John T. Reed is a real estate investor and prolific author. He's also a pain in the backside for the modern-day snake-oil hucksters who peddle get-rich-quick real estate schemes on late-night TV and radio.
Their spiel goes something like this: Attend their seminars, take their classes and buy their books and DVDs, and you'll make millions buying houses on the cheap and reselling them in short order.
Reed says he's often asked what he thinks of a particular instructor or his programs. He isn't familiar with the work of every one of these charlatans, but he has built a list of observations that potential customers can use to separate the bad guys from the good guys. Here's a short synopsis of some of the points on his "B.S. checklist."
-- Emphasis of luxury lifestyle. The best teachers rarely mention how well they've done and don't need to wear their supposed affluence on their sleeves. Those who throw the bull have their photos taken with Hawaiian backdrops, stretch limos and Lear jets to help create an aura of financial success.
-- Best of the best. The bad guys' bios are full of baseless, subjective phrases like "the leading" this or "the No. 1" that. Watch out for words like "innovative," "famous" or "spectacularly wealthy."
-- No regrets. Every real estate investor has made at least one bad deal in their lifetime, but not the hucksters. They rarely point out the pitfalls of the business. Everything has a downside, but not to these guys.
-- No bad news. Similarly, according to the snake-oil salesmen, no new court decision, law or economic trend ever holds bad news for the real estate sector. These rotten apples always see opportunity, even during times when smart investors should retreat to the sidelines.
-- Universal techniques. Another way that suspect counselors boost sales is by trotting out "new," and often obscure, methods. But rather than explaining when one tool or another is appropriate, they leave the impression that all techniques are suitable for every deal. In reality, there is no one-size-fits-all real estate strategy.
-- Motivation. These false prophets wrap too much of their appeal in motivation. There's nothing wrong with trying to rally the troops, but too many "you, too, can do it!" platitudes border on the dishonest.
-- False claims. Virtually all the fake gurus claim to practice what they preach. Baloney. They spend far more time on their seminar business than on their investments, if they have any at all. They may have done some deals -- maybe even many deals -- but that's ancient history. Now they are selling, selling, selling.
-- False offers. The bad guys sometimes offer to join their students in investment deals, but they never do. They may invest in one or two deals someone else brings to the table to be able to say they do, but for the most part, money never comes out of their pockets -- it only goes in.
-- Without money. To overcome the objection of students who really have no money to invest, the dishonest professors stress no-money-down techniques, which are fundamentally unsound. These schemes are "a way to part fools from their money, not a way to invest in real estate," Reed says.
-- Red flags. Treat these words as flashing "steer clear" signs: surefire, cinch, always, easy money, risk-free, safe, magic, bulletproof and automatic. No such thing, at least not in real estate.
-- Fake testimonials. When real people testify to their success using the guru's techniques, they use their full names and locations. When paid actors do so, they only use their initials or their first name, so you can't check them out and confirm their validations.
-- No recording. The instructors who bar you from recording a free promotional seminar do so to prevent you from having evidence of the fraud they are perpetrating.
-- Hard sell. If there's a push to buy increasingly expensive classes, books and DVDs, you are in the hands of someone who thinks they have a sucker on the line.
-- Show me the love. They'll tell you they're not in it for the money. Rather, they are telling the world how to make money in real estate out of the goodness of their hearts. Yeah, right. If so, why not just give away their knowledge, instead of charging thousands for it?