Thin Line Between Education & Snake Oil

After teaching seminars for over 30 years, I know a good bit about teaching newbie investors.

Leafing through my local newspaper, an interesting little article caught my eye. It said there were a lot fewer “Mom and Pop” type investors today than there were ten years ago! It also stated that younger people don’t seem to be quite as interested in real estate investing as they once were. The article wasn’t very big and was easy to overlook near the bottom on Page 6. Most people would have likely skipped right past it thumbin’ their way to the sports page. But here’s the deal! I’m not most people – I’m a dyed-in-the-wool gung-ho real estate investor.

Right off the bat, the article got me to thinkin’. I know for a fact there’s a lot more people on the planet today than there was 10 years ago. 

And from what I can tell, there’s a lot more investment seminars and self-appointed real estate gurus than ever before. The internet is jamb-packed with folks who are just itchin’ to teach others how to make millions! Podcasts and Webinars are the current rage and as a casual observer, it seems to me like there might be more teachers than students. On top of that, there’s a variety of TV shows about flippin’, knockin’ down walls and fixin’ dumpy houses, which often turns the host into a traveling celebrity, attracting countless starry-eyed wanta-bees to $30,000 seminars. I would certainly agree with one thing, if there’s fewer investors today, it’s not because there’s a shortage of information! The question I would ask..."Is the education right for creating new investors?"

It’s been my experience, the longer it takes for start-out investors to graduate from being a student to property owner, the less likely it will happen.

Nothing keeps the fire burning like becoming a brand new owner. Naturally, education must always be on-going, but ownership changes everything. It puts you in the owner’s circle. You now have a stake in the game. The sudden burst of confidence in yourself will completely wash away any doubts you may have had. This is why the right education is so important in the beginning. Becoming a property owner quickly, more than anything else, is a giant step toward success.

After teaching seminars for over 30 years, I know a good bit about teaching new investors. As part of my Fixer Camp training, students were taken on field trips to visit my houses. I wanted students to see the kind of properties I was teaching them to acquire. They also had a chance to chat with my handyman workers and observe the actual rehab work being done. I’ve always felt that students learn a lot more and remember their lessons longer when they can see for themselves what they’re being taught in the classroom. Many of my most successful students still claim those early field trips to see my properties were their most valuable lessons. It gave them the knowledge they needed to start quickly once they were back home.

I can still remember my early days starting out. I was gung-ho and ready to hit the bricks running, but I wasn’t sure in which direction. I had read oodles of real estate books about investing in houses, apartments, mobile homes and everything in between. Most books tended to rehash the same information! Like many starry-eyed beginners, I spent countless hours looking at every kind of real estate on the planet. I was motivated, but had very little knowledge and even less money. 

My early teacher understood this. Mr. Nickerson advised me to concentrate my efforts on properties I might be able to afford. This eliminated nearly everything I was looking at or had read about. Buying your first property will keep your dream alive, Nickerson told me. Ownership is the key to commitment and a positive start. Bill was absolutely right; his teaching, which strongly encouraged me to find a property and buy it, would start me down the path to the Promised Land.

About the only teachers around when I first started were a few successful investors and licensed real estate agents. Today, in contrast, it seems like there’s more teachers than properties. 

It’s my guess that some of the more aggressive types skipped over the investing part and simply declared themselves real estate trainers. Some are quite convincing presenters using copy-cat methods they’ve learned from others. It may be possible to learn a few basics from this imitation group, but the inherent problem for newbies is something akin to being lead into combat by a soldier who’s only experience is scrubbing pans in the mess hall!

Many newbies ask me; "How can I tell the difference between a real teacher and a smooth-talkin’ imposter".  If I were to seek training from someone I didn’t know or never heard of before – I would call them on the phone and ask if I could pay for a short get acquainted visit. That’s exactly what I did with my early mentor, Mr. Nickerson. 

A real teacher who is also a successful investor, will be delighted and usually quite proud to show off his properties. I paid Nickerson for a 4 hour visit, but he kept me there for 9 ½ hours telling me things I needed to know.

A real investor will have some sort of office (likely his home) to conduct his real estate business. He should be able to show you files, closed escrows and Grant Deeds for properties he owns. He or she should also have rental collection records and be happy to show you! Finally, you should always ask for a field trip to see several properties he owns. Nickerson was almost as excited as I was when we stopped to see several duplexes and his small apartment building in Oakland, California. Another thing I observed about Nickerson, which says something about his character and landlording skills, his tenants all seemed to like him. It took us several goodbyes to finally get away.

Obviously, no skilled real estate trainer works for free, but gouging and continually up-selling are not what real teachers are about. Successful students are.  

I’ve had the privilege of working alongside two of the best single family house investors/teachers in the country. They both reside in Florida and both have taught thousands of students during the past 40 years. Quite a number of millionaires owe their success to these highly skilled trainers. Neither has ever charged more than $900 for their excellent 3 day seminars.

As I said in the beginning, the newspaper article got me to thinkin’! Investing continues to be a very lucrative business.  It was that way when I started more than 50 years ago and very little has changed! In my opinion, it still offers the best opportunity for ordinary working folks to make a lot of money without having much to start with. Regardless of background or formal education, everyone starts out equal. Discipline, determination and of course, the right investor training is still all it takes. To my way of thinking, there should be a lot more Mom & Pop start-ups today – certainly not fewer!

One possible explanation may lie with how real estate education is marketed to the public today....

The education business has become a very profitable industry. In many cases, the number one priority is sales rather than successful students! Several years ago, hundreds of eager students paid $30,000 and more to attend what was then called the “Trump University”, sponsored by the ex-president and his associates. According to many disgruntled students, the instructors taught what anyone could have learned in a $24 real estate book. The students sued the university and a federal judge, who called the course “Flim-Flam” (translated BS), ordered full 100% refunds.

With so much information available, what’s a poor newbie to do?  

Confusion stops many wanta-bees from doing anything. My recommendation is to concentrate on first things first! Educate yourself enough to become an owner. This involves selection (type of property), location and negotiating the purchase. As an owner, you’ll now benefit from what we call “on-the-job training”.  Instead of being a patient, you’ve now become the doctor. You may think you’re not quite ready just yet, but believe me; your mind will expand to accommodate your new purchase. On-the-job training provides educational experiences far beyond those found in the classroom!