There’s no shortage of guru’s peddling expensive advice on how to get rich quick investing in real estate. But this advice doesn’t always work out – even for the gurus. Welcome to the Hall of Shame of Real Estate Investing Gurus. For a brief real estate guru history, see this previous post.
Our first guilty party is Robert Allen. Allen set the world on fire with his groundbreaking 1980 book, Nothing Down, a summary of strategies for investing in real estate without any money. I read this book when it first came out when I was still in high school.
Many of the techniques became obsolete as institutional lenders started inserting due on sale clauses in their mortgage documents, preventing easy assumptions and land contracts. But there is a bigger problem. Borrowed money to real estate is like iron ore to making steal – very necessary. But debt is also the enemy of cash flow. Borrow too much and you can go broke – just ask Robert Allen.
Allen declared bankruptcy in 1996. The IRS has been after him along with the Utah State Tax Commission. Allen is a resident of Utah. There has been additional conflicts with speakers for Allen seminars not getting paid.
Robert Allen and so many others overlook some obvious facts about the real estate industry. There are plenty of people like me who make real estate their full-time job and have decades of experience. You have to compete against them. It’s impossible for a single book or seminar to give you the tools you need to be successful, and one of those tools is years of experience – even all the books and seminars can’t render that.
Real estate is a fantastic opportunity for those willing to work hard and be patient. Unfortunately, Robert Allan may be lacking these characteristics.
Come back in seven for a Rich Dad, Poor Dad exposé!