicted felon!
So what’s a guy or gal to do? You want to be a real estate investor. It looks like a great business, or a great way to earn extra income? It can be. Here’s my advice. Simple, easy steps to follow. And significantly cheaper.
#1- Get your real estate sales license Wherever you are, real estate licensing school ranges from $350-$1,000. This is anywhere from 90-160 or more hours on real estate education. Will you be able to use everything you use to go do deals? No. But you’ll have such a deeper understanding of how to stay out of trouble, how to accurately represent what you are capable of, and what you’re about. The “Trainings” described above do a pretty good job of shitting all over real estate agents and brokers. It’s true that not all agents are good agents. It’s true that not all are willing to commit fraud to get a deal done. That’s where step 2 comes in.
#2- Find a broker that is experienced in Real Estate Investing The majority of the good deals in any market are being brokered by experienced, knowledgeable professionals. They’ve taken time. They’ve got deals under their belt. They do deals themselves. These are the people and offices you should be working with. Some of them will take part time agents/investors, others won’t. Keep looking until you find one that will take you in. The cost should be minimal. Your licensing and startup costs should be less than $1,000.
#3- Read and follow Find every book you can on real estate investing. Start with “Rich Dad, Poor Dad” by Robert Kiyosaki, and then go from there. I suspect you’re really interested in being an Entrepreneur, so read “The E Myth” and “The E Myth for Real Estate Investors” both written by Michael Gerber. Tim Ferris’ “The 4 Hour Work Week” is another favorite. Follow those guys on Social Media. Follow other motivational guys that turn your crank. There is always someone delivering great content like Gary V, Tony Robbins, John Maxwell, and some of my buddies like Jimmy Rex (a REAL Real Estate guy), Justin Prince (don’t hate his MLM- he has a heart of gold), and Aaron Wagner, who has nothing to sell you, but continues to deliver gold nuggets of pick me ups daily!
#4- Get in shape I know that seems to have NOTHING to do with real estate investing, but I’m gonna tell you something most won’t. Being an entrepreneur/real estate investor is hard. The ups and downs can be brutal. It will literally chew you up and spit you out. You better be ready for a physically taxing journey. I’ve had my yo-yo moments. I put on weight and take it off. The folks I see that master this one part of this journey seem to take it all in stride just a little better, just a little easier. So work out. Whichever way you like, but do something. I have definite opinions about this, but now’s not the time.
#5- TAKE ACTION No really. Get started. Find out where you can get licensed. Go start interviewing brokers. Go talk to other people that are actually making a living in real estate. Stop talking about it with your wife/husband/dog and go DO something.
My way- Maybe $3,500 if you go crazy with books.
A disclaimer. The accusations made by the FTC are just that. Accusations. As a convicted felon, I appreciate more than anyone the idea of innocent until proven guilty. I’m not saying that what these guys do amounts to criminal activity. Someone else gets to decide that. I do believe, personally, for me, they are unethical. I understand their sales pitch, their justifications, their rationalizations. I just don’t agree with them. Real people are putting their trust in them and getting hurt. I’ve hurt people. It sucks.
And these guys aren’t the only ones. Renatus, https://www.myrenatus.com/Home.aspx who’s CEO, Bob Snyder used to be involved in Nouvea Riche (https://www.biggerpockets.com/forums/79/topics/61975-nouveau-riche-founder-ordered-to-pay-5-57m-for-illegally-marketing-securities , runs a similar operation. Lots of upsell. Lots of promises. I see the collateral damage out in the streets.
For every legitimate training company, there’s 4-5 that are preying on the idea of “get rich quick” and short cuts. As soon as you figure out no one gets rich quick and there are no short-cuts to success, you have a chance.
I’ll be sharing more about the problems that I see in real estate investing, what cures exist, and what some realistic strategies are.
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Have a great day!