There are many so-called experts in the real estate world from late night infomercial kings to your local real estate agent. Many people in the real estate field have vast knowledge and are an amazing resource, while others have no idea how to invest in real estate.
I like to think I have a lot of knowledge about real estate, and have had success when I invest in real estate. I have been a Realtor since 2002, and I have invested in rental properties and flips most of that time. I learned how to fix and flip houses from my father, and I started investing in long-term rentals in 2010. I am making at least a 15 percent cash on cash return on all 16 of my long-term rentals. I explain my investing strategy here in my complete guide to investing in long-term rental properties.
For more information on how to buy the best rentals which will make the most money, check out my book: Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely. The book is 374 pages long, comes in paperback or as an eBook and is an Amazon best seller.
Should you let real estate gurus teach you about investing?
The first professional I want to discuss is the real estate guru. The real estate guru is the person selling a program that guarantees to make you a millionaire in 6 months, guarantees to find you properties for pennies on the dollar, and guarantees to show you a secret formula no one else knows about when investing in real estate.
The problem with real estate gurus is they don’t make their money by investing in real estate. They make their money by selling overpriced real estate programs that don’t work. Having said that, there are many seasoned investors who have programs out there that work and teach people how to invest in real estate. How do you determine if the program you are looking at is legitimate or a guru trying to make a quick buck?
- How much does the program cost and how is the cost structured? Most guru programs are very expensive, but many times the costs are hidden until you sign up. You may see an advertisement for a free seminar, then at the seminar you have to sign up for a workshop, at the work shop you get offered one on one training, all with escalating costs. I have seen many programs charge $20,000 or more to teach about how to invest in real estate.
- Is the investing program local or national? Real estate is very different in different parts of the country, and investing strategies are also very different. Yes you can gain basic knowledge and strategies from general programs, but you can also get general knowledge from books. If you are spending good money on a program that teaches investing programs you want it to be as local as possible. A local expert will be able to show you the best ways to buy homes in your market, not a market 2,000 miles away. Also remember each state has different laws and regulations, the program the national teacher is showing you may not even be legal in your state.
- Does the teacher of the real estate investing program have experience? You want your teacher to have experience investing in real estate. You want the experience to be as recent as possible, not from 20 years ago. The real estate world changes very quickly and old strategies don’t always work in the current lending and market conditions. Lending guidelines are constantly changing and you want your coach to be an expert on investing in real estate in the current market. The real estate world has changed significantly in the last 5 years, the most recent experience the teacher has, the better.
- The real estate teacher should will be willing to talk openly about their program and strategies. If you ask simple a question, they should be able to answer you right away. If they dodge the question or make you buy their program to get the answer, watch out. A real teacher of investing in real estate techniques wants to share their knowledge, help others and get paid for their time and expertise. A guru is trying to trick people into buying a program with fancy sales techniques and little useful information. If a teacher can’t answer a simple question, they either don’t have the knowledge or are trying to take you for every penny they can.
What are good real estate coaching programs?
I don’t have much experience with real estate teachers or coaches, but I can recommend a few. If you have any questions on certain programs or coaches, send me an email and I will give you all the information I can.
- Some real estate forums are full of great people and information. However, some forums have gotten so large that it is tough to know who to believe. Some posters know what they are talking about and others have no clue. When you have some forums with over 200,000 members, it is very hard to differentiate from the good investors and the wannabees.
- Ben Leybovich is a great blogger and investor. His program is called Cash Flow Freedom University and specializes in teaching people to invest in multi family rental properties. The program has a ton of great information on how to buy properties with little money down, how to manage properties, how to find private financing and much more. I highly recommend Ben’s program in my review here, but he may not be local for many investors. Compared to most investing programs, Ben’s is very cheap and I know you will get something worth the purchase price out of it.
- J Scott is also a great contributor on Bigger Pockets and a very successful flipper. He flips many homes a year and even wrote a book on the subject. You can find the book here, and I highly recommend it. J is always willing to help out investors and gives away information all the time without charging a dime! I bought his book myself recently, but I have not had a chance to read it yet.
- I have programs as well that focus on becoming a real estate investor and real estate agent. I am a very successful real estate agent having sold over 500 homes in the last three years and I own 16 rentals and have 9 flips going.
Local experts are the best teachers of real estate investing
Besides gurus and coaches, there are local experts who may be able to help you with investing strategies. There is also a good chance the local experts have no idea about how to invest in real estate. Realtors and lenders are a great source of information for those looking to buy a house. However, most lenders and Realtors specialize in helping owner occupied buyers, not investors. How do you know if a local expert can help you learn to invest?
Real estate agent’s who know investing
Real estate agents are trained to work with owner occupied buyers. Our public schools don’t teach us about investing in real estate and real estate schools don’t teach Realtors about investing in real estate either. If you aren’t a Realtor yourself, which I highly suggest, you need a great agent. Here is an article on exactly how to find a great agent for investors. Remember, unless you have a very savvy agent, the agent will know less about investing in real estate then you will.
I would estimate 90 percent of real estate agents are not investing in real estate themselves and don’t know how to invest in real estate. They don’t know about cash flow, cap rates, or return on investment. Many Realtors do not know the local rental market or vacancy rates. It is okay to use a Realtor who is not an investor, but make sure you are not letting them influence your decisions. Let them find the houses or make the offers, and you decide if it is a good deal.
Lenders who know about real estate investing
Lenders are trained to focus on getting buyers the lowest payments possible. They aren’t focused on maximizing returns and cash flow on investment properties. I bought my first rental with a 30 year, 25 percent down mortgage. I could have put 20 percent down, but I let my lender talk me into a slightly lower rate with 25 percent down. For a few dollars a month in a lower payment, I sacrificed $5,000 in valuable cash. You are almost certain to know more than your lender about investing in real estate so trust yourself. Don’t let local experts talk you into programs or loans that you know aren’t best for you.
Local REIA or local investors do know about investing
If you are looking for a local expert to help you learn the ropes, attend a REIA meetup. REIA’s are clubs for investors to share information and network. I highly suggest going to meetings as you can learn a ton! Don’t be intimidated as many members have never done an investment deal themselves and are learning as well. You should be able to meet real investors doing deals in your area. Take them out to lunch and pick their brains, see how much information they will give you. Who knows, they may even need your help.
Legality of investing in real estate programs
I have heard many stories about people performing illegal acts because they learned illegal techniques from a real estate guru. It doesn’t matter who taught you the illegal technique, if you are the one conduction the illegal activity you are the one who will get into trouble. There is a very thin line about what can and cannot be done when investing in real estate. Much of the confusion comes from whether someone needs a real estate license to perform certain duties. Please do your research on your own state’s laws before you start investing in real estate.
There are some very common mistakes that people make when they begin to invest in real estate. If you are trying to connect a buyer with the seller of a home for a fee, you need a real estate license. Many people like to start investing in real estate by wholesaling properties. In order to legally wholesale a home, you must have a legal title or a contract to buy the property that can be sold. It is also illegal for agents to pay referral fees to unlicensed wholesalers in many states.
There are a lot of people trying make money from real estate investing programs. I am trying to make a bit of money as well from my blog, products and books I have published. I think Ben Leybovich has a great product that he has spent a lot of time on. J Scott, is a fantastic resource and will answer any questions you have, even if you don’t buy his book (you can find him on Bigger Pockets). You will notice these people are very willing to give you plenty of free information, but they also put together programs with easy to understand, legal techniques. If you have $20,000 to spend on a real estate guru’s investing program, why not buy a house instead and learn with hands on experience!