The Real Estate Guru Trap – How It Works & 4 Ways to Avoid It

As I attended a real estate investment event a couple weeks back, I couldn’t help but take interest in each of the speakers and seeing what they were all about. Some speakers seemed to have a genuine interest in creating value for their audience and delivering valuable content, while others seemed most interested in lining their own pockets. For me, this is nothing new, since the first real estate “event” I ever went to was nothing more than a sales pitch for expensive tape sets, seminars and additional coaching.

Typical Sales Flow for Real Estate Gurus

Here are some of the typical things you can expect as part of the sales flow for real estate gurus, or wealth creation gurus.

1. Free or cheap seminar
To get people excited, gurus typically offer free or cheap seminars where they talk about real estate, make it sound sexy, and tell you how easily you can be rich using their system.

2. Raising credit card limits
As an exercise in negotiation skills, or a take home assignment for a multi-day event, you may be asked to call your credit card companies and have them raise your limits. The more credit you can get, the better a negotiator you are and the more capital you’ll have to put together future real estate deals.

3. Hard sell
Towards the end of the free or cheap seminar comes a hard sell. This hard sell usually applies some combination of fear tactics and emotional appeal. With financial barriers removed now that you have plenty of available credit from the previous day’s exercise you’ll be encouraged to sign up for the advanced course where you’ll supposedly learn everything you need to know to get rich in real estate.

4. More courses, field trips, mentoring, etc.
Even if you do sign up for the advanced course, do you really think it will stop there? At the conclusion of the advanced course there will be additional courses on specialty strategies, field trips or bus tours to see the best areas to find deals, or expensive personal mentoring. Unfortunately, the guru you were so excited to see probably won’t even be there because these extras are usually coordinated by their other students.

5. Investment deals
After completing all the training you should have the skills to locate, evaluate and close your own investment deals right? The only problem is doing that can be hard work, and nobody wants to do the hard work. Instead of finding your own deals, Gurus often have great deals ready for you. Since they are the expert, their deal must be the one for you.

After going through all of these courses and spending thousands of dollars you may have picked up some great knowledge, but most are things you can learn by reading books, browsing online forums, or simply networking with other investors in your area.

Tips to Avoid the Real Estate Guru Trap

1. Do your research
Before signing up for any course take 5 minutes to Google the guru and get both positive and negative feedback so you can make an informed decision. Better yet, take the time to talk to past students and see what the pros and cons of the system are, and whether there is expensive advanced training.

2. Be careful who you take advice from
Do you want to take real estate advice from people who make the bulk of their income from investing in real estate, or from people who spend 90% of their time running seminars and selling books and courses?

3. Test the basic techniques before buying the upsell
Never sign up for the advanced course, bus tour, or mentoring unless you’ve made money using the basic material first. If you don’t get enough money making info from the basic course, what makes you think the advanced course is going to be any more valuable?

4. Keep your emotions in check
The gurus are slick salesmen and will toy with your emotions to get your money. Learn to recognize the sales tactics they are using so you can keep your emotions in check. By doing this you can make logical decisions based on the information you are presented with.

There are some fantastic organizations out there that provide real education for investors, so don’t mistake me for being anti-education. Education is extremely important for investors, but simply beware the smooth talking real estate guru and their gimmicks. For the new investor, I recommend joining your local real estate investment club where most members will be happy to share their experiences with various courses and tell you which ones are most worthwhile.

photo credit: jelkeschaafsma

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.