My experience with Cash Flow Edu real estate investment training

I was played. As much as I knew the possibility of it going into it, it still happened.

It was June 2016 — I was out of work and looking for my next opportunity. I always had an interest in real estate investing. The appeal of creating passive income was something I found enticing. I received a flyer in the mail for a free real estate investment seminar put on by Pathway Events. I should have thrown it in the recycling, but it was too tempting — it matched both my interest in real estate investing and desire to run my own business. Besides, what’s the harm in checking out a seminar that’s free, right?

Normally it would have been difficult to attend such a seminar — it was in the middle of the week, but being out of work it was easy to attend. At the free seminar, Bryan Baeumler of HGTV gave a talk. I hadn’t heard of Bryan before the seminar, but he seemed like a reasonable guy (and he’s Canadian — which goes over well in a Canadian city like Victoria). The food was terrible (so if you’re thinking of going to one of these free seminar for the free food, don’t). There were three products being pitched. The main one was a course for teaching people to invest in the United States real estate market which we purchased. Normally, I don’t think I would’ve signed up for a $1000 course by myself — but with my wife who also has interest real estate investing being keen as well, we decided to go for it.

At this point, it is worth noting that there were several companies involved with this real estate training — Pathway Events put on the free seminar, but Response Marketing manages the websites and Cash Flow Edu provides the training packages… my understanding is they’re all controlled by the same people. Yeah, I know, should’ve been a red flag.

In July 2016 my wife and I attended the 3 day Cash Flow Edu real estate workshop course. The content was interesting; however, there was always the ongoing pitch for purchasing advanced training. Each couple was assigned a salesman. Our salesman, Jace, talked about how he and his entire family were making real estate deals. He said he was closing a deal on Tuesday. It sounded so easy. I wonder now if any of what he said was true.

The “advanced training” packages were expensive — $25,000 USD for the “Diamond Elite” package which we ultimately purchased. This package came with access to the “Buying Expo” — where we were told we could buy turnkey US properties (rental properties that have property management set up already so in theory you just buy, do almost nothing, and receive income). This seemed appealing as we figured if we had trouble doing deals we could at least buy cheap US rental properties. Some context for those who aren’t familiar with real estate in western Canada: Vancouver and to a lesser extent Victoria, where I live, are crazy expensive. For the cost of one rental property in Victoria, we could buy three or four really nice homes in the US. We did some searching online — not much came up about the company. We wanted to believe. We felt like it was an opportunity for us to make money by spending money to get access to special knowledge that would enable us to succeed where others who hadn’t obtained this wisdom would fail. We felt privileged to be able to afford the package and that we were special because we were willing to do what others were unable or unwilling to do. After signing up for the advanced training, over lunch, we cheered to the start of our new business. We knew it wouldn’t be a cakewalk, but we figured we had a good chance.

In August 2016, we attended the 3 day “Boots on the Ground” course in Victoria. Five couples and one single attended. This was supposed to be the “learn by doing” course that focused mainly on wholesaling. (For the non-real estate investors out there, wholesaling is when you get a property for at a very reduced price and then sell it at roughly 80% of it’s value to other investors. Since most deals are cash deals, the turnaround time is quick; leading to wholesaling sometimes being referred to as “Fast Cash”.)

Our instructor, Ali, had been quite successful real estate investing. He informed us that he was financially independent and that teaching was his way of giving back. I sensed he had empathy for the group, perhaps in a “you made the mistake in purchasing this package, but I’m going to help you make the best of it” sort of way. Towards the end of the course, Ali met with each couple separately. We were told that we couldn’t tell anyone, but there was a secret way to get deals sent to us that we could turn around and sell wholesale. All that was required was a $125,000 USD investment to buy a turnkey property from an unnamed company who would in turn for as long as we held the property sent us deals. At this point you may be saying — “wow, how sketchy is that — it must be a scam” and I wouldn’t blame you; however, we were intrigued by this possibility since we were at this point already thinking we’d buy a turnkey property or two in the US. The plan was we’d use the deals we received from the turnkey property provider to do wholesale deals. It was an edge. A chance to gain access to deals that we knew were essential for success. We therefore made a plan with Ali — we’d build up a cash buyers list in the top ten cities in the US in preparation for receiving deals and then meet Ali in LA to buy the turnkey property. With a plan in hand and a mentor to boot, we were feeling optimistic and filled out our post course survey accordingly.

Perhaps it’s naivety on my part, but I feel like Ali genuinely wanted to help. Perhaps we just needed to have more faith. That said, spending $125,000 USD should require more than faith. When I asked Ali for details on this mysterious company, he was not forthcoming — he wasn’t willing to even tell us the name of the company. After repeated attempts for more information he said he had a non-disclosure agreement with the company and that he could only give us the information if we came to LA and agreed to buy. At this point, for me, the bubble of optimism and faith in our plan popped. I can accept some things on faith (we bought the advanced training on it), but I wasn’t willing to borrow money against my condo and invest it in something I knew almost nothing about. It’s one of those moments where suddenly your entire outlook changes. By not buying the turnkey property, we had lost our edge. It felt like a punch in the gut. The alternative method for finding deals presented to us at our training was emailing ten realtors the requirements of your cash buyers and hope that one of them found something for you. This felt like a “hail Mary” (a desperate attempt to find a deal when all else fails). After emailing many realtors my cash buyers’ requirements and talking to various realtors, I came to this (perhaps obvious conclusion): realtors have no reason to give you an deal of the magnitude needed to wholesale a property — they would rather purchase fantastic deal themselves. Good deals don’t stick around and they’re not easy to find, especially if you’re not local to a community.

My next place to look was our original fallback plan — the turnkey properties offered via Response Marketing’s buy.incomepropertyusa.com site. One expects if you’re paying for access to deals that the deals will be of good quality and better than what you could get going through a realtor. Upon getting access I was in for some disappointment — the deals I saw were either in very high crime areas (there’s a reason some properties in the US are so cheap) and some that were publicly listed on the MLS — for significantly less than on the buy.incomepropertyusa.com site. Needless to say, this discovery really shook my faith in the company.

Without a reliable source for deals, I didn’t see a way forward. I had also lost faith in the company. The thought of purchasing additional training (yes, you can spend even more on training if want), was unappealing to say the least.

My sense is that real estate investing is like the gold rush — a small number of people do really well that inspire many others to try, but most fail. The people that make the real money are the ones selling the tools to the gold prospectors e.g., real estate investment education. I realize I made a mistake buying into the “gold rush”. I was greedy. I thought I could beat the statistics and succeed at it, but the deck is stacked against you, especially if you’re trying to invest in communities outside of your own.

I feel misled. When you’re selling education, success should be the norm, not the exception. The cost of a course should be in line with the value it brings to students. Students should feel that they received good value not just on the last day of a course, but weeks after when you try to apply what you learned. It’s in application that you find out the true value of a course. A good provider of education knows this — that is why successful alumni are so valued.

So here I am now — writing about my experience. I hope it provides value to those contemplating buying training from Cash Flow Edu. As of writing this, I’m currently negotiating with the company for a refund. I will update this page when I have more information.

Also, a final note for Canadians investors — there are costs that you need to consider for cross border investing. A recommended asset protection structure for Canadians is to have a Canadian corporation, which owns an American corporation, which owns multiple LLCs (one for each property). When you consider that each LLC and corporation needs to file taxes (and for the LLCs you might also need to file taxes in some of the states you do business), it’s not cheap. So, you need to factor that additional overhead in when contemplating investing in US real estate.