[2007 Thread] Any Real Estate investors out there?

[BocaBum99]

Now that the housing bubble has burst, I believe that there will be tons of opportunities in all forms of real estate including Condo hotels and other types of property. My personal interest is in Vacation properties and all forms of how they are offered.

So, I wanted to find out what these get rich quick schemes were all about in Real Estate, so I signed up for a course. I guess I figured it was all a scam based on half truths, but if you learn what was true vs. not, you could get some useful info.

I have a penchant for Robert Kiyosaki and his Rich Dad/Poor Dad concepts, so when I saw one of his free seminars, I couldn't resist attending it. I actually met him. He is quite a bit different in person than on TV. That's for another discussion.

The first seminar was a 2 hour presentation just to get you to sign up for a $495 3-day course. This guy was as good or better than any timeshare salesman I ever saw. I knew exactly what he was doing, but I signed up anyway because I did want to learn more. To me the $500 was just throwaway. I think they got about 50% of the audience to sign up hoping ot get rich some day.

I am now in the 3rd day of the paid course. I feel what I am getting is a good solid overview of the various categories of Real Estate investing and how broad and deep it actually is and some good ideas for getting creative financing and finding motivated sellers. There are actually dozens of ways to make money in Real Estate. I had no idea. Of course, this 3-day course is laid out to show you why you want to get get rich, the financials behind getting rich, the various areas you need education in and a hard sell on signing up for the full monte of Real Estate education through them.

We just got the pricing last night and it makes timeshares look like chump change in comparison.

All of the courses are 3-days in length. There are about 15-18 courses in everything from:

- Wholesale Buying
- Foreclosure Training
- Short sales and mortgages
- Lease Option
- Property Management and Cash Flow
- Keys to Creative Real Estate Financing
- Real Estate Sales and Negotiating Techniques
- Asset Protection and Tax relief
- Discount Notes and Mortgages
- Manufactured / Mobile Homes and RV Parks
- Rehabbing for Profit
- Tax Liens and Deeds
- Commercial Real Estate investing
- Mentor Filed training
- Land Investment and Development - domestic
- Land investment and Development - International

They wrap a really nice context around how to create a portfolio of real estate investments to help you achieve total financial independence. This I agreed with. It would take a long time to master all of these types of investment.

We played the Cash Flow game, which is Robert Kiyosaki's $200 board game that is basically an updated version of the Game of Life with real world people (Police Officer, Engineer, Janitor, Doctor, Nurse, etc). With income statements and balance sheets. The goal of the game is 2 fold. First to get out of the "rat race" by investing in business and financial assets that produce enough passive income to cover all of your expenses. Then, you get to phase 2 where you are building assets to attain your dreams. The winner achieves $50k per month in passive income. Very interesting game. Not sure it is worth $200. It opened my mind that the only way to get out of the rat race is to invest and use other people's money. And, anyone can do it, if they know what they are doing.

The prices. Wow. 1 foundation course any any of the above listed courses for about $9000. By the way, they use the same first day incentive approach where they discount the full price heavily to get you to sign up today.

The one year plan is $24000. That gets you 4 courses and a 3-day mentor who comes out to your house and tries to help you get your first deal. $34000 to get 8 courses which is your 2 year plan to achieve financial independence. If the mentor portion is $9000, then you are basically paying $1250 per day for a course. That is very high for education.

I must admit, I was extremely intrigued by the initial paid course. They use the same sales tactics that timeshare sales people use. They use lots of emotion and tearful situations of people turning their lives around.

After seeing some of the very creative deals that they reviewed. I believe that their system probably works. They give you software, toll free hotline support on deals, mentoring and all the forms and stuff you need. But, I do believe at the end of the day, the person either has "it" or they don't. You either know how to construct and negotiate a creative finance deal at below market costs without competition or you don't. Probably only a small percentage of people have what it takes. But, that is just my guess.

We googled "Rich Dad Education Scam" last night and found lots of negative posts and not a single positive one. I believe that's because out of every 100 people who sign up, maybe 5 actually have the talent and drive to pull it off. So, that leaves a 95% failure rate (or something very high). They claim to be seeing 25000 students per month. My guess is that counts free seminars.

In any event, it was very intriguing. I am not going to sign up although I am going to investigate the various options and alternatives that these ideas opens up for me. The instructor said that 50-75% of people attending the seminar signed up. He called for a show of hands. About 10-15 people wanted to sign up last night. About 25-30 said they would sign up first thing this morning. Oh, by the way, they do not provide financing. So, you put it on a credit card or write a check. That is commitment. At least a timeshare developer will finance you. Most of the rest said that they wanted to sign up, but couldn't figure out how to pay. It was about 50-75%, just like he said. But, as I spoke to people who said they were signing up, there was tremendous buyer's remorse. I would be surprised if 25% actually signed up out of 120 attendees. My guess is 10-15 will actually sign up. Maybe one of them will be a successful real estate investor.

A lot of students are complaining that they didn't get anything out of the course. I think they expect to be spoonfed the how-to's of getting rich in real estate. I don't think that is what you are buying, even at the full price of $60k for all courses. I think what you are buying is concepts, ideas, pre-made forms that helps you get there faster. But, at the end of the day it's all you can create out of the knowledge they try to give you.

I must admit. I really would like to go through the course. It just seems so interesting. But, the risk of scam is just so high, that it's not worth it to sign up on the spot. I could probably network into an investment club and pay someone a $25k retainer to hand hold me through the process with better results. I have a bunch of cards of people who said they are signing up. I think I'll keep in touch with them to see how they make out to see if my theories hold true.

Are any of you out there Real Estate Investors who can comment on what I've said? These are just my impressions. I could be wrong about it, but I think I'm close.

 

[Steamboat Bill]

I would estimate that $50,000 per month in "passive income" would require a "net worth" of about $12,000,000 in assetts....this is MUCH harder to achieve than winning at a $200 board game.

 

[Kagehitokiri]

i definitely plan to do major RE investing down the road. maybe just things like REITs next, but im more interested in high end developments. the higher end you go, the less you feel the market, and with some things the margins are higher as well.

i am NOT interested in doing any management. just providing capital. partnering and whatnot drops profit margin considerably, but id rather have a lot less work, and simply allow people who know what theyre doing to do it. i also cant imagine having the kind of cash some people have to drop on something. like a guy on FT who was talking about a $100MM personal project, or like the billionaires who start DCs. dont know what their funding was like, but ciel for example launched with a portfolio worth $60MM. YCW was probably similar/more. blixseth's buying/selling is a great example of how you can make huge margins by buying big cheaply and then selling very high end.

i have some ideas for one mixed use RE development for example, and have a handful of friends who might be interested in different aspects of it. like one being more interested in fixed income like apartments/fractionals, and another being more interested in bars/clubs/lounges. add 1 or 2 hotel partners, sell a block of units to a DC, and it seems very doable.

other things i find intriguing are
- luxury boutiques
- clubs / bars / lounges
- phone cards / disposable phones
- music / film production

 

[Steamboat Bill]

The one year plan is $24000. That gets you 4 courses and a 3-day mentor who comes out to your house and tries to help you get your first deal. $34000 to get 8 courses which is your 2 year plan to achieve financial independence. If the mentor portion is $9000, then you are basically paying $1250 per day for a course. That is very high for education.

Does this mean that the mentor is making $3,000 per day?

 

[Kagehitokiri]

im sure their cut isnt very large.

 

[vivalour]

Surprising they don't cover market risk, because that's a very big factor in real estate investing, esp. when you get into big bucks and other people's money. If I were you, I would go with your idea or some modification -- lots of books around and people's brains you could pick for a much lower fee. I have been there in a relatively small way, and frankly don't find it the most interesting way to make $$$.

 

[LTTravel]

This reminds me of the saying:

Those who can; do

Those who can't: teach

Those who can't teach: teach you how to make millions in real estate

And if you believe these guys, I can sell you a cream that will grow a full head of hair on a bald guy and a pill that will make your "you know what" that you won't care that you lost all your money in real estate.

If I had a secret way of making tons of money in real estate, I would be doing it rather than teaching the secrets, unless there is more money in teaching than actually doing it, which is obviously the case here.

 

[Kagehitokiri]

and those who cant teach - critique

 

[NeilGoBlue]

Hard Money Lending...

Boca,

My entire networth is in the real estate business. I have a Hard Money Lending business that lends money to people that you mention in your post..

Rehabbers, Tax lien buyers, shortsalers, etc.

I have over 1600 clients who've done everything under the sun.

If you want to talk, just let me know.

 

[luvgoldns]

A friend of mine recently told me about www.REIforNewbies.com where the first report and bonuses is only $50.00...lots of basic "newbie" stuff but still very useable for those willing to take action...

 

[hipslo]

In my legal practice I represent many very, very successful real estate developers and investors. At the end of the day, frankly, its not really all that complicated. What it takes, though, is a good eye, guts, determination, and appetite for (reasonable - and sometimes unreasonable, but always measured) risk, a good measure of fortuitous timing ad luck and, probably above all else, that "it" factor that Boca refers to. I would venture to guess that none of them have ever taken a "how to make money in real estate" course, and in fact, it seems that formal education level is often inversely proportional to success. These are people who, by and large, would be successful in most any business venture who just happen to have gotten into real estate. This is not to say that these courses dont offer valuable information, but most likely not much that isnt in one of the myriad books out there on the nuts and bolts of investing in real estate.

 

[Lawlar]

RE get rich quick courses

I did a lot of bankruptcy and business law work (lawyer, retired) in the 90s. Many of my debtor-clients were good people who took these RE courses and ended up losing everything (one guy bought 12 homes using 36 credit cards for the downpayments - one of the hot ideas of the time - the whole house of cards came crashing down.) If you want good advice on how to invest in RE, go to your library or Amazon.com, or take a course at your local community college. There are some really good books that will give you all you need to know, at a reasonable cost. Most of my business clients who made money in RE did so over a long period of time and with a good deal of work and smarts. They difinitely did not take these types of get rich courses. Be careful.

 

[PerryM]

What real estate bubble?

Before we follow the talking heads on TV over the cliff, we might want to actually check into the “Real estate Bubble Bursting” of real estate. Use www.Zillow.com and check the facts yourself.

On Friday the Stock Market (DJIA) closed near all time highs (During the day it made all time highs of 14,169) – I remember just a few days ago the talking heads were all worried about a 10% correction and that the United States was doomed. The talking heads are always wrong.

Use Zillow and the US has corrected 5% from the highs of just 12 months ago. This is the horrible bubble bursting? I don’t think so.

Our house in Ballwin, MO is at all time highs this very second. Missouri is at all time highs.

Hell, go inland from the ocean at Miami and you will see homes off 2% from the highs in May of this year! Miami-Dade counties are off 5% from the highs in June. Florida is off 8% from the highs 12 months ago. This is a correction that saw homes increasing 100% in the previous 3 years.


Somebody show me a real estate bursting on Zillow!


Good grief we are talking about a 100% increase, doubling of real estate, an then a 5% or so correction. Hello!!!!!!!!!!!!!!!

Do the opposite of what the talking heads say and you will do just fine; listen to those clowns and you will rue the day you did.

P.S.
Look at the US market. 5 years ago the average US home was $154k then went to a high of $270k and is now $265k. (Unclick all the boxes and click US; then select 5 years)

Click FL, the Miami-Dade, then search around the county and try to find this bubble bursting event.


There is NO real estate bubble to burst!

At least I can't find one. I guess there is a home or an area that has been devastated but that could easily be do to something in the neighbourhood.

P.P.S.
I put the real estate bubble bursting hoax in the same camp as man-made induced global warming. Someone is pushing false ideas that benefit a few folks - namely folks selling real estate courses in this case.

 

[johnmfaeth]

If you check with you local colleges and adult education programs, you will find that you can take the state exam prep real estate salesperson and broker's classes. They cover tons of material and pretty much every topis on your list.

I took mine in 1981. At the local community college they were under $100 each with fees.

Plenty of books have also been published on the topic. Definitely not worth pending many thousands to get this info elsewhere IMHO.

 

[Steamboat Bill]

Here is an interesting article debunking many of Kiyosaki's advice

http://www.johntreed.com/Kiyosaki.html

 

[LTTravel]

.

Miami-Dade counties are off 5% from the highs in June. Florida is off 8% from the highs 12 months ago. .

I don't have all the facts but the Miami and north oceanfront is overbuilt and a buyers market. Prices are well off their highs, and certainly more than 8%. One for example; I have looked at the Bath Club because ER has several units there and I was curious at what their value is. They currently have a 4BR unit that they are asking $2.6 million and a 2Br they are asking $890,000 for(would be good for HCC). They have both been on the market for some time. These are down about 30% or more from their highs and not moving. There are 36 units for sale. There are other 4 BR that they are asking over $3.5 million for but they are not going to move at all. I am not an expert on real estate in this area, this is just one that I was looking at to see what was going on and clearly, the prices are down. A friend of mine bought a condo at Canyon Ranch Living and the current value of the unit he bought has dropped more than the down payment he has placed so now he has to decide whether to dump the property and his down payment or buy it. Homes where I live have dropped at least 10% and now take five times longer to sell. So I think there is at least a bubble that is leaking.

 

[Tedpilot]

Bocobum - I invest a significant portion of my porfolio in real estate which I have actively been involved in over the past 7-8 years. It started with one residential rental that grew to six, sold them all off, did some flips along the way, bought another rental property and some raw land that I was able to fully develop into residential lots. I didn't start with a lot - enough for 20% down on the first property, but the net worth has grown much faster than I could have ever imagined. The posters here have all provided sage advice in one form or another. I agree that there is really not a "bubble" going on now. Market corrections in some locations sure, but that is always happening somewhere, not always in your hometown.

If you are apt to get in the game I have a few simple suggestions. However, keep in mind that there is always someone out there that was able to bypass the basics by luck, by-golly, or exceptional risk.

1. Start small and work your way up. I'd recommend a house as a rental near a military base. One of my friends has used this concept well, he is up to 12 rentals valued at $2.4mil and debt of $1.8mil...not bad considering he did it only making $60k/year at his day job. It has taken him about 5 years to build this up.
2. Keep it simple. If you do not understand what you are paying, what income you are getting, what you'll make on teh sale, the exit strategy, or the tax ramifications figure it out before you sign the contract.
3. Visit the library and read a few books, you'll retain more than listening to someone else tell you how they did it. If you don't understand something you read, ask your mentor/realtor.
4. Yes, OPM is extremely important (NeilGoBlue are you reading this?), but it still takes capital to make it work "correctly". That is, unless you are fortunate enough to step into rare and extraneous circumstances which are the backbone of ever real estate get rich quick scheme including Kiyosaki (yes, I have read each of his books, motivational yes, but business 101 taught me most of the principles he teaches). You will need a great relationship with a real bank and/or loan broker. If you can't pick up the phone and speak with them directly then find someone you can.
5. Get a mentor, likely your realtor of choice but only if they too invest in property otherwise they may not understand the real mechanics of it. Pay for the professional services when warranted...they will save you thousands and make your life much easier. BTW, use a full-time full-service realtor/broker, not Mommy making a few bucks on the side a few hours a day between shuffling Johnny to and from soccer practice.
6. Protect yourself and you family. I personally guarantee my loans but quick deed the property and transfer all liability to my LLC. Each property is individually insured plus I have umbrella insurance wrapped around the whole package.
7. MOST IMPORTANT: Learn your investment market!! Read the paper, watch the adds, scroll through zillow, walk open houses, and so forth. This will tell you a ton about what is going or not going on aound your investment.
8. Have fun...if you don't enjoy real estate investing find some venue that you do.

 

[PerryM]

I don't have all the facts but the Miami and north oceanfront is overbuilt and a buyers market. Prices are well off their highs, and certainly more than 8%. One for example; I have looked at the Bath Club because ER has several units there and I was curious at what their value is. They currently have a 4BR unit that they are asking $2.6 million and a 2Br they are asking $890,000 for(would be good for HCC). They have both been on the market for some time. These are down about 30% or more from their highs and not moving. There are 36 units for sale. There are other 4 BR that they are asking over $3.5 million for but they are not going to move at all. I am not an expert on real estate in this area, this is just one that I was looking at to see what was going on and clearly, the prices are down. A friend of mine bought a condo at Canyon Ranch Living and the current value of the unit he bought has dropped more than the down payment he has placed so now he has to decide whether to dump the property and his down payment or buy it. Homes where I live have dropped at least 10% and now take five times longer to sell. So I think there is at least a bubble that is leaking.

Well, just use Zillow and check nearby units that have a 5+ year track record. Zillow does not cover every piece of real estate in the US - about 70 M of them.

I have yet to see anything but a smear campaign by the drive-by media against the US - they seem to hate us. They are so hell bent on doom and gloom and the vast majority of folks seem to want this negative news that much of what the average US citizen believes is totally false. That goes from getting more miles per gallon in a car (which has resulted in 40,000 additional deaths due to flimsy cars) to the "oil shortage" to global warming. Throw in the DDT scare that has resulted in millions of needles deaths due to mosquitos in the 3rd world.

It's all a bunch of crap - same with the real estate bubble. Things can't go up forever and just a rest of the market has the talking heads going ballistic in convincing us that we are all doomed.

 

[BocaBum99]

Boca,

My entire networth is in the real estate business. I have a Hard Money Lending business that lends money to people that you mention in your post..

Rehabbers, Tax lien buyers, shortsalers, etc.

I have over 1600 clients who've done everything under the sun.

If you want to talk, just let me know.

I love the business of Hard Money Lending based on what I've learned. I'll definitely be contacting you soon.

That's what I would really like to be. What a great deal making and high profit business.

 

[BocaBum99]

There was a post seminar meeting with all students who signed up for the course. I didn't do a head count, but it looked like about 40% of the students signed up which is a total of about 40-50. That is an incredible conversion rate. This can work anywhere!

In talking to individuals, most people wanted the first level program that gave them a mentor. That was $24k. If they had 40 students at $24k, that would be about $1M in revenue. The original seminar had 120 students at $500 each. That was $60k.
This is a gold mine selling real estate education to people who have a dream of achieving financial independence.

The original company offering these education services is known as Wealth Intelligence Academy. A company nobody really knew anything about. They did a really smart thing by doing a deal with Robert Kiyosaki to put the Rich Dad Brand on this suite of Real Estate courses. There is a level of Trust that the Rich Dad brand has given the popularity of the book.

Where can I buy the stock? I think it is a pink sheet stock under investigation by the SEC. Surprise, surprise.

 

[Tedpilot]

"I absolutely believe now that it is possible to buy lots of property for no money down and without using your own credit. It's all about finding motivated sellers, creating various financing scenarios to make the deal work for all parties, negotiating the deals and pulling money out of the them. You simply have to know what you are doing. And, if you do it right, you can do it in lots of diffferent types of markets."

I'd like to hear about the first deal that you are able to put together under these circumstances.

 

[Dave M]

5 years ago the average US home was $154k then went to a high of $270k and is now $265k.

Although Zillow has a great product, I don't think Zillow's average market value numbers are accurate. According to U.S. census info, the average selling price of homes in the U.S. was $246,300 in 2003, not $154,000. And that increased by 24% to $305,900 in 2006, not by 75% (!) to $270,000 in 2006.

Those average prices per the U.S. are impacted to a significant degree by the mega-priced homes. Median prices get closer to your numbers, but still show only a 26% rise during that period.

Although average market value doesn't necessarily equate to average selling price, the factual Census data are probably more accurate than Zillow's estimates.

 

[vineyarder]

Although Zillow has a great product, I don't think Zillow's average market value numbers are accurate. According to U.S. census info, the average selling price of homes in the U.S. was $246,300 in 2003, not $154,000. And that increased by 24% to $305,900 in 2006, not by 75% (!) to $270,000 in 2006.

Although average market value doesn't necessarily equate to average selling price, the factual Census data are probably more accurate than Zillow's estimates.

I agree that Zillow can be quite inaccurate; I checked 5 homes that I currently or recently owned, and Zillow only had the correct info on 1 of them; the other 4 had significant errors in square footage, number of bedrooms, number of bathrooms, etc., which obviously throws the 'zestimate' way off...

 

[BocaBum99]

"I absolutely believe now that it is possible to buy lots of property for no money down and without using your own credit. It's all about finding motivated sellers, creating various financing scenarios to make the deal work for all parties, negotiating the deals and pulling money out of the them. You simply have to know what you are doing. And, if you do it right, you can do it in lots of diffferent types of markets."

I'd like to hear about the first deal that you are able to put together under these circumstances.

I just came up with an approach where this is possible without any real estate investing knowledge. All I need is a couple of partners. If it works, I'll let you know. It may not work. I am not in it for a single deal or two. That would be too much work for too little money.

Here is one thing I feel pretty confident about now. If you use your own money and credit for all of your deals, you will never get rich (lottery wins notwithstanding), even if you make $300,000 per year somewhere. That's because you run out of money before you have enough deals to get you enough passive income so you don't need to work anymore.

 

[PerryM]

All I know is that our two homes are within a few bucks of what I know they are worth.

I can only use the tools which are available and that I have some confidence in. How accurate is Zillow? I can't even guess. Let's say it's 80% accurate - good enough for my estimates.

If there is something more accurate, I'm all ears.