John T. Reed’s views of various real-estate-investment gurus Part 3

A.D. Kessler

Some of his Creative Real Estate Magazine's article authors are good, others are by guys I do not recommend. Gurus I recommend rarely write for Kessler.

Kessler was somewhat broker or guru oriented last time I saw any of his stuff. In other words, he was more about helping brokers get commissions or gurus sell their stuff than he was into helping investors make money in their investments. An experienced investor once told me much of Kessler’s material depicted an agent’s fantasy world—“real estate the way brokers wish it was” was the phrase he used. For example, one of Kessler’s authors was famous for bragging that he insisted that every single client come to his office. He never went to a client’s office. When a bedridden heiress begged him to come to her home, he told her to call an ambulance to take her to his office, and bragged about it at his seminars. Very creative.

Kessler’s company name triggers item # 20 on my B.S. checklist.

Months later, they sent me one subscription sale. After that, I forgot about them. About six months later, when I had a new employee doing orders, another Kessler order arrived. I had not trained the new employee regarding Kessler orders. She sent the subscriber an invoice for the difference between the wholesale check Kessler sent and the regular subscription price. A few days later, Kessler’s assistant called and gave me a tounge-lashing for embarrassing A.D. to the subscriber. I never figured out why he should be embarrassed about my not teaching my employee about the deal he arranged on subscriptions.A number of years ago, his assistant called me to say they really liked my newsletter, Real Estate Investor’s Monthly, and wanted to sell it to their customers if I let Kessler pay a wholesale price for it and keep the difference. She predicted many sales. I agreed to this wholesale arrangement.

I recommend some stuff by people whom I do not like or who do not like me, because it would hurt my credibility and deprive my readers of good stuff if I did not do so. I do not believe Kessler has a similar policy. It appears that he regards everyone in the real estate infromation business as either in business with him, or against him and the quality of your material is secondary to that. To put it another way, if Kessler believed that my newsletter was good as his assistant told me, they should have beeen recommending it all along, including after our two-subscriber relationship. To only recommend writers who are currently in business with you strikes me as disingenuous. There are a number of people in the guru business who won’t recommend you unless they make money every time they do so, and will recommend you if they can make make a buck out of it, even if they are not that impressed with your material.

Here's an email I received about Kessler.

Ernie Kessler (passed away 4/30/03)

Kessler seemed like a great guy when I met him at a convention and when I interviewed him for an article. But he once asked me to speak at a conference in Niagara Falls. I agreed and asked for a letter confirming the terms. He said he would send it. It never arrived. When the date drew near, I called to remind him I needed the letter and to make travel arrangements. He did not return my phone calls. I finally got an assistant and told her if I didn't hear in the next day or two, the agreement was off. She called back to say the conference had been canceled. I have no objection to his canceling a conference. But not sending the confirmation letter and not returning my phone calls indicate a lack of responsibility and common courtesy.

On 3/14/99, about five years after the incident in question, Kessler called to apologize. He said he thought he sent me a letter telling me the conference had been called off. He said he is not computer literate and only found out about this Web page on 3/14/99 when a customer called and told him about it.

In May of 1999, a member of a real estate club told me Kessler had treated them the same way he treated me.

On 8/14/99, Frank Verchereau told me Kessler reneged on a deal involving purchase of a six-story apartment house in Schenectady, NY after committing in writing to do the deal. Verchereau had enormous difficulty getting Kessler to return phone calls as the closing date approached.

Robert Kiyosaki (Rich Dad Poor Dad)

I was told I would like this guy. His book was #1 on the Business Week best seller list. Eager to find another guy to recommend, I bought his book Rich Dad, Poor Dad in a bookstore and read it.

One of the best TV exposes on a real estate investment guru was done on this guy in 2009 by Canadian Broadcasting Corpoation. Click on this link to watch it: http://www.cbc.ca/marketplace/2010/road_to_rich_dad/main.html.

Rich Dad Poor Dad is one of the all-time worst financial books ever written! I was so disturbed by it that I wrote an extensive review of it.

The summer 2007 issue of the Ohio Division of Real Estate and Professional Licensing newsletter contained an extraordinary statement by a professional engineer. It told how the engineer was drawn into real estate by Kiyosaki’s book Rich Dad Poor Dad and sent on a bad path by Kiyosaki’s employees. The purpose of the statement and its being printed in the Ohio government newsletter was to warn others from making the same mistake as the engineer. You can see that newsletter at http://www.com.state.oh.us/real/documents/2007Summer.pdf. The Ohio government copy is redacted. Also, I have obtained and copied and pasted an unredated copy of it to my Web site. You can read it by clicking here. I do this because government documents are not copyrighted and because sometimes government Web sites later remove older documents.

Nick Koon—Deceased

Deceased. Some of his stuff is still around. I do not recall being impressed by it one way or the other.

Joe Land

Joe was a nothing-down guru in the mid-'80s. I "debated" him on a 60 Minutes segment titled "Nothing Down" on March 16, 1986. Morely Safer was the correspondent.

Land said you only needed one technique. His was buying, at a discount, a mortgage someone had taken back on the sale of a house. Then you got a new institutional mortgage for 80% of value and used the mortgage you bought at a discount as down payment. The face value of the mortgage you bought at a discount was bigger than 20% of the value of the property you were buying, so you actually pocketed several thousand dollars proceeds of the new first mortgage at closing.

Morley Safer explained it well. He said the crux of Land's technique was persuading the owner of the mortgage that it was not worth what it said, then turning around and immediately persuading the owner of the house you were buying that the mortgage was worth what it said. There is no doubt some sellers are that dumb, especially those who are trying to sell overpriced property. But there are no institutional lenders who will knowingly do that deal.

I debated Land subsequently on a conference call that included Joe, me, and Time magazine reporter Jon Hull. Land insisted that he had done this deal many times and that many lenders would do it. I asked for the address of a property where Land had done such a deal. He refused to give one, citing confidentiality. Time promised anonymity to the lender. Land still refused. I urged Morley Safer to ask the same question of Land. He did and Land refused to provide him with an address, also.

Land stopped doing real estate seminars not long after the 60 Minutes piece ran. He later did TV infomercials in which he sold audio tapes purportedly containing subliminal self-improvement messages. All you could hear was sea gulls and ocean waves. I am told that at one of his real estate seminars, Land once told an associate, "These people would buy blank tapes if I told them to." Later when he was selling the seagulls-and-wave tapes, he said, "They aren't blank, but they're pretty close."

I always thought that blank-tapes story epitomized the real estate B.S. artist segment of the guru business.
Land died January 30, 2010.

Loral Langemeier

Click here to read my review of her book, The Millionaire Maker.

In the 1970s, I took some real estate courses from the Learning Annex and they were good. But my 3/22/06 San Francisco Chronicle had a full-page ad about their “Real Estate Wealth Expo” that weekend in San Francisco. It headlines Donald Trump, whose book Art of the Deal I recommend. And it has a number of gurus whom I do not know. But it also had at least seven that I do not recommend.Learning Annex.

This is the latest example of previously-respected organizations jumping on the bogus real estate investment information gravy train. Yahoo! offers Rich Dad Poor Dad author Robert Kiyosaki as a daily columnist. Time-Life sponsored Kiyosaki for a while. And PBS has had Kiyosaki on TV. According to the San Francisco Chronicle, the Learning Annex’s annual gross income jumped from $5 million a year to $100 million a year when they started promising to tell people how to get rich quick in real estate. That same article said the Learning Annex news release about the Real Estate Wealth Expo called real estate the “drug of choice” in San Francisco.

Time was not that long ago when someone at such organizations would check out a speaker or columnist before hiring them and say, “We can’t associate with this guy.” Apparently, a great many organizations have fired the guy who used to do that and replaced him with a guy who just checks the sales volume of the prospective speaker or columnist.

Al Capone would have his own entrepreneurship show on PBS now if he came back.

After the San Francisco Real Estate Wealth Expo I received some emails from persons who said they attended. The general tone was that Trump, Orman, and Robbins gave good speeches, but that the other speakers were all high-pressure salesmen pushing expensive stuff. That sounds like those three and perhaps Kiyosaki were paid to speak, but that the other “speakers” were actually exhibitors who paid the Learning Annex ($5,000 each according to the 3/28/06 Contra Costa Times) for the right to pitch their products and services to those who came to hear Trump and his fellow celebrities. Two or three attendees told me they were planning to exercise their federally-mandated three-day right of recission to get their money back.

I am also told that Learning Annex staff manned the order booths for each guru selling stuff. Just based on general business practices, I suspect that was because they were taking a cut of each sale and did not trust the gurus in question to give an accurate accounting of their sales. Not trusting the speakers that you foisted off on the public would make for an interesting line of questions at a class-action trial of such a sponsor. I also suggest that you follow the Learning Annex’s example and that you not trust the speakers either.

So it would appear that Learning Annex charged you to hear a bunch of sales pitches, charged the salesmen for the right to pitch you, and charged you and them again in the form of a cut when you bought. Normal practice would be that when you pay for information, you get pure information, not commercials. When you get information free, as on TV or radio, you expect to have to put up with commercials. Some products, like Time magazine, charge for subscriptions and sell advertising. As a consequence, the subscription prices are cheaper than they would have to be if they had no ads.

Learning Annex seems to have charged attendees primarily to listen to commercials and only provided four paid speakers who were not hawking products in their speeches. I doubt that so many would have signed up had they known that was what they were getting. Many of those quoted in the Contra Costa Times story said they were unhappy with the amount of selling they were subjected to. They thought it was going to be all information.

Oddly, I got a call late Friday night, 3/24/06, at my home. Some woman with a very thick foreign acccent babbled at me. When I made her repeat it slowly, I learned that she was offering me free VIP tickets to the San Francisco Learning Annex Real Estate Wealth Expo. “I have no interest in that,” I told her. What do you suppose that was about?

I have also heard that an honest speaker/exhibitor was at one real estate expo type gathering and was open about his disagreement with many of the other products and services being sold there. I further heard that the dishonest exhibitors there complained bitterly about this and theratened the sponsor with a boycott. And finally I heard that ever since, that sponsor runs all potential exhibitors/speakers by some sleazy Utah organization (See item #42 of my Real Estate B.S. Artist Detection Checklist for more on Utah-based real estate investment information organizations) to make sure they are all sufficiently scummy and that the exhibit floors and speaker rooms are not darkened by any more honest exhibitors or speakers.I received an eamil inviting me to exhibit at some real estate expo a year or two ago. It named the other exhibitors who had signed up. I sent back an email declining to particiate in their “fraudfest.”

Enjoy.

Ron LeGrand

$9,000 seminars. Gets people to attend live infomercials. I would love to charge $9,000 for a seminar, but I can't quote such a price and keep a straight face.

I listened to one of his tapes. It was the same old stuff all the other gurus preach. As is typical of other gurus, LeGrand left out much of the disadvantages of the various techniques. He also struck me as overbearing—which is irrelevant unless you are susceptible to being overly influenced by such people. When I get some time I will list some specifics here.

One of my readers told me “our distributor (Access) went bankrupt taking our money with them. It turned out that they were purchased by a company that also owned Ron Legrand’s BS factory six months before we took them on as a distributor.”

Another reader tells me LeGrand says he was once a carnival skeeball concession operator. Why am I not surprised? In general the gurus I do not recommend are salesmen, not real estate guys. Both carnival barkers and the majority of real-estate gurus are salesmen. Real estate investment requires far more than just sales skills. Telling people that you are a real-estate-investment expert, on the other hand, only requires sales skills.

Here is a link to a real estate scam article mainly about another guy but Ron LeGRand is mentioned in the article: http://www.myrtlebeachonline.com/2013/07/17/3589645/leader-of-grand-strand-real-estate.html

Click on this link to see an SEC suit against Legrand: http://securitiesarbitration.blogspot.com/2011/07/sec-charges-ronald-f-legrand-and.html

David Lindahl (Rockland, MA)

On 2/25/06, he sent me a large post card pushing his free Teleseminar. It said on the front,

“Hear how one man owns over 810 apartment units, and hasn’t spoken to a tenant in over 4 years! Find out how you can cash in, too!” [Emphasis aded]

A tenant is a type of customer. Any businessman who avoids all contact with his customers is incompetent at best. Furthermore, the landlord-tenant relationship is special. When you provide someone’s home, you have additional moral, ethical, and legal obligations above and beyond those of a businessman who only provides, say, toothpicks to a customer.

You have responsibilities for the tenant’s health and safety and that of their family members and visitors. By providing him or her with a home, you are probably getting more of the tenant’s monthly income than any other firm they do business with. You owe your tenants a comparable and appropriate level of attention.

What, pray tell, is the name and location of this man who owns 810 apartments? His tenants should be asked if Lindahl’s statement is accurate. For one thing, when you make a representation in an advertisement, you must have a reasonable basis for it under the Federal Trade Commission Act. Someone should verify that the statement is true by tracking down the 810-unit owner and getting him and his tenants to go on the record that it is accurate.

Then there is the issue of that 810-unit owner getting sued for negligence. I can almost guarantee that if the plaintiff’s attorney finds out what Lindahl said, the landlord in question will be forced to read that statement to the jury at his trial. And I can guarantee that he will be sued. Anyone who owns more than a dozen or so units is likely to be sued by one or more tenants. 810 units? Forget about it. People who own that many units are probably being sued continuously by one tenant or another.

Lindahl’s return address is Massachusetts. That is one of the most anti-landlord states in the Union. A MA landlord who got caught making a statement—alng with the “cash in” comment like that might find an angry mob carrying torches and pitchforks in front of his stately abode. He would surely be quoted in the tenant newsletters

What if Lindahl himself gets sued for negligence by a tenant? I do not know how many units he owns if any. But if he owns any, it may not matter how many because he is depicting himself as a deep-pockets guy with his guru advertising. He is making himself an attractive litigation target. He, too, will be required to read that statement to the jury if he gets sued for negligence by a tenant. No doubt they will also make him read the other statement on the front of the post card—the one about making “a killing” from the tenants to whom certain landlords do not lower themselves to speak. How would the plaintiff’s attorney find out about it if Lindahl did not send them one of the post cards? They will Google Lindahl’s name and find this Web page. Then they will demand a copy of the post card during discovery.Then there is the issue of Lindahl himself. Is he a landlord? Most gurus claim to be. If so, does he also avoid contact with his tenants? Does he approve of not speaking to any of 810 tenants in over four years? The fact that he put it on the front of his post card strongly suggests that he does approve.

That’s your name. Not the name of some employee or agent who has an incentive to keep you in the dark about problems you need to know about.Here’s a free property management tip from my book How to Manage Residential Property for Maximum Cash Flow and Resale Value. Find an excuse to call about one tenant per month per building. Use the list of questions in my book to ask the tenant about various aspects of the building and service you are providing. Put your name, address, and phone number on the exterior wall of your building’s office so tenants and prospective tenants can easily and quickly get in touch with you if they feel the need. When they call, use that same list of questions after you deal with their reason for calling.

Here’s another free property management tip. If you don’t want to talk to tenants, stay the heck out of the landlord business. The responsible, competent landlords don’t want your kind giving them a bad name.

Here is an email I received from Lindahl and my response.

John,
I recently read your piece on me at your website.

The reason I have not talked to my tenants in over 4 years (it's actually 6 now) is because I use good quality management companies to do that.

I am not a landlord, I leave that up to my managers. I'm an investor. As an investor, it's my job to grow my business and create more cash flows. I leave the managing to others.

I agree with you that our tenants are our "gold". And I run my business and teach my students accordingly. I let them know that all phone call must be returned the same day. All maintenance request should be completed with in 72 hours with emergencies done within 24 hours.

I instruct my managers to provide a safe, clean and friendly place to live for my tenants. My managers show my tenants the respect they deserve.

As you know, tenant turn over is our biggest expense, therefore we have numerous tenant retention programs to reduce that number to it lowest levels.

For the first three and one half years of owning multi's, I was the manager. I took those phone calls on a daily basis and a lot of time, did the maintenance.

Though I learned that the more time I spend on my properties, the less time I had to grow my business so I switched to using property managers. I instruct my students to find good property managers on the IREM.org website. I tell them to locate a CPM or ARM in their area.

You are right about Massachusetts and it's tenant laws! They have kept me (and now my managers) on my toes.

John, I have been familiar with your sight for years and have gone to it as a reference point on many occasions.

I hope this e-mail clears up any misunderstanding.

I would be happy to send a copy of my home study course for review. I beleive that you will find it a very practical guide on how to do the business of owning multi-family porperties. There's no fluff, just a step by step how to on how a lanscaper living in a one bedroom apartment was set financial free by owning apartment buildings.

Let me know if you would like a copy and I'll send one out today.

Dave Lindahl

Please send it. Although I have others that I have not yet gotten to.

Rather, I say you should do it in-house with salaried employees or yourself.The property management industry you depict does not exist in my experience and observation. I recommend against ever hiring an independent %-of-the-gross property manager. They are almost universally dishonest (e.g., take kickbacks from subs, pocket rent on apartments that the owner believes are vacant) or negligent or most likely, both. It is also in their interest to have you charge less than market rents and to pay more than market salaries and independent contractor fees because it makes their jobs much easier. For example, below-market rents cause a waiting list to develop and it is far easier to call the next person on the waiting list than it is to market the apartments. This, obviously, costs the owner tens of thousands of dollars in lost rent and hundreds of thousands in lost building value.

In any event, the use of a property-management firm does not preclude owner contact with tenants. Nor is it wise for an owner not to communicate with tenants just because he has a property-management firm. For one thing, he may find out about misbehavior or neglect by his property management firm.

I suspect that you have found that tenants and being a landlord turns off prospective buyers of your investment information and that you have come up with this "not communicating with tenants" shtick because it help sales of your investment information products, not because it is a good way to operate apartments either for you or for your students.

John T. ReedTenant turnover is not your biggest expense. Property taxes are. My management book makes the argument that there is virtually no tenant turnover cost at all. If you are big enough, your ads run continuously. Any refurbishing that is done must be deferred maintenance or it would not be needed. Any damage done by the old tenants is covered by deductions from their security deposits.

Al Lowry

Author of the best-selling book How to Become Financially Independent by Investing in Real Estate. Excellent book. But his subsequent books were lousy. His seminar on the Nickerson method was great. But his other seminars were terrible. Formed many Al Lowry Investor Clubs around the U.S. Declared bankruptcy in 1987. Doing foreclosure seminars last I heard.

Thomas J. Lucier

Big on regurgitating other people's ideas, including some of mine.

MAI courses

I took Member of the Appraisal Institute courses in the mid-1970s. They were thought-provoking and interesting, but too ivory tower. I thought it was telling that CCIM courses were given at hotels while MAI course were given at college campuses. They now give some in hotels, but they are still pretty ivory tower. Take these only if you are trying to leave no stone unturned in your quest to become a real estate investment expert.

Michael Martin (Seattle, WA)

Seattle-based property manager and nationally syndicated real estate guru. Disappeared leaving a note in which he referred to himself as a "total failure, thief, and embezzler." Returned and pled guilty to "fraud by radio." On 8/21/98, Martin was sentenced to 46 months in prison and ordered to pay $1.68 million restitution. He almost got a much stiffer punishment. After he agreed to a plea bargain setting the prison term at 31 to 46 months, he wrongly deposited an additional $750 in rent checks from an old client's apartment building into his personal account. Dishonest and dumb.

William McCorkle (Orlando, FL)

His Cash Flow, Inc. was raided and shut down by the FBI, IRS, and USPS on 5/9/97 according to the Orlando Sentinel. The paper said the company had been charged with racketeering and that it was being investigated by the Florida Attorney General for deceptive advertising and unfair business practices based on more than 50 complaints about inability to get refunds. The Wisconsin State Bureau of Consumer Protection published a Guide for Wisconsin TV stations which lists several "Questionable infomercials," among them those of William Mc Corkle, a/k/a Cash Flow, Inc. and Fortunes in Foreclosures. Tom Brokaw did a "Fleecing of America" piece on McCorkle on 9/8/98. NBC TV Dateline did another longer piece on 5/19/99. It revealed that McCorkle lied about his background, used actors and friends to make false testimonials in his infomercials, rejected all deals brought to him by at least one of his customers, and rented for only a few hours the executive jet and yacht which appeared in his infomercial with his name painted on them. See my guru testimonials page for details.

A federal grand jury in Orlando indicted McCorkle and his wife on 90 counts of fraud, telemarketing conspiracy, and money laundering on 6/21/98. The indictment accused him and his associates of defrauding people out of $28 million including refusing to give refunds, failing to provide money for deals found by customers, and misleading customers about his true net worth. McCorkle's lawyer, F. Lee Bailey, argued that the refund pledge was mere "puffing" that was never intended to be taken at face value.

McCorkle and his wife Chantal were convicted of fraud and money laundering and are in jail awaiting sentencing. They got 24 years. They already forfeited their home, four cars, and $7 million in cash seized in a raid in May of 1997. The FL attorney general's office says they have several similar investigations in progress at their Orlando office.

Florida Real Estate Commission Report dated Volume 3 Number 1 FY 2000-2001, page10. Disciplinary Actions...My $29.95 book How to Buy Real Estate for at Least 20% Below Market Value has a chapter on buying pre-foreclosures (before the auction) and a chapter on buying foreclosures (at the auction). You should also read books by John Beck and Val Cabot.

Orlando: Willaim J. McCorkle; Broker revoked effective 12/30/1999; found guilty of a crime which directly relates to the activities of a licensed real estate broker or involving moral turpitude or fraudulent or dishonest dealing; guilty of being confined in a state or federal prison. Also wife named Chantal (sales person) had the same revocation and reasons.

Bill Mencarow (Kerrville, TX)

Publisher of Paper Source newsletter and producer of an annual conference on note brokering. It's not my area of expertise, but Bill seems to be a squared-away guy. I have never heard a bad thing about him. I recommend him to anyone interested in note brokering.

Jack Miller—deceased 10/09

Don’t know much about him. But from what little I have heard about him, it would not surprise me to learn that he put his childhood “Good Fairy” money in a family limited partnership with a corporate general partner who was a trustee of his pension fund which was invested in a Cayman Islands trust. He often did joint seminars with John Schaub.

I got an e-mail from a reader saying, “Your comments about Jack Miller are right on the mark.” See also David Martin letter.

Mike and Irene Milin

I attended one of their free lectures. They had me going about government auctions until I asked John Beck about them. He said, "Did they tell you that you cannot get the cars you buy so cheap off the docks until you modify them at great expense to meet U.S. and California standards?" And he pointed out a bunch of other details which the Milins had omitted from their presentation and which wiped out the attractiveness of what the Milins were pushing.

Armando Montelongo

This guy is a former star of the A&E TV series Flip This House.

I wrote a review of Flip That House, a competing program on the Discovery Channel. After I did, Flip This House tried to hire me. I said I would visit their show and write about it, but not be hired by them. I never heard from them again. I suspect they were trying to co-opt me.

I did not feel another review was needed to cover both “…This…” and “…That…” But there is now a great one on page 54 of the July 15, 2013 Forbes magzine. Here is a link to it for the moment; it will probably not work forever: http://www.forbes.com/sites/abrambrown/2013/06/26/meet-armando-montelongo-the-home-flipping-huckster-wholl-make-50m-this-year/

They take Montelongo apart piece by piece and mock him while doing it. If you spend money on his stuff without reading that article, you deserve what you get. If you spend money on his stuff after you read the article, you deserve to have a guardian appointed for your finanical affairs.

Armando’s brother and Flip This House co-star David Montelongo and his wife Melina filed Chapter 7 (total liquidation) bankruptcy in May 2013 claiming $31,000 in assets and debts of $600,000. The bankruptcy petition said they own no real estate and live in rented apartment.

Among other troubles the Montelongo brothers were in litigation against each other.

Kevin Myers—I recommend his book only

Myers has a few original ideas, but for the most part his book states age-old, often-written-about truisms. He also says some things which I think are nuts. He's big on pretty packaging of deals to attract investors. He tells you to seek out a type of real estate agent which I do not believe exists. I was a real estate agent for two years. Like many beginners, he is enamored of nothing-down deals. He likes partnerships. I say stay away from them. He also sells some more expensive stuff. I got the following from a reader: "Although his book is great, his course guide needs improvement. The cassettes are poorly recorded and seem to be edited severely. Buy the book. But save your money on the course."Myers wrote Buy It, Fix It, Sell It, Profit, a book which has a title awfully similar to Robert Irwin's Find It, Buy It, Fix It. The book was cheap and OK for the most part. The best book on renovation is my $29.95 book Fixers. It's always wise to buy the cheap information on the subject before you buy expensive courses or seminars.

Joel S. Moskowitz

Click here to read my review of his book, The 16% Solution.

My own mother—I recommend

One reader of this page who was extremely unhappy with my opinion on one or more of his favorite gurus demanded to know how I rated “my own mother.” When I thought about it it, I realized I had discussed getting real-estate advice from her in Chapter 5 of my Special Report How To Get Started In Real Estate Investment. You cannot get advice from my mom, however. She was a cigarette smoker and died of lung cancer in 1993. If you smoke, quit. If you don’t smoke, don’t start.

Jimmy Napier (Chipley, FL)My critics would have liked her. I used to send my mom a copy of my Real Estate Investor’s Monthly newsletter each month. Once, when I called her just after she read it, she said, “What’re you—the Don Rickles of real estate?”

Napier seems to be a note and mobilehome guru. I’m uncertain because I have not paid close attention to his career. My only conversation with him was not very satisfying. See John Schaub below. Napier is very popular with his seminar graduates. Although I got an email from a guy who disputes that. Another reader wrote to agree with the first. Napier sends me his newsletter, but find it hard to read because of its rambling style, lack of subheads, and one-column format.

He is fascinated by the magic of compound interest. I was too the first time I heard about it—in fifth grade (Where I heard the puzzle, “If you start with a dollar and double it every day, how many days does it take to reach a million: 21.”) His information is apparently OK as far as it goes, but much of it seems to focus on stuff that I would not write about because it’s too basic.

Devotes much of his talks to a “Country boy Jimmy Napier outsmarts the city slickers” theme. His preoccupation with his country-boy origins is beyond my comprehension, although I must admit that many other country boys, including my late father, seem to suffer from the same rural inferiority complex. There may be a number of other “country boys” in this list of gurus. I wouldn't know. Napier is one of only two who think it’s a big enough deal to tell everyone about it repeatedly (Joe Land is the other).

In case anyone else thinks the population density of one’s childhood neighborhoods is relevant to real estate expertise, here are mine. I spent my elementary school years in Wildwood, NJ, a seashore resort. I guess that makes me a beach boy. From sixth to ninth grade, I lived in Harrington, DE, a small farm community. Son of a gun. I, too, am a country boy! I went to high school in Collingswood, NJ, a suburb of Philadelphia. Whew, that was close! I almost became one of those city slickers. Maybe I can claim some additional country-boy status from Collingswood High School. My fellow Colls High grads include John Sterban, who is one of the Oak Ridge Boys, and Michael Landon, who starred on Bonanza and Little House on the Prairie.

Napier’s real estate advice is fine and his prices are reasonable. He’s a bit too basic and a bit too much of a rerun of Ma and Pa Kettle for my taste. But the interesting thing about him to me is that he has managed to acquire a bit of a cult following. I’d rate his real estate analysis about a 4 on a scale of 1 to 10. But his admirers seem to rate him a 9. I think they are unable to tell the difference between real estate expertise on the one hand and personality and showmanship on the other.

Nationwide Real Estate Discounters (190 Highway 18, East Brunswick, NJ 08816)

Use my Real Estate B.S. Artist Detection Checklist to evaluate this guru. Note items # 8 and 20.

Nationwide Real Estate Discounters Corp. (14360 S. Tamiami Trail, Fort Myers, FL 33912)

Use my Real Estate B.S. Artist Detection Checklist to evaluate this guru. Note items # 8 and 20.

H. Roger Neal

Click here for a review of Neal’s book Streetwise Investing in Rental Housing.

Richard Neiswonger

Here is an email I got about him. He is interesting because he seems to use the standard marketing in the get-rich-quick seminar industry, but he somehow managed to inspire the Federal Trade Commission to go after him. If they wanted, they could do the same to virtually every get-rich-quick guru.

Consumer Protection: Seller of Bogus Asset Protection Service Will Be Barred for Life From Telemarketing

A repeat offender who boasted to consumers that they could earn a six-figure income if they purchase and use his $10,000 "asset protection service" business program is been barred permanently from telemarketing and from selling any type of business program in the future, according to an April 23 order entered in the U.S. District Court for the Eastern District of Missouri (FTC v. Neiswonger, E.D. Mo., No. 4:96CV2225SNL, 4/23/07).

[You can see the various FTC and court documents at http://search.ftc.gov/query.html?qt=Neiswonger&col=hsr&col=news&col=full.]

The Federal Trade Commission previously charged Richard C. Neiswonger with falsely claiming consumers would make a substantial income and with failing to disclose that his company's "references" were paid to give favorable reviews.

A 1997 order barred those deceptive practices, but Neiswonger violated the order by using the same deceptive business practices in his most recent scheme. Furthermore, the FTC charged that Neiswonger failed to disclose significant facts to consumers, especially his time spent in federal prison for money laundering and wire fraud—a violation of the 1997 order.

Challenged Conduct

Neiswonger, his business partner, William S. Reed, and their firm, Asset Protection Group, Inc., told consumers with no sales experience that, by purchasing their "APG Program," they would become well-paid business consultants selling APG's asset protection services.

For $9,800, consumers received training materials, a one-day training session, and a business affiliation with APG, which defendants claimed would provide consumers with carefully screened "qualified prospective clients."

The defendants promised consumers that they would readily make a six-figure income; the company even provided references that consumers could call who would back up their claims. In fact, consumers paid thousands of dollars for cold-call lists, rather than pre-screened clients. Not only were they unable to achieve six-figure incomes, according to the receiver appointed to oversee the business, approximately 94 percent of the consultants failed to earn back their initial purchase fee for the program.

Only one person ever earned a six-figure income, while hundreds of consumers lost money, the FTC recounted. Furthermore, the company's references were paid to deliver positive reviews of their experience. The FTC also noted that the 1997 order required that Neiswonger provide written proof to the FTC of a $100,000 performance bond to it before marketing any program, which he failed to do while continuing to market his business opportunity program.

Violation of Order

Judge Stephen N. Limbaugh ruled that Neiswonger's new deceptive business practices violated the previous order entered against him and that Reed and APG also were bound by the order because they were aware of the order and acted in concert with him and his deceptive business practices.

Judge Limbaugh also rejected Neiswonger's offer of $140,000 as "a drop in the bucket in rectifying the situation perpetrated by the defendants' fraudulent conduct," and he instructed the court-appointed receiver to calculate how much the defendants had gained from the scheme before he orders a final monetary judgment against the defendants.The court found that Neiswonger, Reed, and APG are in contempt of the 1997 order, and it entered a second permanent injunction against Neiswonger, banning him for life from advertising, marketing, promoting, offering for sale, selling, or otherwise inducing participation in any program. Neiswonger also is banned from telemarketing. A hearing has been scheduled for June 25 to determine whether Reed and APG should be subject to a similar injunction.

The pleadings, order, and court's memorandum are available at http://www.ftc.gov--the FTC's Web site--and from the Consumer Response Center, Room 130, 600 Pennsylvania Ave., N.W., Washington, DC 20580; (202) 382-4357. "

Bill Nickerson (deceased, Aptos, CA)

Father of all real estate gurus. Author of How I Turned $1,000 into $5,000,000 in Real Estate in My Spare Time and How to Make a Fortune Today Starting From Scratch. Fabulous books on renovating apartment buildings. Al Lowry’s first book is also excellent and is about Nickerson’s method. It is still cheap—or at least it was before I wrote this item.

Bruce Norris (Riverside, CA)

Nouveau Riche (Phoenix, AZ)

Southern California seminar guy and investor. Teaches various bargain-purchase techniques. I liked everything in his material except his discussion of mortgages in states other than CA and so stated in a 5/96 article in my newsletter. I do not recommend his Twenty-First Century materials.

James Phillip Piccolo

filed Chapter 7 bankruptcy in Phoenix on 8/27/90 (petition #2:90-bk-09050-RGM). On 6/16/92, a Phoenix grand jury indicted James Phillip Piccolo for “Theft, a class 3 felony and Trafficking in stolen property, first degree, a Class 2 felony,” namely, the theft of a 1981 Mercedes Benz and the sale of its parts (No. CR92-91584). Piccolo pled guilty on 12/7/92 and was found guilty by Judge David L. Grounds of the Superior Court of Arizona, Maricopa County.

On 3/23/07, I received an email saying that the Piccolo who is the Nouveau Riche executive is named James Patrick Piccolo not James Phillip Piccolo. He said that he had a credit report that said this. I am not allowed to get credit reports. Actually, as I understand it, neither is the person who told me this, at least for this purpose. You can order credit reports on a person for other reasons, but not to send emails out about credit report contents to persons like me who are not prospective creditors.

I would appreciate it if someone could clear this up. And I wonder why I have not heard about this sooner from Piccolo or his organization.

On 8/7/07, I got an email saying CNN Money had an article on their Web site that among other things, has Piccolo confirming his felony conviction. You can see that article at http://money.cnn.com/2007/08/06/magazines/fsb/real_estate.fsb/?postversion=2007080706.

So now we’ll have to speculate about who was trying to trick me into thinking it was not the same guy. Gee, I wonder who would benefit from my removing mention of the felony conviction?

Sidney A. Pashkow

Click here to read my review of the book she co-authored with Victoria A. Jackson, Focusing on Foreclosures.

George Paukert—Unknown

Use my Real Estate B.S. Artist Detection Checklist to evaluate this guru.

Dante Perano (First Hybrid Corp dba Financial Services of America, 3983 S. McCarran #512, Reno, NV 89502)—Unknown

Use my Real Estate B.S. Artist Detection Checklist to evaluate this guru. 

Wayne Phillips

Phillips is a real estate guru who is best known for real estate loan advice. The Federal Trade Commission fined him $50,000 in 1991 and ordered to stop making claims he could not prove. Phillips did not pay the fine and was sued by the FTC in 1995 for $2.1 million. An FTC spokesman said Phillips exaggerated the ease with which real estate loans could be obtained. Phillips also owes Texas a $30,000 fine.

Phillips used to sell some of my books. His financial guy was very angry at me because I always made them pay in advance with a cashiers check.

Tony Pico—Unknown

Use my Real Estate B.S. Artist Detection Checklist to evaluate this guru.

Larry Pino (Orlando, FL)

Jane Bryant Quinn did a detailed article about Pino in the 6/8/98 issue of Newsweek and in her newspaper column. According to Quinn, Pino is an attorney who was reprimanded by the Florida Bar for misusing an investor's funds. Pino says he paid the money back. He also worked for gurus Charles Givens, Mark Haroldsen and Dave Del Dotto (which see).

A reader sent me an “Assurance of Voluntary Compliance” filed in court in Davidson County, Tennessee in 1996. The barely legible docket number appears to be 96-3631-III. It is labeled State of Tennessee versus Diversified Cash Flow Institute, Inc. (Pino is “President and General Counsel” of DCFI). It says “The Division of Consumer Affairs...and the Attorney General conducted an investigation of [DCFI's] business practices. These practices include the following:...using earnings claims that are not representative of the results an average participant in the training program could expect; making potentially misleading statements about the value or cost of the training program; stating that the training program was associated with a university when it was not;...and overstating the value of certification offered by [DCFI]...the Division and the Attorney General determined that certain acts and practices of [DCFI] violated the Tennessee Consumer Protection Act of 1977. [DCFI] neither admits nor denies any wrongdoing...and gives this assurance...in order to avoid the expense of litigation.” The court papers state that the DCFI training program cost $6,995.

Interestingly, the “Assurance” requires DCFI to make “verifiable substantiation of...illustrations that may not reflect the average experience of a graduate...available on request.” The word “illustrations” apparently refers to examples of student success or student testimonials. I am very suspicious of the testimonials provided by seemingly average persons on guru infomercials. The Assurance requires DCFI to stop saying the “cash flow” industry is unregulated when, in fact, TN law requires a brokers license for some of the activities DCFI covers. The Assurance orders DCFI to refrain from discouraging consumers from taking notes or otherwise keeping a careful record of the information [DCFI] provides during the introductory workshop.

One item really bugged me. It orders DCFI to not encourage consumers to go into debt in order to take the DCFI course. They do that?!

Jane’s assistant Temma Ehrenfeld attended Pino’s $5,995 five-day “boot camp” called The Diversified Cash Flow Institute. 33 people attended that 3/97 session. Temma called all of them 15 months later to see how they had done. One man had grossed $1,050 on two deals---a net loss of $5,995 - $1,050 = $4,945 after deducting his "boot camp" tuition, more if you include the expenses of traveling to Austin. No one else whom Temma was able to talk to had done any deals. It should be noted that Pino grossed 33 x $5,995 = $197,835 for his five days of teaching. Four of the graduates of this “boot camp” called it a waste of their time and money. I suspect the others are still in denial.

Is December of 2004, a TN administrative judge ordered the State of TN to reimburse Dynetech, a Pino company, for $133,000 costs of successfully defending a cease and desist action.

John Polk

Sold "Inside Secrets" of wealth and falsely promised to invest in the deals brought to him by followers. Sentenced to 51 months in federal prison. U.S. District Judge J. Frederick Motz also fined Polk $250,000 and ordered him to pay $2 million in restitution in a mail-fraud case against Peak Performance and its successor, Success Achievement Systems. "The government has made an overwhelming showing of fraud from the inception of the whole business," Motz said.

William Poorvu

Click here to read my review of his book, The Real Estate Game.

Richard Powelson

A much-traveled seminar speaker. I took a Lowry-Nickerson finance seminar from him in San Francisco in 1979. It was appallingly unethical. At one break, the guy next to me commented, erroneously, “I don’t think there’s an honest man in the room.” The audience had repeatedly laughed at Powelson’s cornucopia of tricks, like listing yourself as a vice-president on your business card so you could pose as president when a mortgage lender called to confirm your employment. Powelson himself thought the stuff was unethical. He commented all weekend. “I don’t advocate these things. I’m just telling you what some of my students have said.” But almost the entire weekend consisted of such “I don't advocate..." advice.

Programcritique.com (aka J.C. Sbicca)

This guy, J.C. Sbicca, copied my write up on Carleton Sheets and put it at his Web site without my permission and without saying that I was the one who wrote it. He also had the words “Copyright 2004 All rights reserved” on that page indicating that he is the owner of the stuff he stole from me and that you’d better not steal it from him. Jerk!

2009 UPDATE: In an effort to optimize our organic search engine results, my son did a Yahoo search of "john t reed" to see what the results were. After 2 pages of our own site and a wikipedia entry, the 4th result is a review from programcritique.com where the author falsely accuses John T. Reed of lying. We would ignore the issue if he didn't rank so high with a lie about me. Here is their review of John T. Reed...

"ProgramCritque does not recommend Mr. Reed because of the attack that he levied on John C Sbicca the owner of ProgramCritique. Although he has seemingly built a small successful business Mr. Reed is a complete hothead and although he is highly educated in real estate and has written a number of books on that subject Mr Reed; in life he comes across emotionally and relationally a very small  person. ProgramCritique has had a very good review of Mr. Reed as noted above, and although that is the case he seems to find within himself to resort to name calling, impuning Mr. Sbicca's character, and levying false accusations."

My accusation is not false. ProgramCritique.com plagiarized my site, and its easy to prove. Mr. Sbicca deleted it from his site and denied it ever happened. It appears he's not familiar with the Wayback Machine (aka archive.org). This website can show you what a web site looked like years ago. Think of it like a surveillance camera for website content.

2003 - Text written by John T. Reed about Carleton Sheets is first posted. (see all versions of johntreed.com here)
2004 - First archive of ProgramCritique.com shows up for Oct. 9, 2004 (see all versions of programcritique.com here)
2004 - PLAGIARISM OCCURS: Text originally published by John T. Reed shows up on ProgramCritique.com site on 12/08/2004 (you can see the date embedded in that link - "...web/20041208...")
2006 - John T. Reed discovers the plagiarism and writes brief paragraph about it (its the first paragraph of this review under the subhead "Programcritique.com")
2008 - ProgramCritique.com writes favorable review of John T. Reed

Some time in 2008 or 2009, Mr. Sbicca deleted the plagiarized text from his Carleton Sheets review and also modified his favorable review of me, accusing me of lying, calling me a "hothead" and a "very small person." I don't know the exact date that he removed it from his site because the newest archives for both sites are from early 2008.

Sbicca deleted the plagiarized parts (you can see the passage that was on his site in 2004 is no longer there). Unfortunately for Mr. Sbicca, the internet never forgets.

Mr. Sbicca lied and got caught. Twice. He lied when he portrayed actions by me as his own when he plagiarized me, and he lied about plagiarizing me.

Here is the 2004 version of his site.I have italicized the plagiarized parts which you can confirm are on our web site in 2003.

2) “Carleton H. Sheets a.k.a. Carlton Sheets, Carleton Sheets, Carleton Sheets.

I previously described Sheets as a former Al Lowry instructor. He wrote me a letter saying he wasn’t a Lowry instructor. The letter also complained about being lumped in with Robert Allen. I have since learned that Sheets was a pitchman for Nothing Down author Robert Allen, that is, he was the guy who made speeches to get people to sign up for Allen’s weekend seminar. Seems to me Sheets should have mentioned that in his letter to me.

He also protested that he no longer does infomercials from a yacht in Florida, although he admits he did one scene from a yacht 12 or 14 years ago. In his letter to me, Sheets bragged that he recently did a nothing-down purchase. I asked for the address and name of the lender. No response. Sheets’ letter says he has been a full-time real estate investor for nearly 29 years. The phrase full-time real estate investor catches my eye. Such people are rare. Most of the real-estate millionaires I know only do it part-time.

It’s kind of the nature of real estate: part business and part investment. Sheets’ partner Mark Holocek admitted to me that Sheets now spends less than 40 hours per week on real estate investment, but that’s all he does. Well, except for appearing in infomercials. In his letter to me, Sheets claimed, I am buying, selling and rehabbing property on a weekly basis. I asked him for the addresses of the properties he had bought, sold, or rehabbed in the last three months. No response.

Why would a guru brag to me about his purchases, sales, and rehabs, and then refuse to provide addresses, especially when he ought to know I am going to tell my readers about it? It can’t be privacy. All real estate transactions, including lenders, are publicly recorded. Rehab generally requires a building permit, which is also public. Some gurus refuse to provide addresses because they simply did not do the deals at all, others because there is something about the deal that would embarrass them. I do not know Sheets’ motivation for not responding to my request for addresses and a lender name.

Someone other than Sheets tells me that he is one of another rare breed. He is not a self-employed guru. Rather he has some sort of partnership or independent contractor relationship with the guys who actually promote and sell the Carleton Sheets home-study course. If that’s the case, he may be able to invest most of the time, but not full-time. I guarantee you that no guru who owns and runs his own guru business has time to also invest full-time.

Although Sheets’ prices seem relatively low, once you order you will find that you are repeatedly pressured to buy more expensive products. His inexpensive products are deliberately left vague and incomplete to get you to buy more expensive products.

A couple of people have told me they made a lot of money in real estate because of Sheets. I don’t believe it. I have read a considerable portion of his material and have yet to find any ideas that would lead to anyone making money. At worst, the people who have contacted me are simply shills who are lying. At best, they are sincere people who did, in fact, get into real estate and make money, but they are erroneously attributing their success to Sheets. If you truly think Sheets’ advice made you money, please tell me which one of Sheets’ books gave you the ideas you used to make money, and the page and line numbers of the idea or ideas in question. I suspect that if any of these people are sincere, they will be surprised to find that they cannot cite a single specific piece of Sheets’ advice that helped them, other than his general statement that you can make money in real estate.

The real-estate world has long been inhabited by thousands of successful people who got into real estate because of some bogus guru, could not make money with the guru ideas they had so expensively purchased, but ended up discovering other, legitimate ways to make money in real estate on their own. Most of these folks are intelligent enough to recognize that they were taken by the guru and succeeded more in spite of him than because of him. But a small percentage of people are sufficiently dimwitted and easily manipulated that they retain their love for their guru long after they should have noticed that his stuff really did not work and they actually made their money using a different approach.”

If you are going to buy Mr. Sheets or for that matter any other no money down gurus real estate info, definitely buy it second hand as inexpensively as possible.  Read through everything and learn as much as you can from this information and figure out how you can successfully get into real estate, but definitely do not dilute yourself into thinking that no money down deals are just going to find you, or for that matter any real estate deal. You have to develop a successful team of people that you are surrounded by and bring something to the table. Good luck!

I do not recommend that you buy any of Mr. Sheets information first hand. I definitely do not recommend it second hand if you think for some reason that you are going to suddenly have an inside track that no one else has. This no money down stuff has been marketed for so long that the market is flooded with starry-eyed fools that real estate professionals cannot wait to get their hands on. A fool and his money are soon parted.

Click here to see part 4 of this article.