After watching an hour long informercial on Sunday morning TV, a friend of mine is considering buying one of those courses which supposedly teach you how to get rich buying and selling houses. I’m rather suspicious and cynical by nature, and in any case it’s more or less axiomatic that get-rich-quick schemes are bogus, so I’m just about dead sure this is some kind of scam. But not knowing anything about real estate it’s hard for me to say exactly what the scam is or how it works.
Could one of you kind Dopers out there who know something about real estate wheeling and dealing tell me exactly what is wrong with these courses?
It’s not so much that they’re a scam, it’s just thst they’re shallow and unrealistic. Here’s a typical piece of advice:
Find the worst piece of property in a desirable neighborhood.
Convince the seller to take back a second mortgage instead of a cash down payment.
Find a mortgage lender who offers no-cash upfront financing.
Spend $500 on a coat of paint and a little landscaping for curb appeal.
Turn around and sell the house for a big profit.
The courses don’t tell you how you can “convince” a seller who wants cash upfront instead of carrying a second mortgage, they don’t talk about how to convince a mortgage lender to risk their money when you’re not risking any of yours, or for that matter, what to do if the house doesn’t sell for a big profit immediately and you’re faced with making payments for months.
Probably 90% of the guts of the course is motivational, not instructional. So if your friend already has the technical knowledge and financial background to work on a high-risk, high-return plan and is just waiting for the proper words to get him started, he’ll probably be fine.
I know a few people who do these things, but its not so much a get rich scheme as much as a means of exchanging labor for money.
They usually buy a 40k house in (superficial) dilapidated condition, then they fix it up themselves then try to resell it for 60k. Thats my understanding of how these programs work. I dont know how successful they are when they do it though as you’d assume all the fees, all the building material and all the labor you have to put in would cut into your profits pretty deeply.
One of the all stars in the get rich in real estate mode was Charles Givens. Back in the 1990s he got into a fair amount of trouble with the law and state agencies for the course selling and questionable tax advice.
I still see his infomercials on TV some. Notice I said he “was” an all star in the field. Mr. Givens died about 5 years ago.