Gurus want your money

Among those making money on real estate are the gurus selling (expensive) words of wisdom.
October 4, 2004: 10:34 AM EDT
By Sarah Max, CNN/Money senior writer

SALEM, Ore. (CNN/Money) – Didn't make the cut for the second season of "The Apprentice?" Rejected from Richard "The Rebel Billionaire" Branson's "Quest for the Best?"

Don't give up trying to give up your day job just yet.

There are more than 100 real estate gurus who want to share their millionaire secrets with you -- for a fee, of course. The business of selling real estate advice via books, CDs, online mentoring and seminars is booming.

"Rich Dad Poor Dad," by Robert Kiyosaki, has been on the New York Times bestseller list for four years running. His $195 board game CashFlow 101 is being played around the world.

While the book and game don't give specific real estate advice, "The ABC's of Real Estate Investing" by Rich Dad-endorsed author Ken McElroy, does. (Both books are published by Warner Books, a division of CNN/Money's parent company.)
Student attendance at the Whitney Education Group, founded by Russ Whitney, author of "Millionaire Real Estate Mentor," increased 189 percent between the second quarters of last year and this year. Revenues of the publicly traded Whitney Information Network (RUSS: Research, Estimates) rose 151 percent.

Mentor Claude Diamond has a waiting list for his $15,000 one-on-one mentoring program, which gives students round-the-clock access to Diamond via phone, fax and email.

Meanwhile, more real estate gurus are coming on the scene.
"There's a new one a week," said John T. Reed, who as publisher of the newsletter Real Estate Investor's Monthly is a guru in his own right. "For a while I tried to keep track, but there's just so many of them."
Reed lists and critiques these authors and mentors on his Web site. "There are hundreds of thousands of people out there trying to do these bogus programs," he said. "These programs were designed to work in the seminar room, not in the real world."
To be fair, this isn't always the case. Some of the gurus listed on Reed's site are regular sources of CNN/Money and seem pretty down-to-earth. But it always pays to be wary.

"There are some who are straight up charlatans and some who are straight shooters," said Scott Whaley, president Real Wealth Seminars, which produces real estate investing events. "In that regard it's no different than any other industry."
From books to boot camp

Wanna-be real estate investors are typically introduced to gurus via books or DVDs sold in bookstores, online and through infomercials. These low-cost products help drum up interest in free or low-cost seminars, or generate calling lists – both of which are used to recruit consumers to two- to three-day seminars ranging from $1,500 to $5,000.

"Before you spend that kind of money, do some due diligence," Edward Johnson, president and CEO of the Better Business Bureau, adding that some of these seminars have revival atmospheres with high-pressure sales pitches. "Chances are the offer they're making today is going to be around tomorrow."
This is not to say that all of the companies selling these seminars are problematic, said Johnson. "But this is an industry we get complaints about," he said "Some of the businesses have unsatisfactory ratings with the BBB and other companies have FTC actions against them."

In August, the Federal Trade Commission charged guru John Stefanchik, author of "The Stefanchik Method" and "Wealth Without Boundaries," and a business associate with making false earnings claims.

According to the FTC complaint, an estimated 7,000 consumers paid between $5,000 and $8,000 for materials and mentoring about how to buy and sell privately-held mortgage notes. The strategy, according to Stefanchik.com, "the easiest way to make $10,000 every 30 days... guaranteed."

Yet, when the FTC surveyed 1,000 customers, of whom 500 responded, it found that Stefanchik's method wasn't so easy after all.

"Virtually no one made money," said Nadine Samter, an FTC attorney based in Seattle. Stefanchik's attorney Rodney Umberger said his client strongly disagrees with the allegations, adding that educational courses depend as much on the students as the educator.

"I just hope the other people running these programs are aware of this case," said Samter. "I suspect there are others out there using the same formula and I would venture to say [their customers] aren't making money."

If you're interested in real estate but don't have a clue where to start, considering first joining a real estate club. Not only will you have access to mentors – who don't charge anything – you may be able to check out guru materials from the club's lending library at no cost. (Word of caution: Club organizers say that gurus often speak at real estate club meetings, but that is not necessarily an endorsement.)

Be suspicious of any pitch that promises to make you a lot of money in a short period of time and a no cost to you. "There is no way to get rich quick," Samter said.

Unless, of course, you can uncover the next millionaire secret and package it with a slick sales pitch.