Why you should not buy expensive seminars or “mentoring” services
CONMEN promise that you can BUY FORCLOSURES, FLIP PROPERTIES, buy cheap fix N'FLIP properties AND sucker heirs who are cashless and in PROBATE. DO NOT LISTEN TO THEM!
by ANITA SANDS HERNANDEZ
A friend of mine paid $3,000 today to take a course in flipping probate properties. While she was in the hustle/sign up classroom, just before she plopped her credit card down, a man at the school saw her thoughtful face, came up to her and told her that he'd made a hundred thousand dollars in a month due to this course. Now why he was at the HUSTLE pitch who knows.
This article by JOHN REED totally tells you why not to pay for a scam REAL ESTATE quickie course, whether a "MAKE a million" or "Buy foreclosures" or "Do probate flipping " Seminars.
AVOID REAL ESTATE SCAMMER GURUS
by John Reed http://www.johntreed.com/Reedgururating.html
He says: "I have been amazed and disturbed by the recent trend in the
real-estate-investment guru business to charge thousands of dollars for
seminars, “boot camps,” and “mentoring” services.
The State of California Department of Corporations has a list of the Top
Ten Investment Scams to Avoid at their Web site -- Google it.
“Investment Seminars. Often the people getting rich are those running
the seminar money making from admission fees and the sale of books and
audiotapes. These seminars are marketed through newspaper, radio, and TV
ads and ‘infomercials’ on cable television. Regulators urge investors to
be extremely skeptical about any get-rich-quick scheme.”
One expensive service that I discussed with the guru is Claude Diamond's.
Diamond charges over two thousand dollars for his “mentoring” service.
The fee is completely non-refundable. For that you mainly get to call
him and talk to him about your lease-option business for a year. In
contrast, asset-protection planning attorney F. Bentley Mooney, Jr.
(www.lbc.com/fbmooney) charges $150 per year for telephone consulting.
In addition to his law degrree, Mooney has a masters degree in tax law
and is a board certified specialist in estate planning, trust, and
Lump-sum, non-refundable fees
I complained to Diamond about his fee structure. I do not object to any
hourly rate he wants to charge. He has a law degree so you would expect
him to charge over $100 per hour, at least when he is giving legal
advice. But I do object to lump-sum, non-refundable fees. I told Diamond
that such fees sound to me as if they are designed to get more out of a
person than he would willingly pay on an hourly rate.
In other words, if I charge by the hour, the customer may decide after
several hours that he no longer wants or needs my services. Large lump
fees sound like they are based on the notion that a speaker can cast a
spell over the customer at a seminar, sign him up for an expensive
service while he is still under that spell, then reject the refund
request when the customer cools off.
This sort of front-end loaded pricing is common in the health-club
business where people resolve to get in shape, then decide it’s too hard
and drop out. Health-club owners know that a high percentage will do
that, so they often charge big front-end fees.
Diamond denies that is his motivation. He says he bills by the year
because he doesn’t want to be bothered by sending lots of bills. I
suggested that he solve that problem by making people pay by credit card
to his secretary at the beginning of each call. Many attorneys do that.
Or he could give advice by way of a 900-number. In that case, the phone
company would automatically send him the money. Or he could collect a
retainer which he draws down as each hour of his time is used, refunding
any unused amount. Diamond rejected all those suggestions.
The only situation I know of where nonrefundable, one-year fees make
sense is private-school tuition. Schools can only search for students in
August. Once they allocate a slot to a student, his changing his mind
leaves them with an empty seat which it's too late to resell.
But virtually all other businesses can “mitigate their damages” by
finding another customer to “fill the seat.” Landlords are required to
try to find a replacement tenant when someone breaks a lease. And they
are prohibited from collecting double rent by not refunding money on a
unit which has been rerented. Diamond treats his real-estate-investor
customers in a way that real-estate investors themselves are not allowed
to treat their tenants.
Diamond says he has had about 150 “mentoring” clients and that only
three have requested refunds.
Finally, I have never met Diamond in person, but I did talk to him on
the phone at length. He gave me the impression that he is articulate,
extremely self-confident, and a bit arrogant about how good he is. Many
people are attracted to such personalities. Their thought is, “Wow! This
guy's really hot stuff! I want to be like him. I want to hang around
him.” One of his newsletters has these words after his name, “JD
Editor-Publisher-Mentor-Friend” at the top of the front page. Note the
There are a number of businesses where one person pays another for his
or her company or conversation: escort services, psychics,
psychologists, phone sex, and so forth. An argument could be made that
many an attorney's fee was really for this purpose rather than legal
advice. When I dabbled in consulting years ago (for an hourly fee), I
quickly dropped the service because I felt the clients really just
wanted to hang around with me. They seemed more interested in telling me
how well they were doing and getting “attaboys,” than they were in
hearing what I had to say. I have friends. I would welcome more. But I
do not charge for my friendship “service.”
‘Mentoring’ not necessary
You learned how to ride a bike and drive a car without a multi-thousand
dollar “mentoring” service or “boot camp.” I became a nationally-known
real-estate investment expert without ever having a mentor—free or
otherwise—or attending a multi-thousand dollar seminar. You do not need
to pay anyone that much money for real-estate-investment information. I
know of no such high-priced service or seminar that would give you
anywhere near your money's worth. Read all the articles and books you
can find on your subject of interest. Take all the reasonably-priced
adult-education and trade association seminars you can on the subject.
Look for fellow practitioners who will give you friendly advice on an
informal basis. Then just do it and learn the rest from experience.
Consultants versus books
There was an article in a major magazine in the late nineties or so
about consultants. “Mentors” are consultants. The article said that
consulting companies claim that they are giving customized, tailor-made
advice to each client based on studying that client’s individual
situation. But an executive who moved from one company to another
discovered that both had used the same consultant and he thereby got to
see both consulting reports. Consulting companies normally require in
their contract that clients never disclose the contents of the report.
We now know why.
The executive discovered that the “customized, tailor-made” reports were
identical except that the name of the client had been changed, as well
as some other client-related facts, but not the advice. In other words,
consulting or “mentoring” is little more than a way to sell a $25 book
for thousands of dollars a copy. You should ask any “mentor” why he
can’t just put his advice into a book which you would then buy. If he
gives you the “customized, tailor-made” line of bull, ask for the names
of some other clients so you can compare notes to see if the
customization is really there. I can almost guarantee you that you will
get no names.
The guru may claim he is obligated to keep such names confidential. But
he could ask clients if they would mind talking to you. Most
professionals who owe a duty of confidentiality to their clients have
nevertheless gotten permission from many of them to give their names as
references or to quote their testimonials in advertising.
Compare guru prices to legitimate education
Here are some prices I have heard gurus ask for their “boot camps” or
“mentoring” services along with similarly priced, legit educational
Guru price vs Spend that same amount and get...
$2,000 One year at Reedley College in Reedley, CA including
tuition, room, board, and health care (CA resident). That would take you half way
to an associate degree in business administration All of my books and
6 years worth of subscriptions to my newsletter
$4,500 Almost one year’s tuition, room, board, and health care at
the University of California at Berkeley ($4,354 in-state tuition plus
$7,657 room and board less the average grant of $5,451) All of my
books and 16 years worth of subscriptions to my newsletter
$6,000 One year in the University of Wisconsin’s highly respected
Real Estate and Urban Land Economics undergraduate program ($3,180 in-state
tuition plus $4,860 room and board less average grant of $3,264) All
of my books and 23 years worth of subscriptions to my newsletter
$10,000 Two-thirds of a year at Harvard ($22,802 tuition plus $7,278
room and board less average grant of $14,358) All of my books and 40
years worth of subscriptions to my newsletter
If you are spending this kind of money to talk to some real-estate
guru for a year or to attend a week-long “boot camp,” you are an
You say you have no respect for Ivory Tower academics when it comes to
getting rich in real estate? OK. Here’s what quality, real-world,
real-estate gurus and organizations charge for their courses.
THE GOOD GUYS:
Certified Commercial-Investment Member of the Realtors® National
Marketing Institute week-long seminar (I highly recommend) $845
(nonmember price as of as of 2/22/98)
Bob Bruss's College of San Mateo (650-574-6494) semester-long (16
three-hour sessions) course $39 plus $10 registration as of 3/18/98
Appraisal Institute two-week courses $249-$675 (nonmember price as of
Bay Area Investors Educational Services lectures (510-339-9635) $20
for evening lecture, $59 for all-day conference, $170 a year gets you 12
monthly evening lectures and a big discount on all-day conferences as of
2/24/98 John Schaub’s “Making it Big on Little Deals” or “Advanced Class”
three-day seminars (800-237-9222) $595 as of 2/24/98
Al Seastrand’s (916-446-6200) half-day foreclosure lecture $45 as of
None of these guys pays me in any way to mention them.
Most of the money probably goes to pay commissions
The media are full of recurring scandals about charities that spend
extremely high percentages of their gross income on fund raising and
hardly any on the charity itself. I suspect the same is true of most of
the high-priced guru offerings. That’s why high-pressure salespeople are
calling you at home in the evening and urging you go borrow money to buy
their course. The guy who is trying to sell you is probably getting a
commission in the hundreds of dollars or even a thousand dollars or
Think about how much money it would take to get you to hustle as hard as
those guys who are calling you are working. The answer to that question
is probably how much of your fee is going to pay those salespeople to
call you. The higher the fee, the greater the probability that the guru
in question only getting a small percentage of the money. He is not
going to give you a $4,000 seminar or course when he is only netting
$100 from you (the other $3,900 is going to telephone boiler room phone
salespeople, TV station, seminar instructor/salesman). If you’re lucky,
you’ll get a $1,000 seminar or course. And since people who charge you
$4,000 for a $1,000 seminar are not very ethical to begin with, you’ll
probably get a $20 seminar for your $4,000.
Most expensive real-estate products or services are variations of the
classic ‘advance-fee-loan scam’
One of the classic frauds that con men perpetrate is called the
“advance-fee-loan” scam. In it, a con man finds a person who is having
trouble getting a loan and offers them a loan. Often, there is some
bogus explanation like, “It’s offshore money,” to explain why the con
man can get you a loan when no one else can. When you accept, the con
man tells you there is a small fee for the paperwork or some such. In
fact, the con man is purely in the business of collecting the fees and
running. There is no loan.
The real-estate-investment variation on this is to tell you that the
guru will help you buy property by putting up the down payment or by
advising you or by teaching you how to buy for nothing down. The
nothing-down con involves various approaches from “motivated”-seller
financing to government loans to lease options to flipping to finding
partners to “bring me the deal and I will put up the money to buy it and
split the profits with you.” In fact, the con man is purely in the
business of taking your “advance fee” in the form of a retainer or the
cost of “training” or “mentoring” or high-priced book-and-CD courses.
They have no interest in investing in deals you bring them. It is a lie
to get you to part with the advance fee. Their various techniques for
buying nothing down do not work in the real world. They just lie to you
to get the advance fee.
Here’s a letter I got from a visitor to this Web site:
Judith Abbott jpabbott @ gte.net
I have been around the Real Estate industry literally my entire life. My
parents sold real estate and had a few rent houses. As an elementary
school child, I stood in front of a rental unit refrigerator full of
dead food and SWORE that I would find a better way to make a living when
I grew up...but, here I am, still doing it. I bought my first property
in 1974. I stumbled across your webpage recently. I read your Guru
Review with great gusto. If R.Estate Investing were simple and easy, fast and
risk free, everyone would be doing it. And, even though I consider
myself an experienced, sophisticated investor, I let myself get
sweet-talked (and high-pressured) into one of those high-cost
“mentoring” programs about two years ago. I should have known better.
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