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Investing Success #3: Lies, Damn Lies and Real Estate Investment Courses

By
Rev N You
August 13, 2014






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A few years ago, my partner Dave and I attended a real estate investing club meeting in the Lower Mainland. The feature presentation was from a local area mortgage broker, and he did an excellent job of explaining the important things you need to understand about mortgages as a real estate investor.

The broker mentioned that a couple he had just tried to find financing for couldn't because they had 16 credit cards.

He went on to explain why having so many credit cards can be very damaging to your credit and how you should keep it to five maximum. He also gave some other great tips, like keeping your credit card limit high but always keeping the amount you owe low because your credit will be negatively impacted with balances that are close to your limit.

At this point, a woman said, "I just took a real estate investing course that told us to go out and get as many credit cards as possible. They said that having all that credit was a good thing."

I felt Dave cringe beside me. We knew instantly that the speaker was referring to one of the big-name courses that had come through town with their get-rich-quick kind of program.

The worst part was that the woman didn't seem to believe the mortgage broker when he explained why this was horrible advice. She tried to argue: "Well, you're not necessarily going to use the cards; you're just supposed to have them in case you need cash for a quick flip."

Here are some of the high-risk things delegates get taught at get-rich-quick programs and why such training programs teach you those kind of things:

You must have a triple-tiered corporation and you are stupid and foolish if you don't have one. They actually used these words, explaining all the terrible risks and extra taxes we'd pay if we didn't have one. It can make sense to have a corporation but multiple tiered corporations are not necessary for the vast majority of investors. If you're not sure what you need, speak with your accountant.

Guess why the course was so keen to tell you this, though? They had a package where you could buy a two-tiered corporation for $3,000. A corporation we couldn't even use to buy a property in, despite trying for three years!

Call your credit card company and demand a lower interest rate and higher balance on your credit card. Conveniently they got us to do this during our lunch break. We did as we were told and by gosh we were successful. It's a good thing, too, because thanks to that call we had $20,000 of available credit on our card that we could use to finance the big mentorship package they convinced us to buy at the end of the weekend.

Wholesaling, assignments and sandwich leases are going to make you tons of money within weeks of learning the techniques.These were hot topics at the course we took because the cash looks so much juicier than a "boring old buy and hold" that takes years to get super rich from. And yes, one good assignment or wholesaling deal can earn you a nice fat cheque, but guess what you aren't going to find that deal a week or two after the course because there are still a lot of things you have to learn before you can do that first deal. Luckily, before you leave the program, they help you to realize there are many more details you need to know before you can do those deals and they offer just the solution specific courses on each subject for $3,000-$4,000 each.

The bottom line? Educating yourself is smart, but watch out for the get-rich-quick schemes. Look for the people who are genuinely trying to help and someone who presents the realistic side of the story. I look for teachers who are upfront about risks, and about the time and the effort you need to invest in order to succeed. I also look for people who are teaching fundamental principles as well as their particular spin on investing. And most importantly, I want to know what else they are selling in advance; so if they are telling me I should invest in Florida, I know whether they are saying that because they also happen to sell investment properties in Florida or because they just like the market fundamentals. It's OK either way, but I want to understand their bias. Just like if they say I need a three-tiered corporation, I want to know whether it's because they are going to upsell me their package for a three-tiered corporation or whether it's because it actually saved them from losing everything in a law suit.

Think carefully about what you need to learn. If that course will give you what you need, then go. Before you sign up for anything additional that is being offered, think about the bias that might be behind what they are teaching.

And question what they are saying.

This is an edited excerpt from the Amazon #1 bestselling book More than Cashflow by Julie Broad. You can get your copy and get more valuable investing advice from Julie at revnyou.com.

Last week: Turning a Weak Deal into a Money Maker

Next week: Get Great Deals to Come to You


Julie Broad is a real estate investor, entrepreneur and #1 Amazon bestselling author of More Than Cashflow. Her website www.revnyou.com was twice voted best website by readers of Canadian Real Estate Wealth Magazine. She has spoken to thousands of investors across Canada and appeared on CTV and Global TV all over Canada. She lives in Nanaimo, BC.
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