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Real Estate Investment Gurus have been around for decades. Have you seen the old school late-night infomercial salespeople hawking real estate courses? Or, how about the in-person real estate seminar hacks with their get-rich-quick-through-real-estate schemes? They come in many forms and they are everywhere. This is a basic primer on what these real estate gurus are up to. I’ll explain how their “business model” works, why it rarely benefits you, and what you can do to protect yourself.
Let’s start with the concept of “information marketing”, and clarify the standard real estate guru sales models. Remember, they are building their own personal path to riches by selling real estate seminars, coaching or real estate courses. And that is a very different path from the one they are advocating to you.
Some real estate investment gurus offer you a "free real estate seminar" to get you in the door. Often times, it is deceptively promoted where it appears the real estate guru will be there in person. Then, when you arrive, it is just low level sales people who get in front of a captive audience to deliver a scripted sales pitch. Here, you are entering the their "sales funnel". Then, their sole goal is to sell you on their next product tier.
Next, the real estate investment guru makes some "legitimacy claim." This is usually without much evidence so you cannot independently verify it. It often relates to a success they had with real estate investing. For example, "I started from nothing and made $1 million in 18 months". Sometimes, these gurus are authors of books, former stars of TV shows, or have other types of 'fame' they can use towards this end. They often have other types of supplementary claims to bolster their legitimacy as well, often including paid celebrity endorsements.
Then, the real estate investment guru claims that their real estate investing "model" is replicable for everyone in the audience. They imply that anyone who implements it can do exactly what the guru did by following their “proven system”. They often claim you don’t need any money, credit, or knowledge to succeed. Sometimes they heavily emphasize that if you are broke, lazy and dumb, this program would be perfect for you (Target market alert!).
Over the years, I have sat through a number of real estate guru pitches. I personally witnessed a slew of emotionally manipulative techniques used to attempt to get me to buy into their next product tier. I have even watched the gurus get the audience to dive into childhood insecurities through carefully proscribed exercises. Their goal is to move the prospects into the most vulnerable emotional state possible. Sometimes they even reduce audience members to tears. I have also watched gurus use very aggressive peer pressure tactics. The goal here is to make anyone who is not buying their product feel like a complete loser. Sometimes they will even try to get the rest of the audience to ostracize them.
The real estate investment guru will usually provide “testimonials”. Often, they will not provide the full name, or allow you to contact the person as a reference. So, rarely is there independent verification available. Now, sometimes the testimonials are real people and the guru introduces their "best students". But, these individuals usually have results that are extremely atypical. And, there are usually a variety of other factors that facilitated their results beyond the product that they are attempting to sell you.
Finally, they will "lower the barrier of entry" and allow you to buy their product/service at a "special discount". They will generously help you open a new credit card, raise your credit limit on the spot, or use a payment plan. Whatever it takes to get you to part with your money.
At this point, you have entered the "rabbit hole". So, you may have bought a second real estate seminar that has the real estate investment guru there in person. Or, maybe a real estate course or coaching program. Those often have generic salespeople doing "back-end fulfillment" and reading off scripts to "mentor you". Either way, your purchase is the first step into the "up-sell-funnel". Now, they will continue to try and get you to buy more and more expensive products. This will likely continue until they are pitching you on real estate seminars and coaching programs that cost up to $40,000 or more.
Not surprisingly, most students are unable to achieve the advertised results. And, when they complain or attempt to publish a negative review of the real estate investment guru online, there is often aggressive retribution. First, the real estate guru or their organization usually blames the student. They insist that the failure is solely the student’s fault because they are not smart enough or did not work hard enough. Secondly, many real estate gurus have legal teams standing by to intimidate unsatisfied customers. In response to public criticism they will often threaten to sue them. And, they frequently employ "reputation management" services to try and get negative reviews out of public site.
However, a disturbingly high number of expensive coaching programs and real estate seminars are of very little value. Actually, they are often of negative value because they cause you to lose money. I also want to clarify that I am not accusing all real estate investment gurus of being fraudsters. And, not all of them use every sales tactic described above either.
However, I have personally witnessed a number of these real estate gurus preying on low-income people. I've also seen them target emotionally vulnerable people who are susceptible to manipulation. They aggressively attempt to sell them "hopes and dreams" but proceed to deliver very little value. Then, they ultimately blame the student for their own failure with the product/service they bought. Furthermore, many of these products and services are being sold in highly emotionally charged environments. And, that is expressly designed to diminish reasonable due diligence by the consumers purchasing them.
So, please be careful.
I want to be clear that I am in complete support of life-long learning and particularly in support of educating yourself about real estate investing. But, the ultimate question for you as an investor is how much value you are getting in return for the money you are paying. With the amount of free real estate investment resources available online, there is no reason to pay tens of thousands of dollars for a guru program.
There is no amount of reading and studying and coaching and mentoring that will ever substitute for actually getting in the game and learning through experience. So if you were to re-direct those tens of thousands of dollars into actually buying a cash-flowing property for yourself and going through the process of market research, due diligence, closing, etc, this is the quickest way to accelerate your learning curve. Plus, buying rental property means you will own an asset that has the potential to put money into your pocket instead of putting that money into the real estate guru’s pocket. You can book a free video consultation with Maverick Investor Group to discuss buying your next rental property.
We are not a tax professionals, this is not tax or legal advice, and tax laws are constantly being changed and revised and may change the day after you read this. So, this is for informational purposes only, and it is your duty to consult with your own tax professional about your individual situation and the most updated applicable laws before attempting to implement any of the content in this post.
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