A Story of Mayhem

John and Jenny had been treading water financially for years. Hardworking and diligent, they carried their weight but never managed to build any savings or get ahead. They had dreams of financial freedom and often talked about how to break out of their rut. They read books, watched videos, and immersed themselves in online forums. Eventually, they became convinced that real estate was their ticket to the life they’d always wanted.

Determined to be prudent, they interviewed several mentorship programs to ensure they were making the best decision. They felt proud of themselves for doing their due diligence, believing this cautious approach would set them up for success. However, the real problem was that they didn’t have savings to invest—a reality they downplayed. When it came time to enroll, they rationalized buying the course on credit. “We’ll just do deals to pay it back,” they told themselves.

Getting into the mentorship program was euphoric. The community was vibrant, filled with success stories that reinforced their belief that they were on the right path. Stories of bad deals or failures were notably absent, drowned out by the relentless positivity. Buoyed by the energy, John and Jenny took the next logical steps: they spent more money forming LLCs, printing business cards, and even purchasing additional courses and tools. 

It was exciting, but as the expenses piled up, they began to feel the strain. Their original plan had been to keep it under $10K, but each little thing stretched them a little further. Convinced they’d succeed, it wasn’t long before they had $18,000 “invested” in this venture.

So came the pressure—both financial and social. In the mentorship community, the mantra was clear: success means closing deals. John and Jenny started to feel the need to prove themselves. They fell into the “fake it till you make it” trap like many others in the group who weren’t actually doing deals. They needed to close a deal to bring in money, but they also wanted to close a deal to appear successful among their peers. The push to make money and the pull to look successful created a toxic cycle of urgency.

Underneath their outward confidence, they felt self-doubt and inadequacy. They had already spent thousands of dollars on the mentorship, LLCs, softwares, phone systems, conferences, leads, Virtual Assistants, and more, but had no tangible results to show for it. The idea of admitting they were failing was unthinkable. What would people think? What would it say about them? They put their bets on one good deal saving them. They just knew it would make it all worthwhile.

When a deal opportunity finally came along, they were desperate to make it work. The financial pressure, combined with their need to maintain appearances, clouded their judgment. They began to cut corners. To the seller, they painted a picture of themselves as seasoned investors. To their private lender and JV partner, they omitted critical details about their finances and/or provided fake proof-of-funds (besides, they’d have the money once they did the deal!!). They didn’t have savings to fall back on, but they couldn’t admit that. They avoided people who might ask hard questions or challenge their underwriting.

“We need this deal,” they told themselves. By now, they were fully committed, having sunk so much money into the mentorship and their real estate dreams. They believed that landing just one good deal would put them back in the black. But it would have to be a good one, so they started looking for that one special deal. They started trying to make regular deals into that one special deal that would save them.

They relaxed their underwriting standards. They intentionally avoided thorough due diligence, worried they might uncover something that would kill their deal. When they found something bad, they “forgot” to disclose it...

And then, the deal went bad. It could have been unforeseen costs, a defaulting partner, longer-than-expected vacancies, regulatory hurdles, or any of the myriad issues that can arise in real estate. Whatever the specifics, the truth all along was: they weren’t, and never had been, financially prepared to take on this deal.

The fallout was devastating. The very deal they had pinned their hopes on became their undoing. Their financial situation worsened, relationships with partners soured, and they were kicked out of the mentorship. Feeling like victims, they never realized that their desperation, which was fueled by a financial pressure and the relentless push from the mentorship, was completely avoidable.

An Open Letter

TO: Real estate gurus, tycoons, the leaders of mentorships, training programs, communities, or whatever else you want to call yourselves,

You are fostering these situations. They may not be your fault… but they’re your fault.

Your sales teams are driven to close deals… Your advertising attracts financially unprepared people, but you don’t have minimum standards to keep them from joining yet. You and your sales teams are all too happy allowing people to financially overextend themselves just to join your programs.

You’re bringing the problem into your own groups. This builds a community out of people whose baseline is poor financial decisions. What do you think that does to your community? To the industry?

Your method essentially brings risky people together and makes them feel the need to fake it ‘till they make it. That leads to mayhem: bad deals, bad partnerships, defaults, poor judgment, disappointment, and financial ruin—not just for those individuals, but for everyone they do business with.

You can do something about it though: QUALIFY your students. Set minimum financial standards for people to join. Sell a junior program where they can get their first deals without overextending!

Sincerely, 

someone who has met and counseled many of those people and the people they hurt.