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Real Estate Guru Scams

Real Estate Scams: How to Not Get Caught on Costly Real Estate Education Mouse Traps

Real Estate Guru Scams

Last Sunday, we just completed the last day of a three full day real estate investing workshop that almost parted us with a whooping… drum roll please! $25,000.00 US or $36,000.00 CAD.

It all started a couple of weeks ago when a friend and business partner reserved me a spot on a “free” one day real estate investing event by a familiar HGTV income property celebrity.

The event was packed that they had to split the attendees into three conference rooms to accommodate the crowd, and obviously, by the looks of it, the star has such a good following amongst Canadians.

This one-day event was held at the Marlborough Hotel in Winnipeg and following three day event was held at the Fort Garry Hotel.

Before coming to the one day workshop, I already knew that this was going to be a teaser workshop having that this wasn’t the first time I’m attending this kind of investing fiasco. My wife was interested to tag along as she wanted to understand more of what I have been trying to do in the real estate investing world.

Side note: As of this writing, we have a one buy and hold rental property that we ourselves are managing. This is our first ever real estate investment, or as others would put it: House #1.

What made us attend the teaser workshop was the impression that it would be given by the celebrity himself.

As it turned out, the celebrity was nothing but a “come on” to attract people into the event – took the stage for a couple of minutes, entertained a couple of photo ops, then he was nowhere to be found.

Gurus Took the Stage and Did What They Do Best

It was then clear that the celebrity was an endorser and not the show. The stage was then taken over by a “successful real estate investor” whose job was to lure people into a paid three day real estate workshop that will teach you everything you need to know about investing in real estate in both Canada and the US.

Fair enough, their three day workshop didn’t cost $2,000.00 as most of similar events would. They only charged $260.00 US, which of course is a steal, if you think of it, that’s a lot of zeros discounted on their package and going through this training as a serious real estate investor wouldn’t hurt at all. The best part is, you can bring a guest to attend the workshop for a measly $260.00 – that got me and my wife excited.

By the end of the seminar, the presenter encouraged the crowd to make their way to the back, hand over their credit cards and sign up for the 3-day course. A third of the people rushed to take advantage of this once in a lifetime low-priced real estate investing training.

I was on a different room as I came in late because I had a hard time finding a parking spot downtown on a weekday, just as I was heading to the back tables, my wife phoned me to ask if we are to avail of this three day course and since the price was relatively low, I told her to go for it.

It was easier to pay on the other room because it consist of a smaller group so I decided to join them and finish the transaction on the other side.

I remember asking the event staff what the catch is and he said that there was no catch, so I rephrased my question. I asked, since this was such a low priced training, would there be other trainings involved? He told me, that there is an advanced training but it’s optional and most will be covered on the three day event.

The Real Estate Training That Almost Stole $36,0000.00 from Us

After a couple of weeks, it was time for the three day real estate investing training. We came in a bit late because my wife had to finish something at home. We were about 15 minutes late and some attendees came in a few minutes after us.

The trainor/speaker commented on the importance of coming early to make the most of the workshop, which I believe is a fair advise.

The speaker went on with the training, which was composed of vague descriptions of common real estate investing terminologies like wholesaling, flipping, presenting samples of actual deals his client(s) did under his supervision and advise. He said he charges his clients $25,000.00 US per deal but as a student of their real estate investing program, it comes with the package, so you won’t be paying extra fees for coaching and buying trips.

There was a huge emphasis on wholesaling properties in the US using their proprietary tools as it’s where the opportunity is and not in Canada. Based on the live examples given, you could grab houses on the neighborhood of $30,000.00 and below, some costs more but there were foreclosed houses that you could grab for as little as $2,500.00 which got the crowd really excited.

I could say that the speaker (who, I’m now aware is a salesman for the company) was a great motivational and transformational speaker who seamlessly implemented what seemed like a perfectly syndicated sales funnel that slowly suckerred people into their advanced training.

The three day seminar was syndicated to condition the crowd so participants will be ready to give their credit cards to be charged the $25,000.00 Real Estate Investing Course by the end of the third day. Each day, you get to meet a consultant whose team you’ll be part of.

What I observed however, was the fact that there’s really no value with those one on one meetings as each day, these meetings was focused on motivating people to increase their credit card limits, to max it out for the course.

Too bad for me and my wife, we’ve got high enough credit limits to charge the whole thing but I wasn’t convinced on “investing” a full $36,000.00 CAD on an educational course, thinking that if I’m going to get that money  from credit anyway, I may as well invest it in an actual property that will cashflow or give me immediate measurable returns but they were so good that we were lured in.

As a Financial Advisor by profession, this was against every bit of advice I give my clients. I have a very good credit because I’m so disciplined with handling our finances but we were hooked.

Our business partners – the other couple that invited us over for the free event was hooked as well and was just about to pull the trigger on DAY 2 but $36,000.00 CAD is just too grand for any one of us, so I tried negotiating the rate down to $12,000.00 CAD, saying that that’s the only amount we can part with.

Too bad for us, they already know how much credit we have and the salesperson (consultant/coach) was also aware that we can afford the whole thing. This syndicated events are well designed that it can literally rob you off your hard earned money or worst, CREDIT!

So I told my wife, we’re not ready to lose that kind of money on a course still thinking that it will be well spent on an actual investment instead.

I talked to our partner and we came up with an offer. On DAY 3, I told our consultant about our plan of joint venturing with our business partners to make the course affordable for us since two can go for the $36,000.00 CAD price tag, our consutant countered with the idea that all four of us can, we just need to add an additional $4,000.00 US, which will lower down our “investment” to only $21,000.00 CAD instead of $36,000.00

Think Think Think… and then Think Some More!

And so we think, and think again, then think again. Now that we can grab this program for only $21,000.00 CAD, maybe we should proceed because all four of us could go for like $15,000.00 discount and get to take advantage of all their resources, which includes financing for wholesale and rental deals. On top of it, they guarantee that they will not stop helping us until we get three real estate deals on our belts.

That’s just a great deal, ain’t it?

But I still felt it’s expensive and since we’re not sure if they’re going to keep their end of the bargain, $21,000.00 is not yet quite the amount I’m comfortable losing, so I negotiated again… Finally, we suggested that only one from each couple should go which would bring down our cost to around $16,000.00 for the course and another $700.00 for the US LLC registration.

The Verdict

By the end of the day, our coaches / consultants approached us again, to close the deal of course. It probably took them another hour of convincing, ’till we finally threw the towel and helplessly gave our credit cards to be charged more than $17,000.00 CAD a piece.

That amount, we thought we were ready to lose if everything should go wrong on this deal.

So we took some pictures with seminar posters and called it a day.

That’s to be about the biggest amount I’ll ever charge on my credit card, and the biggest balance I was to carry to be charged interest for. Driving home, I kept thinking if I made the right decision – right or wrong, this is an amount I know I can easily pay off.

Doing Due Diligence (After the Deal)

Have you ever experienced a purchase when you just didn’t get the chance to do due diligence because things seemed to have happened so fast that you didn’t have the chance to investiget? Well, this is one of those…

So when I got home, I did some research on the company that’s running the real estate investing program and I hardly found any reviews on this specific company, which doesn’t appear right. If they’re really a big company or the number 1 real estate education company, they should have at least a couple of positive and negative reviews.

None was written about this company, so I was convinced that I have to dig a little deeper. I checked internet archive to see as to when they bought their domain name. It appears that they’ve only started using their domain name one year ago.

I then discovered that “their” financing company who would finance the deals at 1% is a third party, the people receiving the calls is also another company and the people selling the program are yet another group of people from another company, all syndicated to look like one humonguous company that controls the industry – but are they really?

One thing that disturbed me was the fact that I couldn’t find anything about the company online. There are no negative reviews whatsoever, not that I’m a fault finder but I couldn’t find any good reviews either (other than the fake reviews they have on their website).

The Verdict (Part 2)

After being sold and doing due diligence (almost) too late, I was ready to break the news to my partner. I just phoned her and told her that we should get out of the program before the refund periods runs out.

True enough, the refund process was easy, the customer service representatives seemed so used to refund calls that they would never try to upsell you, so we got our “tuition fee” and US LLC registration fees refunded but…

One thing remained, it’s what they call “The Deal Desk”, and it’s supposed to be a monthly subscription thing. My partner has already contested this as an unauthorized charged on her credit card as we clearly told the cancellation team to cancel this.

So How Do You Avoid this Trap?

The number one, and perhaps the biggest secret that most mouse should know, is to AVOID the TRAP at all costs. Know in your heart that there’s no such a thing as get rich quick, and anyone who tells you that you can become a millionaire in one year is LYING to you.

The best way to learn real estate investing is to actually start investing, traditionally.

Good news is, we are in the era, where you can learn pretty much anything you want to learn by simple mouseclicks. If you know how to read, you can learn and you don’t need a $30,000.00 course to teach you because, as I realized, real estate investing is just like any other business, you just need to take the time to learn it and of course, when you learn it – You have to TAKE ACTION and learn more lessons along the way.

No Guru can guarantee your success. Your success will depend entirely upon you. After all, after they collected your money, they wouldn’t be there to “coach” you when you actually start taking action – $30,000.00 after, you still have to take action, so you might as well save your $30,000.00 or use it to purchase your first property.

 

 

 

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