MUST READ BOOK: Homebuyers Beware by Carolyn Warren

Most real estate investment books I read are just plain awful.

Either they offer the same impractical get-rich-quick nonsense on lease/options and flipping properties and the like I have read 10,569 times before and never believed even once or the are give just plain boring advice much like you would find on HUD's website or in the lobby of your local bank branch.

HOMEBUYERS BEWARE by author Carolyn Warren is a wonderful exception to this rule.

This book is a MUST if you are thinking about buying a home anytime over the next year or so. It gives right-on-target advice on everything from how to find the right home for your individual needs to learning the tricks and scams of the mortgage industry.

It is enlightening to finally read about yield spread premiums in a book designed for ordinary homeowners and not in a mortgage broker's class.

If you have never owned a home, or just lost one to foreclosure or a short sale and are thinking about buying one again soon, do yourself a favor and read this book.

I picked HOMEBUYERS BEWARE up in a bookstore thinking it was just another real estate book and I knew I was wrong about ten pages into it. This author really knows her material and teaches it well without all the usual get-rich-quick real estate hype. This is a how-to book and if you are buying a home anytime soon you will need a copy.

The author's website is www.mortgagehelper.com.

For the record, I do not know Ms. Warren and I have no financial stake in the sale of her books or products.

Robert J. Abalos, Esq.

Downfall of Russ Whitney: A Lesson for All Get-Rich-Quick Creative Real Estate Gurus

Since over the next few days it appears very likely I will be exposing yet another get-rich-quick creative real estate guru as a fraud and a criminal, I thought it a fitting lesson to explore the rise and downfall of one of the most famous gurus of the last 25 years, Russ Whitney.

He was a feature of late night television through his infomercials for many years. I doubt there are few Americans who have never seen him at least once. I remember one night flipping through my TV and he literally was on almost every channel SIMULTANEOUSLY pitching his rather conventional brand of "Make a Million Dollars in Real Estate" home study courses and seminars.

I never believed his claims of how, as a slaughterhouse worker in upstate New York earning $5.00 per hour, he turned $1,000 into $4.7 million in 18 months. It made no sense to me then, and years later real estate journalist John T. Reed actually visited Whitney's hometown and conclusively proved it wasn't true. You can read his exhaustive analysis by going here.

But much of Whitney actually taught was not wrong or bad. His books, like BUILDING WEALTH or MILLIONAIRE REAL ESTATE MENTOR, offer investors lots of good advice. If you can find them at your local public library by all means read them.

The problem with Whitney was simple. All get-rich-quick creative real estate gurus have the same message which is inherently flawed.

You can get rich quick in real estate.

Sorry to break the bad news to you but it just isn't true.

You can't lose twenty pounds a week eating nothing but pizza and ice cream and taking no exercise. Just the same way, you can't make a fortune in real estate starting with nothing in an instant either.

This get-rich-quick wealth message is just what the target market of mostly lower middle class paycheck-to-paycheck workers who buy from these gurus want to hear. So this is how the home study courses, seminars, mentoring programs, and all the rest of the products and services are sold.

Whitney made the boldest statement I have ever seen by any get-rich-quick guru. It was unbelievable then, and just plain absurd now.

On the rear cover of his book MILLIONAIRE REAL ESTATE MENTOR he proclaims:

"You can create a net worth of $1 million or more in a year or less---even if you have nothing now."

Think about this for a moment. If you started with $500,000 you would have to earn 100% on that capital in just one year to get to $1 million. If you had $250,000 you would have to earn 400%. But Whitney claimed you could get to $1 million (or more!) starting from nothing in just one year.

Believable? No, of course not.

For most of the years between 2000 and 2007 Whitney ran a public company called Whitney Information Network that traded under the ticker symbol RUSS. He had a terrible reputation, was sued repeatedly by people, law enforcement agencies, and eventually ran into serious trouble with its investors.

He got into trouble for selling overpriced real estate to "big fish" customers in Costa Rica and Florida.

There were many allegations of security law violations.

Eventually Whitney was forced out of the very company that he started and bore his name.

Today, the company, now associated with get-rich-quick guru Robert Kiyosaki, is called Tigrent and trades under the ticker symbol TIGE. Whitney and his wife are suing Tigrent hoping to get back in the door, or at least get some money to go away.

I hope Whitney chooses a better lawyer than he did when he sued author John T. Reed years back. Whitney used the old SLAPP suit technique to shut Reed up about the number of customer complaints Whitney was receiving and it backfired badly on him. Whitney's attorney in these suits was none other than Scott Rothstein, who has just been convicted of running a $1 billion Ponzi scheme in Florida and is facing 100 years in prison.

None of this comes as any surprise to me. As I said yesterday in this blog you can't write fiction this bizarre. I've seen dozens of creative real estate gurus, major and minor, come and go over my nearly 30 years in the real estate business and one simple lesson is true.

Nearly every get-rich-quick creative real estate guru since 1980 has either gone bankrupt, been sent to prison, or is shut down by regulators. Some have even been murdered by their own customers.

The reason is obvious, beyond the fact that you can only sell a worthless snake oil product for so long before people take notice of this fact.

It takes a certain type of low personality to become a get-rich-quick real estate guru, a defect in character that allows you to look desperate people in the eye and smile like you really care, and then take from them not only what little money they have but also their dreams about a better life. It is wrong to suggest that ultimately this flaw catches up with them, because it was always with them. It's the reason that these gurus are not criminals in just one aspect of their lives but all of them.

Russ Whitney has left the real estate scene for good. I suspect few people, other than the salesmen who made a fortune selling his products at hotel ballrooms all across America or the TV executives that sold him air time, will miss him much.

I know another get-rich-quick creative real estate guru who is facing a very similar fate this very day. He's on the edge of a cliff, hanging on by his fingernails, screaming for dear life, God, someone, to come rescue him from the fate which he himself created through hubris and contempt. I know my choices are clear. I can silently walk on by and ignore his peril knowing eventually his fight against gravity is futile, or I can step on his fingers and watch him fall.

Robert J. Abalos, Esq.

Get-Rich-Quick Gurus Russ Whitney and Robert Kiyosaki Company Sued for Fraud

Tigrent Inc., a company associated with "get-rich-quick in real estate" gurus Russ Whitney and Robert Kiyosaki (of Rich Dad fame), has become a magnet for lawsuits alleging fraud of various kinds and at the present moment I don't understand what is going on or why.

I am asking the public's help in learning more about the company, Tigrent Inc. which is headquartered in Cape Coral, Florida, apparently in the same building Whitney once used to run his publicly traded firms that sold the usual get-rich-quick in real estate and stock market courses, seminars, and other programs.

Here is Tigrent's official website. The stock trades under the ticker symbol TIGE. Current price is 43 cents per share.

For the record, the company says in this press release and SEC filing that it has been cleared of real estate fraud charges after the plaintiffs withdrew their complaint. But the 8-K cited discusses a case from the U.S. District Court for the Middle District of Florida. It also does not mention why the plaintiffs withdrew from the case. It also does not mention the dismissal of this case on its own website's list of press releases---a fact I find very curious too.

But here is another case listed in the Justia Federal District Court index from the U.S. District Court for the Southern District of Florida naming different plaintiffs. Obviously it is a different case but I do not know the status. If anyone has a PACER account I'm curious what the pleadings look like here.

Tigrent is the legacy of Russ Whitney's Wealth Information Network, which operated under a variety of names and traded under the ticker symbol RUSS. Russ Whitney's website no longer appears to be online so there are no answers to be found there. During the years 2002 through 2007 there were a number of class action lawsuits alleging securities fraud against Whitney and his various companies but they apparently were dismissed by the courts.

Why Robert Kiyosaki, famous for his Rich Dad programs, would want to become associated with this scandal ridden company is beyond me but here he is on Tigrent's website. I'm asking the public's help for answers. I admit I'm confused and also very curious about what is going on here. I have requested information directly from Tigrent so I'll see what I learn and report it to you.

In the end, nothing surprises me about get-rich-quick creative real estate gurus or the courses they sell. Nothing at all. You can't write fiction this bizarre.

Robert J. Abalos, Esq.

Get-Rich-Quick Creative Real Estate: An Insider Speaks

I received the email below last night. It speaks for itself. Aside from deleting the real estate guru's name to protect the writer's identity I have made no changes to the text.

The guru in question is known to me. I would describe him as a "B List" guru. He is a frequent speaker at REIA's around America but virtually unknown outside get-rich-quick real estate circles. His products are sold online through his website. I never believed what he was saying was true and now I know it is false.

The author of this email spoke to me by telephone this morning and agreed to cooperate with law enforcement officials and the Federal Trade Commission in their investigation of get-rich-quick creative real estate fraud. I believe her claims of working with this guru and she gave me substantial information about him which I have confirmed.

I want to thank this woman for coming forward and contacting me. I feel it was an act of contrition on her part and I hope she feels better for doing so.

It is time to put these get-rich-quick creative real estate gurus out of business once and for all for all the harm they have caused, the money they have stolen, and the damage they have spawned all across the United States which law enforcement estimates into the hundreds of millions of dollars.

Time is running out for them. The noose is tightening every day. People like me who want to end their reign of terror over the real estate world need your help.

If you have worked in the creative real estate business, as an office manager for a guru handling their back office sales, or are a former real estate guru yourself, or are a customer who has been defrauded by these slimy real estate peddlers, please contact me at robertjabalos@gmail.com.

Robert J. Abalos, Esq.

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Read this

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	Tue, Feb 9, 2010 at 8:48 PM
To: robertjabalos@gmail.com
I have been reading what you write and everything you say about these real estate gurus is true. I know because I worked for one for about three years. I worked for XXXXXXXXXXXXXX as an office manager. He actually did invest in real estate unlike some I guess and was a total slumlord. We were told never to respond to complaints from tenants about broken things because it was his hope that when they moved out he could pocked their security deposit. The stories I saw there were sad. One single mom with two kids had a roof fall in on this awful property and it took a complaint from the city to actually get the thing fixed. This guy bought every run down and garbage strewn property in the county. The more trash in the yard the better. He paid illegal aliens to fix these places up and even stiffed them from time to time. We were constantly getting sued and I had to deal with the sheriff coming to my door but he held these properties in so many trusts and corporations very few people actually got any money from him. One day he announced he was going into the real estate information business and this work got added to my duties without any increase in pay. He bought or paid someone to write a course on lease options and some other investment topics and started selling them online and at seminar events sponsored by others. It was my job to ship the products and take calls from people wanting information on them. The idea that anyone could actually learn anything useful from his made us laugh in the office but he sold plenty of these courses. When sales numbers didn't match the previous month we were threatened with firing if we didn't sell harder on the phone. I attended two seminars with him and worked the back of the room selling and handling the credit cards. I was sad so many people were buying these courses because I knew they were worthless but I had to smile and just thank them and encourage them to buy more. The other real estate speakers at these events all had assistants too and we talked before and after the event and they agreed with me that a job was a job but we were sickened by what we were doing to pay the bills. I saw lots of immigrants at these seminars and poor people paying on visa cards. I don't think any of these gurus actually knew what they were talking about. I know in my case the guy I worked for inflated everything he said and showed pictures of properties he did not own. Most of his real estate was falling down and dirty but all his pictures were shiny and new buildings. I finally quit when the cops kept calling looking for him about this renter or that. We had lots of drug activity in our buildings and it was getting dangerous to even call people to pay the rent. But I also know he was making huge sums of money selling these courses and speaking events all over America and especially in the west and northeast where real estate is high priced. One bank deposit I made one day was for $33,000 in just course sales. I feel disgusted at what I did and my part in all this. I hope the government shuts these con artists down because they are taking money from people who can't afford it. Good luck. Please don't use my name because I still live in the town where he work

Commercial Real Estate Review for 2010 and Beyond

Below you will find reprinted an excellent article on the U.S. commercial real estate market and its prognosis from the website Inside Tucson Business. The article is just so good I am reprinting it without any further comment.

Robert J. Abalos, Esq.

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Commercial Real Estate: Stable 2010, bargain hunters point to start of years-long recovery (with slideshow)

By Roger Yohem, Inside Tucson Business
Published on Friday, February 05, 2010

For the next five years, the commercial real estate industry faces a chilling forecast. Nationally, 2010 “looks like an unavoidable bloodbath” for a multitude of borrowers, investors, and lenders.

Each year through 2015, there will be $250 billion to $300 billion in loans that will come due on office buildings, malls, shopping centers, manufacturing facilities, warehouses and other commercial properties, according to PriceWaterhouseCoopers, a New York-based professional services company.

“Yes, those are big, real numbers,” said Howard Schwiebert, investment specialist for Tucson Realty & Trust Company. His research shows $270 billion in loans maturing in 2010 nationally. For the Tucson region, the $1 billion-plus level is certainly reasonable.

Scarce capital, high vacancies, declining rents and sluggish job growth will pound the market, including Southern Arizona. Although there will be spurts of positive activity, it may take until 2012 for a sustainable recovery to gain traction.

Ironically, these vile economic conditions could create the opportunity of a lifetime for investors this year and next. The values of commercial real estate are at cyclical lows, presenting some of the best acquisition environments ever.

“There will be some offsets that will mitigate this to some degree. Not all notes coming due will default, some will be successful in refinancing. Some owners will find buyers and avoid default. Some will work with lenders on short sales. And certainly, there will be investors who will buy foreclosed, bank-owned properties that lenders put back on the market at a realistic price,” Schwiebert added.

He agreed with the forecast, that commercial real estate values will hit bottom this year and investors with cash will take advantage of bargain-priced opportunities.

PriceWaterhouseCoopers also projects commercial property foreclosures to accelerate across the nation. To build up their loss reserves, financial institutions delayed “dropping the hammer” on distressed borrowers. Now, due to government bailouts, they are ready to take action.

For Southern Arizona in 2010, significant commercial property foreclosures are expected. Although it sounds harsh and he doesn’t want to come across as being negative, Schwiebert says the data backs it up.

Due to higher vacancies and falling rents, the region’s commercial property values are starting to reflect deteriorating financial performance. Problems with maturing debt, specifically again, the inability to secure financing, will cause a surge in defaults.

“Because loan defaults continue to increase, we can expect the resale of bank-owned properties to continue,” Schwiebert said. “Although this obviously brings misfortune to distressed owners, it brings opportunities for investors and is a necessary part of the correction.”

Well-financed investors are going to focus on bargain-priced, bank-owned properties. Property prices will likely continue to slip through 2010 even as sales of buildings increase.

Schwiebert holds hope that liquidity will improve in 2010. He has seen signals of the commercial mortgage-backed securities market reopening and several independent investors have successfully raised capital.

“On the positive side, this could shorten the correction cycle that some experts expected to extend through 2012,” he said. “This doesn’t necessarily mean 2011 and 2012 will be great markets, but it may mean that 2010 is a year to make good deals if you’re an investor.”

Schwieber went on to say, “This might unfold in any number of ways. Locally, 2010 could be the year that much of the distressed property problem is dealt with.”

The road to recovery begins now.

Statistics cited in this special report were provided by CB Richard Ellis, Tucson Realty & Trust, Picor Commercial Real Estate Services, Land Advisors Organization, and Bright Future Business Consultants. In sectors where data from these sources were not an exact match, an average or median number was used that best represented those market conditions.