The free seminars can be very exciting in themselves – you hear about all the different possibilities of real estate investing – little tidbits of information, just enough to get you thinking. I told you about the first one Steve & I attended in How It All Began – Part 1. We didn’t buy their program, instead we took the money we would have spent on it and put a down payment on our first apartment building. How’s that for inspiration? They also recommended two books that changed my life, Napoleon Hill’s Think And Grow Rich and Robert Kiyosaki’s Rich Dad Poor Dad. These books repositioned my mindset. There is a certain mindset you have to have to be a real estate investor or any kind of entrepreneur, and it goes against everything you’ve likely been taught all your life about money and debt and risk. Especially if you were brought up poor, like me. Although I think it’s easier to be an entrepreneur if you’re poor – you have sort of been there/done that attitude toward living on a shoestring that the comfortable middle class doesn’t often have the stomach for.
The other great thing about the seminars is you meet a lot of like-minded people. Other investors. Some are beginners who listen in awe to your war stories and want to be just like you – that’s a trip! Some are at your current level, brothers- and sisters-in-arms. We’ve formed some great business partnerships this way. And the greatest thing is when you meet an investor who is ten steps above you in the game and is also willing to talk to you, hang out, share tips, and introduce you to friends. That's how you get to the next level.
Keep in mind, you can meet all these people at the free seminars. You don’t have to spend a dime! But what if you want to? What if the mentor program sounds good to you?
Most programs have another, paid seminar, costing anywhere from $200 to $1000 for two people – this isn’t the big mentoring package, that comes later. The paid seminars are usually 3 days long and held at another local hotel or conference center, you sign up for it at the free one. Steve and I have been to two of these together.
The first one was in the fall of 2012, a few months after my lay off. The program was Fortune Builders anchored by Than Merrill, who played for the NFL in Tampa Bay and Chicago before a knee injury ended his career. Then he took that NFL money and became a real estate investor, smart boy. And now he’s a guru.
A variety of real estate investing topics were covered. Rentals were discussed, but they were not the focus. Wholesaling properties was a big topic – you see those “We Buy Houses” signs everywhere? Those are wholesalers, who will negotiate a low price with a motivated seller who just wants out and will help to get them out quickly. The wholesaler has a list of buyers – real estate investors who have better things to do than to drive around looking at houses and hearing the personal life story of each seller. The wholesaler’s job is to match the motivated seller with the lazy buyer, for a nominal fee. It’s legal and no, you don’t need a real estate license to do it. Not even in PA!
Flipping houses was touched upon. That’s when you actually buy a house that needs work, fix it up and resell it for a profit. Rent-to-own was discussed, when you buy a house, fix it up and rent it to someone who can’t buy it yet but can probably get financed in a year or so when they fix their credit. Sandwich leasing – when you rent-to-own the home from a seller, then turn around and lease it to a tenant who’s rent payment covers your payment to the seller and then some. All very interesting possibilities! Then came the sales pitch…
For a mere $25,000, you could buy the Fortune Builders Mastery Program. I chuckled. Especially when they handed out applications with the announcement they would only be accepting a few students! On the application were blanks asking very personal financial information, such as what my limits were on my credit cards and how much I had in my 401 (k). And we were told all the blanks needed to be filled in to be considered for the program. Well that was that, then! The other thing that turned me off was the brochure they handed out for the program had pictures of beautiful sunsets and people windsurfing and rock climbing and playing on the beach with their kids. They were obviously selling the dream of financial freedom to the overworked, underpaid masses. I felt like I was at a time share sales tour! Please. Show me pictures of a remodeled kitchen in a flip, or a rental portfolio of 400 cash flowing units!
In defense of Fortune Builders I know a few people who went through the program and have had success. They apparently have a good system in place for getting people started making money as investors.
Stuck in a real estate investing rut. By spring of 2013, it became apparent that we had to do something. We had 25 rentals, but that’s not enough to replace a salary, let alone two salaries. Steve had quit corporate America to do real estate investing full-time. I was laid off and living off my dwindling unemployment compensation, and paying for health insurance out-of-pocket, pre-Obamacare. And it wasn’t like I was sitting home playing X-Box – I was helping Steve manage the rentals. It was a full-time job for him, as he did maintenance as well. And a pretty sizeable part-time job for me, dealing with tenants, paperwork and taxes. The rest of my time was spent raising Savannah and applying for radio jobs, because as a condition of receiving that unemployment check I had to apply for 3 jobs every week. And since I don’t suck, I got called back. A lot. Problem is, all the gigs wanted to pay me next to nothing to move my family to tanother city, so it was a pointless, frustrating process. 2013 was the Spring of my Frustration.
We couldn’t even use the equity in our rentals to buy more rentals and increase the cash flow! Honesdale Bank told us after we bought our 4th property that they were done lending to us – four was their limit for mortgages on rental properties. So we moved most of our accounts over to Luzerne Bank, as they had more of a stomach for rentals. But the financial crisis and their sale to a larger company put a damper on their lending as well. We were stuck in what I called “the suck zone” – our rental company was big enough to be a lot of work, but too small to really pay us for doing the work, let alone hire someone else to do it so we could find ways to make more money!
I got a job off Craig’s List taking pictures of foreclosures for banks and damage for insurance companies. It was interesting – there were an aweful lot of big, beautiful, foreclosed McMansions in the Poconos that spring. Hmmm…
Then I got an invitation to Scott & Amie Yancey’s seminar.
Scott Yancey, Scott McGillivray, and Dean Graziosi
I loved watching Scott & Amie on Flipping Vegas. They were a lot like I imagined Steve & I would be one day – him making the big deals and acquiring the properties, me using my design talents to really make them pop - the two of us fighting over how much my design ideas cost and me being always right. Yeah, that sounds like us. So I signed us right up for his company’s free seminar at the Woodlands in April 2013.
As I explained, we were in a real estate investing rut, we needed a shot in the arm. I was inspired by the seminar, being around other investors, the energy, talking about foreclosures and tax liens. I signed us up for their paid 3-day seminar at what was then the Clarion Hotel in Scranton.
This seminar had a lot of good information. More so than Fortune Builders. It covered a lot of the same ground on wholesaling and flipping, but went into much more detail on the flipping. Here’s a free tidbit for you: 70% After Repair Value. Say a 3 bedroom, 2 bathroom house in perfect move-in condition sells for $100,000 (in NEPA, it often does!) You find such a house that needs about $30,000 in work to bring it to move-in condition. You would want to pay no more than $40,000 for that house, so you can list it for $90k instead of $100k, sell it faster, and pocket a quick $20k. Try to get the house for less than $40k if you can. I was writing notes furiously – there was a LOT of information packed into those 3 days! And then came the sales pitch.
Dean Graziosi, Scott Yancey & Scott McGillivray wanted $45,000 for their top tier mastery program! It included one-on-one, on site mentoring, lifetime admission to their wholesaling “Boot Camps” held in cities nationwide, and admission to their Buying Summits (big networking, seminars & property trading event) in Las Vegas, with them picking up the air & hotel for the first one. I went up to one of the presenters. “You know, Steve & I would love to buy into your program. We’re already investors – we started a rental real estate company locally, and we’ve even flipped a house – the one we live in! We need something to take us to the next level, and your program might be it. We have plenty of money – but the problem is, it’s all tied up in our rentals! Our local banks won’t lend us another dime on them, so we’re sitting on all this equity. We have four buildings right now, free and clear. If you can find a way to finance these buildings for us so we can take the cash out, we’ll buy your program! It’s the only way.” I filled out their application. In the blanks where they asked for the amount of money I had in my 401(k) and other investment accounts, I wrote “plenty” – under income I wrote “more than sufficient” and under credit card limits I wrote “quite high.” I figured that’s the last I’d hear from them.
Wouldn’t you know it – they refinanced our properties. And we bought their program. In August of 2013, we got on a plane to Las Vegas to “turn our luck around.”
So… was it worth it? You’ll get that question answered in next week’s blog post, How It All Began, Part 6.