The following is my opinion and observations about a free seminar I attended put on by Fortune Builders. It is based on my own hurried note taking as recording and picture taking were not permitted. I do not believe that this program operates in violation of any law.
I walked into the large conference room and saw that it was completely empty aside from three lonely rows of chairs. Dave Matthews played on a loop as a timed slideshow flashed feel-good quotes on a projection screen. One of the slides listed the core values of Fortune Builders, the “education” wing of Than Merrill’s real estate empire.
- Ethics and Integrity (Do the right thing)
- Inspire (Motivate and help others achieve their goals)
- Educate (Believe and commit to personal development and growth)
- Lead (Take action & follow through)
- Crush It (Enjoy every moment and do it with passion)
Ignoring the fact that “Crush it” is not a value (I suppose someone felt that five was the right number of core values, and this was added as an afterthought), it’s curious that Ethics and Integrity is foremost among the values listed, as so little integrity was on display. Rather, I was about to sit through a two hour slow-burn sales pitch that used misdirection, omission, and psychological tricks to place the audience in a receptive frame of mind, and ultimately, to extract $197 from a group of people who can ill-afford to spend it.
Who is Than Merrill?
Than Merrill is a Yale grad, a real estate investor, and a star of television network A&E’s “Flip This House.” His Wikipedia page is squeaky clean, but there’s some evidence in the article history that attempts to portray controversial aspects of his business model have been suppressed.
Mr. Merrill may be a great guy, but if his aspirations were really to educate as many people as possible, then making the courses affordable to his target audience would be step number one. There is literally no ethical justification for the prices charged by this organization for their courses. Their costs relative to their profits on their “Mastery” level courses (when you actually begin to get concrete information) are insultingly disproportionate.
No Friend to Gurus
It’s no secret that I have little regard for exploitative gurus. Bearing that in mind, when I heard a radio ad for Than Merrill’s “Fortune Builders” program, I relished the opportunity to attend and share my observations.
My primary complaint with Fortune Builders is that they are structured as a series of increasingly-expensive “seminars” which present no actionable information until the highest tier, which often costs tens of thousands of dollars. While it is possible to take the scraps of provided information in the free or paid courses and use the internet or a library to determine a plan of action, most of the people targeted by the program have limited cash, time, and education. There’s nothing illegal about repackaging freely-available information for a profit. There’s not even necessarily anything unethical about it, within reason. It becomes unconscionable when the price is so outsized that it represents literally years of disposable income for the student.
In effect, Fortune Builders and their competitors build a shadow economy of education, finding deals, funding deals, and mentorship, all at preposterously high prices. Later in this post, I’ll show you how you could use the same money you would spend on the Fortune Builders course to not only achieve the same level of education, but to complete a purchase of your first cash-flowing property (and in the right market, potentially two of them!).
The Fortune Builders Seminar Itself
At the beginning of the seminar, a young woman appeared at the front of the conference room and asked everyone to turn off their cell phones. She also insisted that the information we were going to see was proprietary, and that no pictures or recording were permitted. I couldn’t help but feel that this was to make writing a post like this more difficult. As a result of these rules, I had to rely on my own rapid note taking.
With that, our speaker, Michael Kasper, was introduced. Kasper is just the kind of speaker I expected to encounter at this seminar. He’s good looking, charismatic, and a polished speaker. Our small group applauded anemically as he strode to the front of the room, but he took it in stride.
How many of the audience had seen “our” episodes of “Flip This House,” asked Kasper. This was to become a theme. There were constant callbacks to the television show, references to Merrill by first name (“Than says,” “Than believes,” “Than will teach you”) in what appeared to be an attempt to establish credibility and intimacy. Mr. Kasper set to establishing his own bona fides. He’s a family man from the San Diego area, with two children. He has, he claimed, decades of experience in real estate.
“How many of you would like to spend more time with the people you love and care about?”
Everyone raised their hands and murmured their agreement. The seminar was filled with simple, no-brainer questions to which the answer is obviously yes. This was important: Mr. Kasper was using these questions to put the audience in a receptive, “Yes” frame of mind. It’s a compliance technique called the Foot in the Door. In short, this is a psychological sales trick that influences you to agree to a large request (in this case, paying $197 for the next level of training) by getting you to agree first to simple requests, then increasingly more complex ones. In effect, Mr. Kasper has already begun to groom the audience to comply.
“How many of you realize that what we put into our lives is what we get out of our lives?”
Again, obviously, yes. Kasper continued, explaining who Than Merrill is and that his company consistently flips over 100 homes a year. Kasper explained that in 2007, CT Homes (Merrill’s original real estate company) “decided to launch a little show called Flip This House.” This seems implausible, since Merrill wasn’t on the show until the third season (which was indeed in 2007). This was another troubling pattern in the presentation- minor inaccuracies that inflate the audience’s opinion of the speaker and of Fortune Builders.
Next, we were introduced to the many “education” programs Fortune Builders offers, and a brief mention was made of the “mastery” program. Not everyone gets in, we were told, and the program requires an interview in order to be accepted. As an audience member, I’m expected to be worried that I won’t be good enough, and so I become more compliant as a result.
“If you’re going to go to Yale, or Harvard, or an Ivy League school, the qualifications are pretty steep, and those organizations are just like mastery.”
Sorry, Mike, but that’s nonsense. We’re not talking about the Ivy League here, we’re talking about publicly available information and mentoring that countless people would be happy to offer for free. Next, we were introduced to the “three day hands on workshop,” which is the next level of training. We would be hearing a lot about the three day workshop for the next 75 minutes or so.
Kasper cautioned us that the real estate business is not easy.
“Folks, can Real Estate be risky?”
Everyone nodded and answered yes, this time more assertively. Everyone was getting into the groove of agreeing. Kasper cautioned that those entering the Real Estate business without a plan can encounter cost overruns, fines, and unexpected costs that can make their profits disappear. On this, we agree, though I feel that the sense of fear of the unknown is playing to Fortune Builder’s advantage here. The unknown is scary and expensive, the when audience cannot afford to fail, of course they are more likely to pay for a convenient program which offers to “help.”
“Let’s take a little quiz. Is there risk involved in Real Estate?”
“Yes,” the audience around me said with slightly more confidence than when the same question was asked sixty seconds ago.
“Question #2: Can I lose all of my money?”
“Yes,” the audience said firmly.
“Are there people out there, like us, like Than Merill and CT homes, flipping homes and making money?”
“Yes!” the audience exclaimed. Everyone seemed to be getting very confident about how to respond to these questions.
“Are there people losing money?”
Yes, a thousand times yes! Note how a comparison was drawn between those making money and Fortune Builders, but there was no acknowledgement that some of the Fortune Builders students are surely losing money as well.
Kasper went on the explain that the one thing more valuable than money or gold is education. This sounds good, but it’s actually false on face. Education for education’s sake is useless. You can neither eat it nor take shelter beneath it. What people really need is education that gives them the tools to succeed. He highly recommended that we all read a book called “The E Myth,” by Michael Gerber. Apparently the book teaches that there’s a difference between talent and success, and that difference is education.
I disagree with the premise completely.
Moreover, if you actually go look up the book on Amazon, the cover is different than the one shown on the presentation. There are two more authors. You guessed it: Than Merrill and Paul Esajian, the founders of Merrill’s CT homes. All avenues for potential profit from the audience lead back to Fortune Builders.
Side note: I was even able to find an article by Merrill himself where he takes no credit for the book and tries to steer real estate investors towards it, citing his co-author as the only author. Based on the pattern emerging, is this a person who merits great credibility?
Kasper was quick to note that Fortune Builders is a Systems company, likening the experience to the difference between a local taqueria and Chipotle. Chipotle, he explained, is a multi-billion dollar company because of their systems. He never defined what a “system” entails, but from reading between the lines, it appears to be a series of spreadsheets, web tools, and checklists that guide you through each element of a real estate deal.
In fairness, these things are important. To the inexperienced real estate investor, having a checklist and spreadsheet to help with the analysis can be invaluable. The trouble is, tools to do each and every one of these things are already available for free (or nearly free). The key, as always, is in connecting the audience with the information. Fortune Builders capitalizes on their ignorance to reap unreasonable profits.
I’m pretty sure Chipotle wouldn’t be thrilled with the comparison, either.
Continuing the theme of all income streams flowing to Merrill and Fortune Builders, we were introduced to Grand Coast Capital, which is, as Kasper called it, a “a Private Money Lender who funds the deals of our students.” He was careful to refer to it by this term, but most real estate investors use a different term: Hard Money Lender. Fortune Builders clearly chooses to use a more friendly term because of potential negative connotations.
There’s nothing inherently wrong with Hard Money Lenders (HMLs), but it’s important that an investor understand that HMLs should be avoided whenever possible, as they tend to charge very high interest rates due to the expected low lifetime of the loan.
The Trap Springs
We were only twenty minutes into the presentation, but at this time, Kasper was ready to spring the trap. Bemoaning our lack of time, he “invited” us to the upcoming three day seminar. He kept prefacing sentences with “because it’s the last day of the week.” We were led to believe that we were getting a special deal of some sort.
Kasper played an inspiring video of a convention-center sized group of people over rousing music. People explained how their lives have been changed. They’re motivated. They can do this! Their real estate careers have taken off!
Invigorating. Inspiring. Motivating. These words were repeated over and over.
As the video ended, there was a palpable sense of excitement in the room. I could literally hear excited breathing somewhere to my left. According to Kasper, there are two ways to register for the training. Online, the course costs $1197.
The room deflated. How could anyone afford so much?
“Would anyone like a discount today?”
Around the room, drooping heads rose. “Yes,” responded everyone excitedly. Kasper beamed back at us with a twinkle in his eye. For everyone in the room, the tuition will be “almost free,” or $197.
It was over. The trap had sprung. It would be insane not to sign up! It’s almost free, my friend Mike said so! He continued: It’s not about the cost, it’s about the investment of your time. Those who are unwilling to spend three days with “our” team aren’t very serious about investing anyway.
Here, Kasper used a negative manipulation. If I were desperate, and poor, I’d be highly motivated and serious about changing that. To suggest otherwise compels me to prove him wrong. I’ll show you how serious I am about investing! I’ll spend $197 and that’ll show you!
“Why does Than Merrill charge so little for these classes?” Kasper asked. “Well, it’s because Grand Coast Capital is a funding company. Fortune Builders doesn’t need to charge thousands like these other companies do.”
This is nonsense. Fortune Builders does charge thousands, just like all the other real estate gurus do. He’s just turning up the heat slowly. Even better, our spouses are included in the $197 price. This is hardly for the benefit of the student, however. It’s so the moderating factor of the significant other can be removed from the equation. If you both buy into the fantasy sold by Fortune Builders, then there will be less resistance when you arrive at the final hard sell for the Mastery program.
Kasper directed our attention to the back of the room, where friendly-looking people now had laptops set up. He was opening registration while he continued to speak. By the way, there were bags with extra goodies in them on a first-come, first-served basis. We were never told what was in the bags, merely that they might run out. Immediately, about half of the room jumped up and rushed to the back.
Frankly, the rest of the presentation was relatively devoid of content. By the end of the seminar, 80% (or more) of the room had registered for the three day workshop. Kasper rehashed the importance of “systems,” and emphasized that it’s still possible to make money, even in the most competitive markets. He spent about ten minutes discussing the various “free” items we would receive upon payment for the three day seminar.
The seminar concluded with what I thought was the most galling element at all. Kasper briefly addressed those who would struggle to pay the tuition for the three day course. He said:
“There are folks for whom $197 is a big stretch. Those are the people who need it most!”
Of course, Fortune Builders offers a payment program for those without $197 to their name. I cannot adequately explain how difficult it was in that moment to keep from jumping up and sharing all of my thoughts on the seminar, especially while in the presence of people lining up to pay this organization money. Instead, I held my tongue and continued to fill in my notes, unable to watch what was going on around me.
I walked slowly back to my car, and as I sat in the driver’s seat before starting the engine, I considered what was next for all of the people who had just signed up. I thought of Fortune Builders giving this same presentation in major cities around the country, every weekend, and equivalent presentations being given by countless real estate gurus. I thought of $197 multiplying, over and over and over again. I thought of all the people who would be attending the three day courses, only to find that you can’t learn the entire real estate business in three days. I thought about all of those people being “accepted” into “advanced” programs costing tens of thousands of dollars. I thought about the impact it would have on their lives, their marriages, and their children.
I thought about how, during my preparation for the seminar, I came upon this Yelp review for Fortune Builders:
I went to the Fortune Builders meeting, What they say is possible just not very probable. I am a older women, physically handicapped, the disease I have affects me mentally as well. I survive on a very small SS check. FB has everyone fill out an application, its really just to get your information. To tell them what you have as far as money, credit availability. If you do not have the money, they inform you where you might get credit. I was one of them who followed them. I got 3 new credit cards and they maxed them out for me. I do not know how I will pay them back or even more for my medicine or Dr. visits or groceries. They get your money and forget about you unless there is some new software to sell you.
I gripped the steering wheel so tightly that my hands hurt.
I took a deep, deep breath– and then I drove away.
What To Do Instead
For me, it’s not enough to simply identify the problem. It’s important to find solutions, too. I want to emphasize to anyone reading this page that you can take the same money you would have spent on this “education,” and turn it into the same level of expertise, and you may very well be the owner of a real estate asset at the end. With that in mind, I’ll be working on a post to help get you started in real estate, whether you are an aspiring flipper or you want to generate semi-passive income for retirement. I’ll come back and add a link here when I’m done.
In short, though, sites like Bigger Pockets have forums full of the same kind of information being marked up and re-sold here. It has file sections with checklists and rehab guides. It has a huge number of podcasts that teach you nearly every conceivable real estate topic.
A Useful Saving Tool
I track my net worth, investments, and savings progress towards down payments on my rental properties, using Personal Capital. It’s net worth and investment monitoring and savings planning tools are second to none. The best news of all is that it’s 100% free. I recommend it as a tool to all readers, and even though it comes at no cost to you, signing up through a link here and completing your profile to track your online accounts may help to support this site, too. I’d appreciate the support if you have a chance to check it out.
Standing Against a Tidal Wave
In the end, in a best-case scenario, my opinion of Than Merrill and Fortune Builders will manage to reach a tiny fraction of the vulnerable people who can ill afford to be taken advantage of, and who this kind of “system” preys upon. Somewhere out there, someone is paying $197 for a three day sales pitch. Somewhere out there, someone is paying between twenty and thirty-five thousand dollars for information and systems that are available for free on the internet.
It just doesn’t have to be you.