16 Ways to Find a Good Real Estate Teacher

How do you know which real estate investment teachers to trust?

The litmus test is this: They must have earned the right to teach measured by their years of success in real estate—not in selling seminars.

Do an internet search for the teacher’s name and company name(s) with words such as “fraud,” “rip-off,” “scam,” etc. If what you find makes you even slightly uncomfortable, cross that person or company off your list.

Here are 16 red flags to pay attention to as you do your due diligence.

1. Mass-marketing

Website ads, mass emailings, and/or infomercials are a sure sign this person or company is in the seminar business, not the real estate investment business. Reputable teachers depend mostly upon referrals from satisfied students. Putting a notice about their next class on their website is enough to fill it.

2. Using the words “boot camp,” “coaching,” mentoring.”

Calling a seminar in a hotel a “boot camp” is an insult to veterans. The “mentors” and “coaches” are salespeople whose job it is to convince you to spend more money.

4. Implying that you will make a lot of money quickly.

The old saying, “If it sounds too good to be true, it is” could have been written about many real estate seminars. If promotions for the seminar tell you how much money you can make quickly, run away even more quickly. Real estate is a get-rich-slowly investment. Some people occasionally make a profit flipping, but for every profitable person, many others have lost their shirt, pants, and more. Flipping is gambling, not investing.

4. Claiming that no one else teaches what they do.

Does the “teacher” claim to be famous, successful, expert, etc.? Do they promise to teach you “secrets”? No legitimate teacher says such things. Their reputation precedes them.

5. Displaying wealth.

Displaying wealth. Scammers often use mansions, luxury cars, yachts, etc. in their marketing to impress you with their wealth. These are leased or borrowed props.

6. Offering a regular schedule of seminars.

A full-time real estate investor has little time to teach, because they make a lot more money investing than they do giving seminars. If they teach more than a few times a year, that’s a red flag.

7. Offering free seminars.

These are the timeshare sales pitches without the complimentary hotel room. The purpose is to beat on you to pay for the “real” seminar. You might learn a few things at the one you’re attending, but the upselling never stops. Legitimate teachers charge a few hundred dollars per day for seminars, and they never upsell.

8. Providing special discounts.

Honest teachers never use high-pressure tactics such as “normally $XXXX, but today only $XXXX.”

9. Making claims of success.

If the teacher claims they have years of experience in real estate, ask for the addresses of their properties and the name(s) of the entities on the titles. Then look up the properties to confirm the claims. If they refuse to tell you, stay away. These details are a matter of public record, so privacy is not a legitimate excuse.

10. Lacking a solid reputation.

What is the teacher’s reputation among experienced investors? Go to a meeting of a local real estate investment club, find several of the most experienced investors, and ask what they think of the teacher you are considering.

11. Not admitting mistakes.

“You don’t learn to walk by following rules. You learn by doing, and by falling over.” —Richard Branson. An honest teacher admits their mistakes so you can learn from them. A dishonest teacher either doesn’t admit them or claims they were smart enough to make them profitable.

12. Using motivational language.

“You can succeed!” and other phrases like that are marketing gimmicks. Motivational language has no place in an educational environment.

13. Advocating high leverage.

Does the teacher use terms like “nothing down,” “low down,” “creative financing” to describe strategies? These high-leverage approaches all result in negative cash flow, aka money out of your pocket every month, because the rent doesn’t cover the mortgage, taxes, insurance, and maintenance.

14. Relying on anonymous testimonials.

People claiming they made windfalls with the training are often phony, especially if their names are incomplete (“B. W.” or “John A.” for example).

Look up William McCorkle. He made some $50 million convincing people that if they bought his real estate courses, they would get rich. In court, his secretary testified that he used friends, employees, and paid actors to falsely claim in testimonials that they made big money from what they learned from him. He was convicted on 82 fraud and money laundering charges and sentenced to 24 years in federal prison.

McCorkle is far from the only one who puts out false or misleading testimonials; he just got caught. If those who offer the testimonials are not lying, they are not telling you the whole story when they say such things as, “I bought 20 houses worth $2 million with no money down!” That means they have 20 houses with negative cash flow (they must dip into their savings to pay the mortgages and expenses every month), 20 roofs, 20 furnaces, 20 air conditioners, etc. to maintain and replace, 20 property tax bills, 20 insurance bills—all with no income from the houses. And they are $2 million in debt. Unless they have very deep pockets—and if they did, they wouldn’t need to use high leverage—they will soon lose those properties. Bankruptcy court, here we come.

15. Claiming access to a fund.

Do they have a fund or an offer to put you in touch with funds? Too many times people lose their money in real estate and note funds through mismanagement or outright theft. Did you know that the Securities and Exchange Commission can shut down funds that miss filing even one document and then confiscate the assets—even if no investor has lost a dime? Have fun trying to get your money back.

16. Selling to students.

This is a huge red flag. Would you trust someone who told you that if you pay them, they will teach you how to buy something at the lowest price—and then try to sell it to you? No ethical person would sell what they teach to their students or promise to give you access to a “secret list” of properties or notes for sale, and/or offer to invest with you.

A wise investor once said, “There is an inherent conflict of interest with any education program that offers investment assets as well. Someone can’t be an impartial and expert educator and also offer assets for sale. The educator’s fiduciary obligation is to teach discerning and quality due diligence (and to help one master the art of the negotiation) to maximize the student’s profit from the acquisition of an asset. The seller’s function is to maximize the asset’s sale price. The two are, by definition, in conflict. If you expect a two-for-one deal you’re merely asking to get screwed.”