Don’t Flop Before You Flip: How to spot a real estate seminar scam.
P.T. Barnum once said, “A sucker is born every minute.” But, with the birth of reality TV, it can be argued a sucker is born every episode. By using their “celebrity status,” reality TV personalities prey on fans trying to replicate the results they see on favorite TV shows like Flip or Flop and Flip This House. Real estate investing has become an industry ripe for scams.
The reality is that the average flip generates about $25,000 to $45,000 in profit, but many stars of these favorite TV shows promise much more. They have made millions by promising to share their secrets, but the fact is that most of their millions come from their $30,000-plus “mentoring programs,” versus real-estate investments.
We trust these TV stars because we invite them into our homes every week and feel like we know them. Websites exist that are dedicated to reviewing these programs and calling out these scams, but what are some things you can look out for from the get-go if you genuinely want to learn about real estate investing?
1) Remember the adage, “If it is too good to be true, it probably is.” Why would a millionaire real estate investor want to give you all of his secrets for free? He wouldn’t, and that’s because everything has a price.
2) The Upsell. The free seminar is only an opportunity for them to sell you on their boot camp, where they entice you with just enough information to sell you their boot camp.
3) More upsell. The two-to-three day boot camp is a way for reality TV celebrities to offer tidbits of information before going in with the hard sell, offering you their $30k-to-$60k real-estate mentoring courses that promise to give you their secret finally. But here’s the real secret: there are no secrets. Sadly, the chance of you ever hearing from these so-called mentors again is nearly zero.
4) No real local or specialized market knowledge. How can investing in the property be the same in Kansas as it is in Los Angeles? It absolutely isn’t. You either have to have the local market expertise or learn how to find someone who does. If a program tells you that their application works in any market, it is probably a scam.