If you see a poster on the side of the road advertising a six-figure real estate apprenticeship, keep on driving.
We’ve all seen them. Pulling up to an intersection in Aurora or Denver, and slapped to a stop sign is a hastily hand-written advertisement offering to pay you six-figures to be someone’s real estate apprentice. It's hard to believe anyone would bite on this, but these ads keep popping up! So, we set out to discover the truth behind these ads.
Before we get into any of this, we want to make a very important note: please don’t call one of these numbers. These operations are set up to monetize every single piece of collected data and they will sell your phone number to telemarketers.
Learn from our mistake and don’t call.
The entire "offer" is a scam. There is no multi-millionaire looking for a real estate apprentice at a red light on East Colfax.
The way these scams work is they funnel "prospective hires" into a seminar program. A prospect pays for these real estate seminars out of pocket, and on top of everything, the seminars don't teach anything that can't be found by simply a simple internet search. The sad reality is that this is a Multi-Level Marketing (MLM) scheme, also known as a Pyramid Scheme. Enrollees get paid commission when they get new prospects to also enroll in the seminars.
However, we want to be clear. In some cases, there isn’t even a seminar. Scammers post these "job listings" on stop signs hoping to get suckers to put a deposit down on the "seminar" courses. Once the money changes hands, the scammer disappears and moves onto another region. In other cases, the seminars are terminal, meaning there is never a real estate apprentice job at the finish line.
But sure, let’s assume that the $120k/year job posting on a handwritten sign stapled to a telephone pole in Commerce City is legitimate. What would the program entail? These scams specifically look for individuals susceptible to these types of ads. Most of the people who go through these seminars never see a job offer.
Every now and then, someone in the seminar actually does get offered a job in "real estate investment." The term is used loosely because the poor person who got conned into paying for a bogus seminar is then put in charge of either finding new people for future seminars or people desperate to stay on top of their mortgages.
Just like how the "job offers" are posted in lower-income areas, the real estate side of the business focuses on low-income homeowners as well. The targets are low-to-middle income families who bought homes they couldn’t afford and now owe the bank more than their houses are worth.
The company offers these desperate homeowners cash for their home – way below market value – and then turns around and flips it for a small profit. These types of short sales are hard to orchestrate because they mean the bank takes a haircut on the mortgage. But in distressed neighborhoods, lenders are often willing to take a percentage of what they're owed when the alternative is foreclosure.
For the underwater homeowner, short selling their home may mean losing money in the short term, but it cuts the period of time they can be penalized by creditors in half.
None of these real estate short sales are particularly profitable, but the goal for these operations is volume. Once they purchase the house for a steal, they want to flip it as soon as possible and move onto the next one. They don’t want to hold onto the distressed properties for long.
So if you see one of these six-figure job offers on a stop sign the next time you’re on the road, just keep driving.