Dean Graziosi Real Estate Scam?

Purpose: If you are thinking of attending Dean Graziosi's Real Estate Investment class, I want to give you a heads up on what to expect along with my personal opinion so that you know what to expect and can make a more informed decision on whether to spend your money on it or not.

Why: I searched on the internet and couldn't seem to find a review on his class that wasn't tainted. What I mean by "tainted" is that the review seems like it was from someone being paid by Dean but acting as if they were not. I could be wrong here. Or other people saying that the class is a waste but didn't present much info on it as to why. So I want to write one for others thinking of going to his class.

So here goes:

I got a mailing inviting me to a free real estate seminar with gifts of a digital camera for just attending. If the gift is the reason you are going, let me save you the trip: the camera is the crap; even by 10 years ago standards.

The seminar is a sales pitch (and I knew that going in but a good one) for Dean's 3 day class along with promises of finding sources of money to fund your transaction. The funding sources are worthless, but more on that later. They promise to teach you some strategies and such. Then the next sales pitch is on a class on buying liens (good/interesting sales pitch here too as I didn't know much about this). Cost of the real estate investment seminar is $2000 and you can bring someone else with you for free. The class on property liens is an online class along with access to their website to buy liens at a discount and is priced at about $1000. The real estate investment class comes with a $2,000 cash back if you do a deal within 90 days of attending the 3 day seminar. The cash back is hard to get if you're new in real estate investment. You either have to successfully do a flip at a profit or purchase a property and rent it out with a positive cash flow. If you can do this easily within 90 days, you probably don't need to attend this class anyways.

I talked to someone who did buy the package on property liens and he told me all that's left on there were empty lots. Sure sounded like he wasted his money.

I have already been a real estate investor at this point and at this time had 3 properties renting out so I figured if I can learn one additional idea or strategy, it would be worth it to me. If the $2000 seminar is a total scam, I make enough to where it wouldn't make a difference in my life. I wouldn't lose any sleep over it. So yea, I signed up.

The actual class:

Day 1:

The teacher was Deno Frabrizio. This day was spent on mostly personal development stuff. He talks about how, in order to be rich, you must have a wealthy mindset. And if you don't have one, you wont get rich. He gives the example of how people who win the lottery go broke after a few years because they don't have a wealthy mindset. He goes over a bit on his background and person life and how he got started in this. He goes over some challenges of investing in real estate: No time/money, lack of system, lack of coaching, lack of confident/wealthy mindset, don't know what to do, etc. He tells you these things are needed in order to succeed.

While I agree with him on a lot of these because I've started without any of it, you can find a lot of these in real estate investment books. You get the impression that the class will solve all these challenges for you but it won't. What he's setting up here is to sell you the next seminar package and its not $2,000. Not even close, but more on that later.

He explains on good debt and bad debt and what the differences are. He explains on how to get a wealthy mindset. All of this is good stuff if you haven't been exposed to the world of personal development. For me, I have been studying this stuff so it wasn't anything new. And I do agree with him that on the road to success, you need to develop all this: that money is a result or side effect of a wealthy mind. If you don't have one, its almost impossible to get rich. Tony Robbins explains this very well.

A side note: He teaches the idea of a wealthy mindset as if it was an on or off button; as either you have a wealthy mindset or you don't. I, personally, disagrees. There are many levels in a wealthy mindset. His example is that if someone with a poor man's mindset wins the lottery, they won't know what to do with the money and will end up blowing it all in a few years and become broke again. While those who have a wealthy mindset, you can take all his money away and in a few years, he'll make it all back. While I agree with this concept in its general sense, its not either you have a wealthy mindset or you don't. If you take a person that's been making 100k a year and take away all this money, he will know how to get back there again. Same with someone at 1 million and 100 million. But if you get the guy making 100k to make 1 million, he probably won't unless he develops a millionaire's mindset. Same is true for the guy making 1 million if you ask him to make 100 million. So this is where I think there's many level of a wealthy mindset and you gotta work your way up.

He ends the class with a brief plan on how to buy a house at wholesale and selling it back to rehabbers along with how to price it.

My opinion: The first day was good. I like hearing about the personal development stuff and the wealthy mindset idea. I think this is a critical step in building wealth. This idea was probably more important than the real estate strategies itself. The brief plan on how to buy a house at wholesale and selling back to a rehabber was worthless to me. He said you can find houses at wholesale prices just by going around your area and look for crappy houses and make them a really low offer. Then estimate what it cost to repair it and what it will be worth after the repair and sell it to a rehabber for a few thousands dollars profit. You can either do a reassignment of the contract or just flip the property. Oh and to find a rehabber, just hang out at your local hardware store. While this may be a viable strategy for some people, it was worthless to me.

Day 2:

He goes over the 3 types of income: earned, passive residual, and portfolio. He goes over some examples of  a real estate transaction and the steps involved and how to see if a deal is a good deal or not. He goes over the details of a real estate contract and what all it contains. Then lunch break.

My opinion: All this stuff is basic investment 101. At this point, I can't believe he's teaching this. I just paid $2,000 for him to go over investing 101? And details of all the parts of a real estate contract? I could ask a Realtor and they would've explain all the parts of a real estate contract for FREE. But I understand not everyone is at the same level I'm at. I've talked to other people during the breaks and some have been investing for decades and some have never started at all. So I guess going over the basics for the beginners was good.

He finished the 2nd part of day 2 going over lease options. He explained how you can get 20% money upfront for the consideration of a lease option and that you can lease the property to them at 20 to 30% higher than normal rental. The 20% upfront for the consideration is like the cost to buy a call or a put in the stock market.

My opinion: At this point, I'm very confused about the lease option. Why would anyone with that kind of money do a lease option? Someone would actually pay 20% of the property value for a lease option consideration for 3 years?!! AND you can get them to pay 20 to 30% higher in rent for the time they lease? REALLY?! This was something brand new to me and what he was saying was just unbelievable. Apparently, I wasn't the only one because plenty of other people in the class asked more about it. However, at this point the instructor started to become very RUDE to some of the students asking questions. I felt so sorry for this one lady in the class that he kept on picking on her every time she had a question or comment. He was just downright rude to her. When I asked some questions on this, he gave me an attitude too as if I'm just too stupid to understand it. I didn't appreciate this at all. His rudeness continued to day 3 and he almost seems to make himself look like just a rich asshole. As for the lease option strategy, it sure seems bogus to me. But I could be wrong.

After day 2, I kinda felt like this was a waste of my money.

Day 3:

He goes over some software that helps you find properties that are under foreclosure and those about to be. The software also finds potential cash investors and a bunch of other stuff. The demo seems like its really good (and it probably is). I can't remember the software name now but I did look it up on the internet during class. You can't buy it outside of this class. This day seems like most of it was setting you up for a bigger sale. All the challenges that he presented for an investor can be handled if you just purchase their next premium packages of either $20k, $26k, or $42k. He talked about the funding sources. If you flip a house with a quick transaction, you can use their money for the cost of 2%. If you borrow it for long term, it's 1% per month.

REALLY?! So 12% annual interest rates? That's the oh so good funding source they promised? At the time of this writing, bank interest rate is around 4%. Why would anyone want to use this? I guess if you have really bad credit and the property you found can net you over 12% profit, then its worth it. Otherwise, the sources are worthless to me.

This is the last day so they tried really hard to get people to buy one of their packages. The only thing that interested me was the software which I found out cost $2,000 for 1 year subscription. I forgot what it was going forward after that. but it was a lot lower per month. My thoughts were, if the software was as good as they demo it, why did they need to sell me a whole years subscription for $2,000? I would be a lifetime client if it helped me get good deals. So I didn't buy it.

The packages they were trying to sell included going to a "buying summit" where, supposedly, Dean Graziosi has already purchase the property, fixed it up, get it rented, and now is selling it back to you. They say that each property there can net you at least 12% return; which is fantastic, if true. My current rental properties do not net that much. The properties he's selling, according to the consultants that were there (all of us were assigned a consultant to answer any questions regarding rental investments and to sell us the premium packages), these properties are low income housings.

So that's the class and I did not buy any premium packages nor the software. The premium packages come with the software.

Conclusion: Was the class worth it? To me, it was barely worth the $2,000. What made it worth it to me was that had a bunch of questions and the consultant gave me straight answers from his own experience.

I did learn a few things useful.

1. Low income housing can be hugely profitable. After the class, I looked into low income housing and they can have a huge return. The particular property I was looking at was a duplex with both units rented out. I calculated if I was to purchase the property out right at the full asking price, it would have net me 20% return. That's a WHOLE lot better than what I was currently doing. So Dean's "buying summit" with a minimum profit of 12% is probably true. In fact, you might be buying it too expensively from Dean.

2. You can use your money in an IRA to buy properties by switching it to a self directed IRA. I didn't know that.

I did get a few of the student's contact info and tried contacting them after the class was over. Only one person contacted me back and she said she didn't do much with the premium package. So it sounded like she wasted her money.

They did say that not everyone will succeed at this and that you need to take action to succeed. I agree with this. Most of the students in the class didn't seem to have enough of a wealthy mindset when I talked to them to succeed in this. But I could be wrong here. They seem to have bought into the hype more and just went ahead and spend 20k or 40k to get started in this.

The instructor did say that "when the student is ready, the teacher will come." I believe in this wholeheartedly.  But what he didn't say was that if the student isn't ready, no amount of teacher, no matter how good they are, will be able to teach you. This is what I fear of those who bought the premium packages. They aren't ready and just wasted their money. I knew I wasn't ready for it. If my annual income was 1 million, $40k would be no problem to spend.

So to answer the title of this blog, is Dean Graziosi's Real Estate Seminar a SCAM? I would have to say no. They are providing education and that's what you are paying them for. I think the better question is, can you make it work for you?  Are you REALLY ready to do this? If the answer is no, going to this class or the premium ones probably won't help you. If the answer is a big HELL YES, then you may not need this class anyways. You are determined enough to probably succeed without it. Get some books on this and get started!

So then, what's the point of having this class at all? It is to speed things up with the education instead of learning things the hard way. That's the point of education anyways, isn't it?

While the above sounds like I'm endorsing his class, let me be CLEAR: I am NOT. It is my opinion that his class isn't worth it. If I had to choose again knowing what I know now about the class, I would have spent that $2,000 elsewhere. All the things that were in this class could be obtain through books about real estate investments...and there are tons of them out there. That's how I started. I read one book on it and just jumped in. Ready, FIRE, Aim.

So I hope this was helpful and good luck.