Epic Real Estate Investing - EPREI 027 : Real Estate Investing Courses - The Good, the Bad and the Ugly

Episode Date: February 18, 2012

Real estate investing education is a $500 million a year industry, and if you're not careful... choosing the wrong real estate investing courses can leave your wallet a whole lot lighter and with NO REAL ESTATE. On this episode, Matt pulls back the curtain on the real estate investing education industry and shows you what to watch out for before plopping down your credit card. Learn more about your ad choices. Visit megaphone.fm/adchoices

Epic Real Estate Investing Podcast, Episode 27. Without further delay. Your guru. Sorry. Your guide to a better life through real estate investing. Matt Terrio. Hello and greetings from the Epic Real Estate Investing podcast, the podcast that will show you how to build wealth through creative real estate investing.

So you'll have the option to realistically retire in the next 10th. 10 years or less and enjoy the good life while you're still young enough to do so. My name is Matt Terrio, author, full-time real estate investor, and family man. If this is your first time listening to this show, you'll want to do two things. First, go back and listen to Episode 1 for the Ground Rules of the Show. And two, download the free real estate investing course, how to do deals, no money required, and you can get that for free at free real estate investing course.com. It's a step-by-step course of which I unveil the mystery around doing deals.

deals with no money or credit. Speaking of no money or credit, that makes a good transition for what I want to talk about today. You know, you hear the words no money down investing all the time. I mean, you don't need any money, you don't need any credit. And, you know, and if you find the right seller with the right motivation and the right situation, there are indeed strategies of which you can execute that transaction with no money or credit. But don't get it twisted. Real estate investing, it ain't free. I mean, even if you acquired it using no money or credit, it ain't free. You do need currency to transact real estate. But currency can take many different sizes, shapes, and forms.

I mean, for the purpose of today's episode, and just to keep it really simple, I'm going to group currency into two specific categories for you. First, there's hard currency, like money, like dollar bills, like checks, like wire transfers, like real money. In the second category, there's what I like to call intellectual currency. Like, what's up in your noodle? what's in your brain, your knowledge, you know, what you actually know. Now, although you may be able to do a deal with no money down, you do need currency to do a deal.

You know, both currencies, hard currency and intellectual currency, can be used to transact real estate. And, you know, the relationship between the two, it's a rather unique relationship. The relationship is counterbalanced, meaning if you have a bunch of the hard currency, money, the less of the intellectual currency that you need to complete your transactions. And vice versa. The more intellectual currency you have, the less hard currency you're going to need

to complete your transactions. The two, they're counterbalanced in that way. It's kind of like a teeter-totter. You know, if the hard currency side of the teeter-totter is really light, the intellectual currency side has to be heavy. And vice versa, that's how they work together. And another way that the two are counterbalanced is, the more hard currency that you use in your real estate transactions,

the more intellectual currency that you get in return, the more experience that you get. And the more intellectual currency that you use in your real estate transactions, the more hard currency that you make, the better you return on your investment. So basically, just the more educated that you are around real estate, around deal structuring, around finances, the less actual money you'll need to transit.

real estate and the greater your profits are going to be. You know, just the more educated you are, the better shot you have at doing deals with no money or credit. Conversely, the more money you use in your real estate investing, the more experience and education you're going to get in return, the more experience and education that you're going to receive. You know, in those experiences, they may be good ones, they may be bad ones, but either way, you are increasing your education. you are making deposits into that intellectual currency. Your intellectual currency account is getting bigger and bigger. It's growing.

So you see how they work hand in hand. You know, one of my real estate investor buddies, he has a saying, and he says, I'm either making money or I'm getting educated. I'm either making money or I'm getting educated. So I'm really glad that you've chosen to be proactive about your real estate investing education by listening to a podcast about real estate investing. Because, you know, regardless of what you've paid, for your education up to this point. It's typically much more expensive being reactive about

your education. Going to that other academy we hear about so often, right? The Academy of or the School of Hard Knocks, that's a very expensive tuition. Now, speaking of tuition, when it comes to real estate investing education, I mean, there's a wide array of tuition that you could pay. I mean, from free books at the library, all the way up to $100,000 plus from the most recognizable names in the business, the most recognizable courses in the business. Now, I don't know. I mean, is that $100,000 education? Is it $100,000 better than the education in the free books at the library? I guess I really can't answer that because I have never taken that $100,000 educational program. But let's talk about your choices for real estate investing courses. I mean, what are your choices?

You know, many people, they want to get involved in real estate investing as, you know, over $500 million dollars last year was spent on real estate investing courses and education. I mean, it's a big industry. It's big money. And there are probably some things you should know about the industry of real estate investing education before you actually go out and make that investment in your intellectual currency. You see, about a year ago, I was sitting around a table at a bar with a couple of new friends. I mean, they were new friends then, but they're really good. They're good friends now, of which, you know, they all used to be in the industry of real estate investing education. Now, they're no longer in that industry and they've given me their blessing to share this information

with you today. I mean, there are others in the industry, however, that might not appreciate me sharing this with you today. They might make some enemies today. But then again, you know, I'm just one little guy with a little podcast on iTunes. So how much damage could I do, right? Either way, I don't really care too much about what others think, as you probably could tell by the, if this is not your first time listening to the show.

You know, their opinion of me is really none of my business anyway. And besides, I'm not going to name names. I really probably don't have to, though. You'll probably figure it out in most cases. Anyway, what's right is right. So today, let's discuss the dark side of real estate investing courses. Let's discuss the good, the bad, and the ugly. And let's do it in reverse order.

Let's discuss the ugly first. Real estate investing education business model number one. You're probably all very familiar with this. Late-night infomercials. I mean, we've all seen them. We've been seeing them for years, decades even, right? You know, the guru of the night, he hosts a 30-minute TV commercial, known as an infomercial, and he's there talking about how much money that they've made and how easy it was to do

and how they've taught thousands of people to do the same. I mean, they're flashing on the screen images of checks, these large checks, these large amounts of money that they've made, and then they'll cut away to the average person sitting on the couch or the average little family sitting around the table telling about how they were able to do the same thing with this guy's particular system. Or they might flash to the guy that used to be average and now he's sitting around the swimming pool with the bikini-clad models at his beck and call, right? You've all seen it.

You get the image. And it's just, it's testimonial after testimonial after testimonial. And for you to get the same thing, all you have to do is buy their easy to read, easy to follow book for just $19. and 95 cents plus shipping and handling. That's it. That life can be yours with the purchase of that book. That book contains all the secrets, everything that you need to know to make that happen for you.

So the actual intent by this infomercial is to catch the person late at night while they're lamenting over their poor life, feeling sorry for themselves, and the intent is to spark a dream inside of that person and get them to call and order this book. This book is going to solve this. poor guy's problem of no money and a miserable life, right? Hey, it's marketing. I get it. I mean, it's just business up to this point.

I mean, this is how pretty much every industry works. You know, empires were, are and are going to be built on providing products and services that satisfies a need or it cures a problem. Nothing really unique here yet. You know, this book is going to cure this guy's problem. So, just like all customers do, they call to buy the book. Now, this is where it actually starts to get up. Ugly.

Now I'm going to lift the veil and explain to you what happens next from behind the scenes. Okay? First, the sole purpose of that infomercial is to do nothing but raise to the surface, to bring to the surface people with working credit cards. That's it. The guru just wants to identify customers that have credit cards that work. So the customer calls in and then they're exposed to by the operator a number of upsells. I mean, the person just called for $19.95 book, right? And plus shipping and handling.

And then you discover it's going to take six weeks to arrive. But, you know, just for another $19.95, the book can be delivered in two business days. You can have it in two days. And then for an additional $9.95, you can purchase a code at a website where you can download the book instantly. You don't have to wait for the two days. You can actually pay the $9.95 and then download the book as soon as you hang up the phone. And then there's typically a second book or a fast start guide or something of a companion product that goes with the book of which if you're really serious about your new career as a real estate investor, you can't afford to pass that up.

So there's another $9.95 tapped on to your order. So you just called for a $20 book but ended up at the end of the call with a $60 charge on your credit card. And the key to your new life as a real estate investor is now in the mail to you and on his way. you are now super excited and you can't wait to receive your purchase, right? And then a couple days later, you see the big UPS van pull up to your house and the driver has this huge box in his arms walking up to your front door and you're like, wow, I mean, I just ordered a couple books. What else could possibly be in this big giant box, right?

So you get the box into the house, you slice open the seam of the box and then and the thing literally, well, almost literally, explodes. I mean, the box is loaded with stuff, more contents than probably should be in this box. I mean, it's loaded with books, it's got a DVD, maybe even a VHS. Yes, they still make those things. It takes up some room too. And a quick start guide, a message from the guru, a certificate of authenticity, a little book that says, read me first, and maybe an internet resource directory.

I mean, this box is loaded with all kinds of stuff. And once you get into the contents, you've got stuff everywhere. I mean, it's spread out all over the place, right? And that's no accident, by the way. It's designed specifically to overwhelm the customer. In fact, in the industry, they actually call this box. They have a name for it. They call this box the exploding box.

So, the guru that just sold you this exploding box sends all of your information to another company, the call center, quote unquote, the sales center. And they let you sit with your materials for a week or so. They wait for the euphoria to wear off a bit. And maybe you actually let frustration says. in a little bit. And then one day, the phone rings. And it's a customer service follow-up call, right? And they want to find out how your purchase is working out for you. They're really concerned. How is this going? How is your real estate going? Do you need any help? You know, and with this call,

they have three intentions. First, to empathize with you and find out why you ordered the product in the first place. I mean, they really want to know why, right? Because they really, they're really concerned. You know, actually, they really just want to know what your pain points are. Maybe you just got laid off. Maybe you're sick and tired working for your job. Or maybe the wife has been on your back to make some extra money. Or maybe you can't find a job. Or maybe one of your kids is approaching that college age and you're trying to figure how you're going to pay the tuition. I mean, it could be a number of things. But whatever the reason, there is a reason that they want to know your why. And these are, they're highly trained people that are very good at

and uncovering your reason why. And then the second intent of this call is to find out how much credit you still have available on the credit card you use to purchase the product. They just want to know how much credit that you have available. And then their third intent is to offer you some help, to offer you some help by connecting you to a coach that's going to eliminate the overwhelm of this exploding box, and they're going to get you to your goal of paying your child's tuition faster than you could do it on your own.

I mean, that's the answer. That's what's going to bring it all together. and guess how much this coach is going to cost you. Take a guess. How much? How much is this coaching program? Yep. It just so happens that the coaching costs almost exactly what you have left on your credit card.

Ain't that a coincidence? So you plop down the money for the coaching. I mean, hey, you're serious about your real estate investing career now, and the best in the world have coaches. I mean, the best people in the world and all of their professions have coaches. I mean, even Tiger Woods has a coach. right? So you need one too. Make that's logical. Makes good sense. So you've now purchased time with a coach. Now this company that just sold you the coaching, they go and send your information to a third company.

It's not the same company that you purchase the coaching from. Not even the guru's company, not where you bought the book from. They send your information to a third company. They call it a fulfillment company, the fulfillment center. Yep, there just happens to be a company of nothing but experienced, professional, successful real estate investors who have made so much money that in their spare time, they help others do the same over the phone. Not really. This fulfillment company consists of a bunch of $12 an hour employees whose job it is to do, what do you think?

What do you think it's their job to do? What do you think their job is? Come on, give it a guess. Yep, their job is to read back to you the content. of your exploding box. That's your real estate investing coaching. That's your real estate investing education. That's the ugly part.

And then that center that sold you the coaching, they cut a commission to the guru, they cut a commission to the fulfillment, and then they keep the rest. It's three different companies working in conjunction with each other. Three completely separate companies. Ugly, huh? I know.

Okay, we're doing the good, the bad, and the ugly. So let's get into the bad now. We're working our way backwards. We did it ugly first. Let's go to the bad. This is another scenario you may be familiar with. The guru of the day, you know, comes to town, promoting their free seminar, a seminar of which is going to transform your life. We actually just had one hit yesterday.

It came by. And they advertise on the radio in the newspaper. And they purchased lists of which they'll email to, so you might get on email also. And they start doing this several weeks before, several weeks before they actually arrive. And, I mean, and you just can't resist their message of riches and freedom. I mean, and the entire thing is free. Can you believe it? I mean, who can resist free, right?

So you call in or you go to a website to register for the event. You got to save your time because there's limited space, right? There's limited space. So you want to make sure that you get in. You block it off on your calendar and then when the day arrives, you get into your car, you drive down to the local hotel, and you give the person at the desk outside the room, that you give them your name and they give you the little freebie item that was promised on the promotion. and then you sit in the room with another 100 people or so,

oftentimes a lot more than that, but we'll say 100 people, and they're all waiting for this free, transformational, real estate investing seminar to begin. You're all excited to hear it straight from the guru's mouth, right? And then the speaker of the day comes out to begin the seminar, and you're like, what? Where's the guy that I came to see?

Ah, did you know in most cases? The seminar that you came to see isn't even the guru's seminar. It's not even the guru's company. It's a second company that licensed the name of the guru just for marketing purposes, just so you'd actually show up. How does that make you feel? Most people don't realize that. Anyway, you may be a little disappointed, but the person on the stage, they're typically good, right?

They're good looking, they're well-spoken, they're funny and entertaining, and, you know, that's why they're up there on stage, because they possess all of those qualities. They are trained professionals. And then soon you're all caught up into the seminar hanging on every word listening to these fascinating stories about real estate investing. You're watching the images of large checks flashed up on the screen, photographs of the speaker's home and the photographs of his vacation home and pictures of his boat and pictures from exotic places traveling the world with his family. And then it comes. So next weekend, we'll be putting on a three-day boot camp training for only $397. And if you want to be a real estate investor like me, there's nowhere you should be that weekend than at that boot camp.

So go see my associates at the back of the room and sign up. There's limited seating. You better hurry up and get back there. And if you move right now, I'm going to cut the price and half to $197. You better go. And like cattle. There's a stampede. They all stand up and they stampede to the back of the room.

And you've got all of these people plopping down there $197 for this three-day boot camp that can, turn any and everyone into a successful real estate investor in just three days. But you know what? It's not going to happen to you unless you're actually there. So you've got to get there. And I've been watching this exact scenario play out for years. There was one here yesterday. I didn't go yesterday, but my friend went yesterday. And he said, there, man, there was like 200, 300 people there. And it was actually a reality celebrity. Yeah, reality celebrity. I don't know if that even makes sense. But a reality show celebrity was actually representing the company and given this presentation and given her testimonial of how she was so.

successful and she did this and she did that. She really didn't give any information at all. And more than 50% of the room got up to the back and went and purchased this three-day program. I mean, I've been watching this exact scenario play out for years. I can't believe it still works. But, you know, it happened just yesterday. Anyway, it's just the $197, though, right? I mean, that's no big deal. What could it hurt? And that's a rather small price to pay to become a successful real estate investor. What do you got to lose? Well, if any of you listening to my voice right now, been to one of those three-day events, you know exactly what you've got to lose. And when you attend this three-day boot camp, you get some good information, you're getting

all excited, you're learning stuff, you're meeting people, and you're actually beginning to see how this could be your reality. And they deliver 90% of the information. And then comes the closing of the boot camp, and you hear something to the effect of, we've given you some great information, and we've got really high hopes for you. You can do this, but if you want that extra 10% of the information, if you're really really... serious about being a real estate investor, you'll need to come to our week-long training to get the last 10% that's going to bring it all together for you. That's what you need. And that's only $4,997. And again, you're so jazzed up after the three days. You stand up

and you rush to the back of the room, you plop down your credit card. I mean, you're serious about being a real estate investor, right? When you've come this far, you can't stop now, so you go for it. And then when you get to the week-long training on day seven, you hear it again. Now, if you're really serious about being a real estate investor, you need our coaching program or our mentorship program or our partner with the pro program. I mean, there's tons of names for it. But the real name should be the $20,000 upsell program because that's what it is. And it goes on and on and on.

I mean, I know two of the most popular programs out there, household names. They don't stop selling to you until you hit about $106,000 of real estate investing education and training and mentoring. And, you know, there's nothing really wrong with the information that they provide. I mean, I've known some people that have gone through this and they've been taught good stuff. But in both scenarios, the ugly one and this one, the bad one, the information is decent. And quite honestly, I mean, if you took action on what was taught, you'd definitely earn your money back. I mean, no doubt in my mind.

I mean, even if you bought the $100,000 program, I mean, I believe in education. And if a $100,000 program is going to enable you to make $200,000, that's a good trade. That's a good investment. And if you're thinking you're not going to make any money. any more than $100,000 in real estate, then real estate probably isn't the right thing for you anyway. But what makes these two types of real estate investing courses so ugly and bad is that the intent is not to teach you to be a successful real estate investor. It's to sell you the next training. And in many cases, they keep that carrot dangling, dangling right there in front of your nose to

keep you dependent on the system so that you have to keep paying the money for training and coaching and assistance. I mean, if you really want to be successful, you've got to go to the next level, that type of program is not going to increase your intellectual currency. So that's the ugly and the bad. So what's the good, right? What are the good choices out there? What makes good real estate investing education? What makes a good real estate investing course?

Well, first thing is first. You've got to make sure you're getting your real estate investing education from an actual real estate investor, not a salesman on stage. You got to get it from an actual real estate investor, one that's investing and succeeding in the current market that's succeeding today, not some guy that was successful 20 years ago and he boxed up all of his information that worked 20 years ago and is selling it to you today. Hey, it worked for me 20 years ago. It could work for you now. I mean, the market has completely changed. What worked 20 years ago? What worked just five years ago? I mean, if you

use that same strategy today, I mean, you'd lose your shirt. So getting your education from an actual real estate investor that's succeeding in the current market, in my opinion, I think that's key. That's really important. And if you can find a real estate investing course or system that provides that, or even a one-man company in the shape of a coach or a mentor, I mean, I think that type of education is priceless. There's nothing like getting real-world education from someone that lives in the real world and is succeeding in the real world. I mean, for that type of education, price really shouldn't be an object. I mean, I paid $22,000 for a two-year program. And in hindsight, I mean, I've got no regrets. I took a comprehensive program that taught me

just about every aspect there is in real estate investing. I mean, every acquisition strategy and the four main exit strategies, I mean, from REOs to short sales to auctions, to wholesaling, to multifamily, to fix and flip, to buy and hold, to lease options, to creative acquisitions, to legal and tax strategies. I mean, it was a great all-around comprehensive education that I wouldn't trade for anything. And I've been able to complete a successful transaction in just about every strategy that they taught, giving me a very well-rounded education. I haven't purchased anything at the auction.

yet, but just about everything else I've been able to do. And that has created some great intellectual currency for me. But on the other hand, I don't believe anyone needs to pay $22,000 to get started. I mean, it was a great education for me. But, you know, it bordered the line of overkill. I didn't need $22,000 of education to go out and do real estate. So the best education, the best education by far is just getting out there and doing it. I mean, if you've yet to complete that first transaction, you'll learn and remember more from that transaction than you ever will in a three-day boot camp.

And that's another thing. I mean, you can't learn this entire business in a three-day boot camp anyway, so don't get suckered by that. Real estate investing education, it's ongoing. It never stops. You'll never know it all. So don't wait for the day that you do know it all, because it's never going to get here. So here's my advice when it comes to real estate investing courses. seek them out, do your research, do research on the company delivering the education, do research on the person that heads the company,

try to speak with past clients of the program, and, you know, when you find something that feels right, go ahead and start making an investment into your education. Put some money down, you got to make that exchange, you need the information, and make some deposits into your intellectual currency. And it doesn't matter whether it's really a free book at the library or a $22,000 program like I did. But here's the key. Don't spend another dime on education after that until you've actually implemented the education that you originally purchased. That's where my saying,

move at the speed of instruction comes from. Because what you'll find, if you do indeed move at the speed of instruction, the less education you'll need to actually purchase. Because by moving at the speed of instruction, you travel as far as you can see, and when you get there, you see further. You'll be receiving the best education

available that way. The real world experience. I mean, there isn't a real estate investing course available that can teach you better than the real world experience. Having said that, just don't go out there blindly either. I mean, you can make some mistakes and they could be some very expensive mistakes. I mean, that school of hard knocks can carry a very hefty tuition fee also. I mean, get the basics, get a mentor if you can, and then start moving at the speed of instruction. Start taking action. I mean, and what I mean by that is moving at the speed of instruction. If the program you choose says to go and and knock on pre-foreclosure's doors, go do it and keep doing it. Don't try a few and say it doesn't work.

And if the program you choose says to send out postcards, do it and keep doing it. Don't do it for a couple days and say it doesn't work. And if the program you choose says to visit two for sale by owners a day and write an offer at each visit, do it and keep doing it. Don't do it for a couple days and say, oh, this is tiring or this is boring or this is hard work or this doesn't work. Just move at the speed of instruction. Keep doing it. Every strategy out there works the same way. There's a learning curve. It takes time to build up. It takes time for you to create momentum. It takes time for you to learn. And the only way that you do that is by moving at the

speed of instruction and keep moving by doing it and keep doing it. You're going to travel as far as you can see. And when you get there, then you'll see further. That's how it works. That's how progress is made. I mean, there are countless ways to approach real estate investing. And they all work. I mean, some may work better than others depending on your market and depending on your personal skills and your strength and your experience, but they all work. They will all work as long as you do. So learn, then do, learn some more, then do some more,

learn some more, then do some more. Don't get trapped into that learn, learn, learn some more, learn some more, learn some more, learn even more, and never actually end up doing. You know, contrary to popular belief, knowledge is not power. It is potential power. Applied knowledge is power. And the more knowledge you apply, the more intellectual currency you'll acquire. And the more intellectual currency that you acquire,

the less hard currency you'll need to transact real estate. That's all I got for you today. So until next time, as a very wise person once said, the great aim of education is not knowledge. But action. To your success, I'm Matt Terrio, living the dream. Thank you for spending this time with Matt Terrio and the epic real estate investing podcast. When you have a moment, stop by iTunes to leave your comments and let us know what you think of the show. And if you haven't done so already, get started investing today by

visiting free real estate investing course.com to access Matt's free course, how to do deals, no money required. Until next time. To your success. To your success. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.