Going from Rags to Riches in Real Estate

You may or may not have noticed that the title of this article is 'Going from Rags to Riches in Real Estate' and not 'Real Estate Investing'. If you noticed, perhaps you thought it was a mistake, a typo. It's not.

Many people will tell you that you can get rich by investing in real estate. They'll make amazing claims about what you will be able to do. They'll tell you that you can turn a few hundred dollars or less into millions, virtually overnight.

You may have seen these people on late at night, promoting their real estate investment products in productions ranging from the obviously seedy to lavish affairs. The extravagant programs will show you examples of things you'll be able to do once you've only purchased what they're selling: mansions, yachts, fancy cars, expensive jewelry, etc.

The lower budget affairs will simply tell you that you need to buy what they're selling. Perhaps they will show people testifying to what the infomercial is promoting. Perhaps they'll give you a list of supposed examples.

But what both the extravagant and low budget programs both share is that they'll tell you that you'll solve all of your life's problems by buying what they're selling. If only you had their product, you'd be rich.

If only things could be that simple.

William McCorkle, do you remember him? He was the 'real estate investor' that promised you millions if you'd just buy his system. His infomercials were the epitome of luxury. He showed you 'his yacht' and 'his jet'. He and his wife were convicted in 1999 of fraud and money laundering (after having been indicted on 90 counts of fraud, telemarketing conspiracy, and money laundering ) for, among other things, having rented the yacht and jet he showed in his infomercial. He also lied about offering a refund for his program as well as how much he was worth.

Carleton (or Carlton) Sheets claims that he purchases houses regularly for no money down. He claims that you can do this, too. But he refuses to give any examples of this. He refuses to even give addresses of properties he buys normally, yet claims to buy and sell them every week. His notebooks are, apparently, filled with bad and outdated advice. His book(let) on tax law hasn't been updated since it was written in 1986 (over 20 years ago), except for a tiny portion and the copyright page. Tax laws change a lot in 20 years. He also brags about being a member of an organization that went out of business in 1990 (Real Estate Securities and Syndication Institute or RESSI).

Robert Kiyosaki, author of "Rich Dad, Poor Dad". If you haven't heard of him by now, you haven't been paying attention. He makes various claims in his books that contradict other claims he makes in the same book. There may be some advice in his books, but it's concealed within the bad advice and the just plain made-up stuff. Not once does he name his 'rich dad' and has even partially admitted to having entirely made up the 'rich dad' and compared him to Harry Potter.

There are many, many other people who make fabulous claims about what you can do; so many it'd be impossible to list them all here. But they all share at least one main trait: they claim that they do or have done things that they have not.

They claim to have made their money in real estate, but they can offer no proof that this is so. Or the proof that they offer is limited and/or incomplete.

These people have almost entirely (if not entirely) made their real money by telling you how to invest. If they're such good investors, why do they have to lie and inflate their claims (shouldn't they really have the millions they claim you'll make)? If they're not good investors, do you really think you should be listening to them?

You wouldn't take your car to a mechanic that has no idea what he's doing, so why listen to someone who doesn't know up from down in real estate?

I'm sure it's not impossible to make your money by investing in real estate. After all, there are a good number of people who have made money this way. But nowhere near as many as the so-called real estate investors on the infomercials would have you believe. And the the people who did get rich in real estate definitely didn't make their money by listening to those so-called real estate investors.

The lesson here is fairly clear: The fastest way to make money in real estate is to tell other people how to get rich in real estate investing, regardless of your actual background experience. And then hope that nobody investigates your claims.

A bad, bad idea. Stick to listening to people who have actually succeeded in real estate investing, instead of the infomercial people.