Is there still time to get rich in real estate?
Nouveau Riche University makes money by getting its students to buy investment property, no matter how scary the market is. Do you think the timing is right to make money in real estate? Let us know by posting a comment here.
From Briana Cartagena, Jamaica, NY Wow. Dean's highly insightful comment has really helped me think again as to whether or not I am ready to join NRU. I was basically set to sign up with the $75 to help me earn enough commission to pay for the regents tuition. I had no idea of all these little stipulations. It's a little frightening too. I'm certainly glad I got to read this. All I've heard was all the praise but it's very important to hear the downside to this program as well. Thank you so much for posting this. You may have very well saved me from a future of bankruptcy and disappointment!
From Spencer, Chicago, IL Well Dean has one item incorrect: Historically Real Estate appreciates at the rate of inflation. I am not sure where he gets his facts from as that is simply not true.
Also, what's wrong with a marketing degree to work in the real estate industry? Make's sense to me.
Oh, and btw, I am not affiliated with NR, nor have I been to any of their classes. I was just reading Dean's postings and noticed his (comedy of) errors.
From Darren Workman Hi Patricia,
I was quite intrigued with your article about the Nouveau Riche University. I was recently contacted by someone who introduced me to the program. I have yet to go to any meetings or pay anything to this person. He said I should do my homework and that is what I have been doing. He also stated that there are two sides to the Nouveau Riche program, Multi Level Marketing and Real Estate Investing. He presented this, he will invest with me until I earn enough money to go to the University, I am assuming that after that point it would be my job to find people to also go to the University which would be the MLM side. From your research have you found any issues with the real estate side alone, networking with other investors and potentially doing a deal with them? I am hesitant about the MLM and university side and told this person directly that I was not interested. Is the real estate side credible?
Thanks for your help,
Darren Workman
From Dean, Los Angeles CA As a preface, I joined Nouveau Riche University by purchasing the “Regent’s” package, I went to the "college", I tried to recruit, I have analyzed the Investor's Concierge deals, I went to the briefings, I have heard the likes of Piccolo, Snyder, Cheri Tree, Kecia and all the other NRU hacks speak, and I’ve met and talked to many NRU "students". So please don't tell me I don't know what I'm talking about. Here is my assessment of NRU. I have tried my best to be fair. For those of you familiar with NRU, this outline follows the “EPIC” presentation some of you may have been subject to.
The Company
1. Piccolo and Bob "the General" Snyder, the founders of NRU, have MARKETING backgrounds. Look it up. They have no prior experience with real estate investing before NRU.
2. As a consequence of Number 1, NRU is primarily a MARKETING business. You can call it whatever you want, direct marketing, MLM, a pyramid scheme, a ponzi scheme, there may not be a perfect term, but it contains aspects of all of these concepts.
3. Real estate investing and education is an ancillary part of NRU. It is the "product" that they sell, but it might as well be long-distance phone plans, an internet web-based business, vitamins or make-up.
4. NRU's success is a direct product of the real estate mania this country has experienced over the past 7 years, not anything inherently great about the company’s products or services.
The “Education”
5. For $16,000, you really don’t get very much. You receive a certain number of “college” credits that expire after two years, but the catch is that you have to fly to Arizona to use them and you can only do that four times a year for a one-week period each time. There is an on-line option, but it is sub-par for a variety of reasons.
6. The courses are amateur hour and taught in seminar-fashion. They may dazzle people who don’t have a college degree, but will offer little to those who are generally versed in basic real estate and financial concepts. The educational materials are photocopied, hand-bound booklets, sometimes just an outline of the power point presentation. The instructors appear to be knowledgeable in their field, but they are mainly interested in consulting fees and fees for other services that they offer to NRU members (not altruism as many NRU shills would like you to believe).
7. NRU does not “teach” you anything you can’t learn by spending a few dollars on Amazon.com. There are no secret tips to learn that haven’t been published in the hundreds of real estate books you can buy on your own.
8. The “education” is primarily a vehicle for the direct marketing aspect of NRU, just as Investor’s Concierge is there to give members credibility when they market the course. The Concierge, however, is also another mechanism by which NRU extracts additional money from its students. More on this later.
Real Estate as an Investment Class
9. In marketing the tuition, a great deal of emphasis is placed on how real estate can make you rich. There is little or no information on how risky investing in real estate can be. At the “briefings” (the 2-hour presentation designed to lure new members), the presenter will talk a lot about how great real estate is because of the availability of leverage and certain tax benefits. At several briefings I went to, the presenter would literally make the representation that real estate prices only go up. Finally, the presenter will talk about how terrible it is to work for a corporation and how useless a college education is (ala Robert Kiyosaki). This usually manifests itself in the form of derisive acronyms, such as JOB, which stands for “Just Over Broke”, or how only NRU can give you an MBA that’s worth anything, a “Massive Bank Account” (crowd usually goes wild here).
10. NRU never mentions the special risks inherent in residential real estate investing, such as problem tenants, financing and interest rate risk, structural and environmental risks associated with housing, the cost of maintenance, the prospect of asset depreciation or declining rents, and the risk of litigation including from eviction and foreclosure. Bottom line, investing in residential real estate is very risky and comes with a host of hazards you would not find in other asset classes. NRU discounts all of this and presents real estate as a perpetual money tree.
11. We will likely never experience again in our lifetimes the type of appreciation in residential real estate that we have seen these past few years. There are several reasons that this is very likely to be the case: reversion to the mean, unsustainable public/private debt burdens, massive transfer of wealth to developing nations, slowing economic growth, an aging population, greater regulation in the financial sector, etc.
12. Historically, residential real estate prices have appreciated at the rate of inflation.
13. Real estate, like any other asset class, carries risks that are commensurate with the returns you are likely to generate. For example, leverage is great in good times, but people are quickly learning how easy it is for your equity to get wiped out a result of relatively small declines in home prices.
14. Investor Concierge deals are generally market-rate deals, but they are advertised to NRU students as amazing deals that generate positive cash flow. There are other sites that break this down, but generally speaking, the appraisals are usually 2-3 pages long and contain nothing more than a broker's opinion of value, the financing is almost always interest only or neg-am, the rents are inflated, and the only way you get "positive cash flow" is if you include certain seller incentives like pre-paid HOA or guaranteed rent, most of which will expire within 2 years. Additionally, maintenance and vacancy will almost immediately eliminate the $100 or so of positive cash-flow a month you may get. NRU members hate talking about the details of the Investor Concierge deals.
15. Typically, there are only 15-20 available properties on the Concierge at any given time, so the pickins’ are slim. NRU encourages you to “reserve” a property you like as soon as you see it online because it could get snatched up by someone else unless you do. The NON-REFUNDABLE fee for reserving a property is $350.
16. Investor Concierge deals are mainly located in historically depressed or undeveloped, sub-urban or rural real estate markets, you will generally not find properties on the system in established, urban markets. These properties are likely to experience declines in this current bear market and will not likely appreciate much at all when the economy recovers.
17. Anyone who has purchased a deal off of Investor’s Concierge over the last two years has either lost all of their equity and/or is underwater. This is a terrifying prospect for many people in NRU because at the briefings, many of them go up to the front and brag about how they have bought 5, 10, 15 or even 20 properties over the past few months. Many of these people are going to have to walk away from their homes in the coming years, which will destroy their credit and eat up any ponzi money they made from the marketing. Anyone even thinking about joining NRU should be asking the ISAs for a detailed breakdown of their current real estate portfolios.
The Marketing
18. The real estate investing component of NRU is used mainly to support the primary business of the company which is selling tuition packages. For an additional $75, you can become an Independent Student Advisor (“ISA”) and can go out and sell the tuition packages on behalf of NRU. There are three options which cost different amounts, but most people are pressured to purchase the most expensive package, the “Regent’s” tuition together with the “Encyclopedia”, which total almost $20,000. There are certain commission and tuition-related perks you get for buying this package.
19. The commission system is what really drives NRU. NRU members receive a 50% commission for each tuition package they sell, so that can amount to nearly $10,000 a pop. Commissions are further leveraged by the requirement that each new person you sign up bring you two additional recruits before they can be “certified” and start collecting their 50% commission, with the commission for those first two recruits going to you (that’s almost an additional $20,000 on top of the $10,000 you already made from the first guy). Then, each of those two fresh recruits that were handed to you also need to bring you two new recruits before they can get “certified” (yes, that’s another $40,000 on top of the $20,000 on top of the $10,000). You see where this is going. Of course, before you can begin collecting any commissions at all, you need to bring YOUR ISA two fresh recruits and get “certified” as well. This “pyramiding” aspect of the commission structure makes it extremely lucrative IF YOU ARE GOOD AT SALES. This is hook that gets most people to fork over the money. If you get out a piece of paper, you will see how quickly you can get to $1 million. Also, the commission structure is subject to change by NRU AT ANY TIME.
20. But even the commission structure has a catch, one that NRU only recently started to be more upfront about. NRU used to present the commission system as requiring that you bring your ISA two fresh recruits before you begin collecting commissions for additional recruits yourself. But if you actually read the commission rules, you will find that you in fact, need to bring your ISA FOUR new recruits, NOT TWO. My ISA sold me NRU telling me I only had to bring him TWO, when in fact, the rules say you have bring him FOUR. His explanation to me AFTER I signed up was that he would “manually” certify me on the system after I bring him two recruits. Well, that’s fine for me, but how the hell was I supposed to sell this thing to others? I could not guarantee that they would all get “manually” certified after two sales because that’s not how the commission rules work. My partner was furious about this, but this is the type of thing that happens when you incentivize people to aggressively market any product. There are other hidden rules as well, one that pretty much requires that you have to keep selling indefinitely to keep the stream of money flowing. Anyone even thinking about signing up should ask to see a copy of the rules on paper before you do anything and read it very, very carefully, because it is confusing.
21. Most people are unsuccessful at selling tuition packages. It’s akin to trying to sell a used car, except you would probably get more value from a junker than the “education” that NRU offers. Most people are simply not good as selling used cars and most people wouldn’t feel good about it either. The problem is that the “education” and other ancillary services are simply not worth $20,000 and it’s obvious why: most of that needs to go subsidize the commission system, which is needed to lubricate the entire NRU machinery. So unless you’re committed to selling and you’re good at it, you’re likely to be very disappointed.
22. The commission system places a lot of pressure on NRU members to sell, sell, sell. This is how all the top “producers” have made most of their money. This also creates a massive conflict of interest. More on this later.
23. The direct marketing aspect of NRU preys on the greed and naiveté of all sorts of people, but mainly lower-middle class individuals, young people just starting out, and real estate agents/brokers, many of whom don’t have a lot of education and work crappy jobs that they aren’t happy with.
24. NRU is tied in with the likes of Robert Kiyosaki and “The Secret”. I’m not going to bore you with the analysis, but try Google and you will find plenty of critiques.
Conflicts of Interest
25. NRU generates tremendous income directly from its students. They make money not only from the tuition, but also from marketing materials and services, credit services, mortgage brokerage services, accounting and legal services, special seminars, Investor Concierge transactions, all of which cost extra, and they’re not cheap. You also have to pay for lodging and the plane ticket to get to the college. All of the NRU instructors also offer consulting deals and other professional services, which also cost extra. The $16,000 for the Regent’s tuition only buys you “college” credits, you get NOTHING ELSE. You even have to buy the forms and brochures you need to sign up people for NRU. I take that back, you do get a tote bag, but it looks ridiculous.
26. NRU members are supposed to be “mentors” to the new members who they sign up, but what they really want from you is for you to sell the tuition to others, because they will the commission for the first few sales you make. There is a huge conflict of interest here because there is a big incentive for NRU members to sell the tuition, irrespective of the quality of the product or the unique situation of people to whom they are marketing.
27. NRU encourages you to sell to friends and family, which destroys relationships when people are dissatisfied or feel cheated, which is often the case.
28. The most distasteful defense of NRU to me is that “it’s not for everyone, but it worked for me”. It may be that there are some people who are successful and make lots of money in NRU, but the system cannot support a situation where most of the people in NRU make tons of money. This is the inherent, mathematical limitations of these types of marketing structures. I’m sure someone smarter than me can prove this. Likewise, the real estate market cannot support most people in NRU making money in residential real estate investing. Case in point is the short sale strategy, which NRU shills tout as the way to make money in a down market. Well, there is so much competition in short sales right now, and even more with each “college”, that short sale investors are bidding up pre-foreclosures pretty much to market. These two fundamental concepts virtually guaranty that only a small minority of NRU members will make any money either from the marketing or the real estate investing, and REQUIRE everyone else to fail in order for the system to sustain itself. This is the biggest conflict of interest of them all and lends to NRU’s reputation as a “scam”.
Conclusion
NRU is a marketing business that encourages and monetarily incentivizes its members to use high-pressure sales tactics to sell a very expensive real estate “education” package with questionable value to unsophisticated people with the lure of quick money and unlimited riches in real estate. Success in NRU is highly dependent on (1) a booming real estate market and/or (2) a unique talent in sales and marketing. What makes NRU so insidious is that it plays on the fear and greed of ordinary people, often friends and family, most of whom will go bankrupt by following NRU investment strategies during a severe and sustained real estate down turn such as the one we are experiencing now, and most of whom will fail in selling the tuition package because they lack the sales and marketing expertise which is further exacerbated by a declining real estate market. Taken as whole, NRU may be perfectly legal, but many people will feel like they were cheated out of thousands of dollars by someone they trusted. If after reading this, you are still interested then by all means sign up. But just be prepared to live with it if at some point you find yourself either financially bankrupt, morally bankrupt, or even worse, both.
Epilogue
Finally, you’re not going to see a whole lot of posts like this from people who have joined NRU. Most are very disillusioned at the loss of thousands of dollars and don’t even want to give it another thought. The rest are out searching for marks. I can only hope that NRU won’t survive this bear market in housing, and if this post can hasten its demise, so much the better. I don’t blame the person who signed me up, he incidentally has had to find a full-time job now since NRU is apparently not doing it for him. I walked into this with my eyes wide open, which shows you how greed can overcome any good judgment you may think you have. But I am thankful that I didn’t end up dragging anyone else into this apart from a good friend as my partner in this scheme, but with whom, as a result of NRU, am no longer on speaking terms. So for all of you NRU shills out there who still think you are doing God’s work, why don’t you try calling each and every person you have signed up and ask them exactly what they think about NRU. I think you will find that my experience is not so unique. If you can keep on selling after that, well then, good luck to you.
From Maria Calanchini As a five year real estate investor and 6 month member of Nouveau Riche it saddens me to read such irresponsible "journalism". You can clearly edit, twist and turn facts and comments to spin a story any way you choose. Why you choose to put down those who go outside of a safe corporate box is beyond me. I have done fairly well in real estate and have transformed my career in a very positive way since joining NRU. I have watched many individuals come in with no experience and do extremely well because they were willing to learn and then take action. Clearly you had an agenda when you wrote this and your reference to the "blue collar" crowd is beyond pathetic. If you have your own mind and any kind of consciousness, wake up and use them. What is so wrong with people wanting to take charge of their own lives? Why don't you try it with your writing.
From Alexis Escarfullery, Austin TX Hi, I've recently been contacted by NRU, through a craigslist.com posting. Funny it is that they post themselves as an EMPLOYER, rather than a university. Of course, when it comes to the credits they DO give you a runaround because the "kind of are" accredited, just not on every "part" like in the "investor program". So it pretty much changes the perspective on the sense that they are far from being an employer… let's call it slight change number one or SC1. Then, after spending half an hour on the phone for their first conference call, (let's face it, it's a monologue.) You find out that it's not only not a job opportunity, they are going to ask YOU for money. And that's OK, some NRU-ers might call it, "teaching you how to fish", but I call it SC number TWO. Then after that, they call you to a meeting at a local hotel so they can teach you.. or pretty much sell you their "education". (Non accredited, supported by no-one and sold through constant slight changes) But the best part is that after that, once you've become a part of this "investment circle" you are pretty much urged to invest! So.. that would be SC number 3!
So, after three swings and no hits, this so called university has delivered nothing near a job, a position at a specific company or even accreditation for their investment education… Why oh why should this sound so solid to all this people defending NRU? Anyway. I DID MY RESEARCH. And found this.
The best way to have a profitable "reverse funnel" scam is to keep it underground. Or selling it as a business that's "Not for everybody". Using that excuse (or any other) to keep it private and secretive so it won't attract an investigation.Then, you give it a little spike, let's say, promising you will earn at least 5k every month… most of the time as a licenced realtor you can't even reach that. But OK, let's go. Then, once youv'e captivated middle America with that promise, they enroll themselves and, here it comes, the best part, YOU DELIVER… for the first few months. The money actually comes from those recently enrolled since this is always a growing community, but hey everyone's happy because you've got money in your pockets.. and two or three properties that will soon go down the river, and hopefully, after a paint job you will sell at a middle to high price to the NEXT NRU investor. Yep, it WORKS. So.. even when one doesn't need to come from an educated background, NRU wil teach you how to make some easy money, but then again is it always going to be that easy?
This is Alexis Escarfullery, and I love the idea of Auditing at least three recently graduated students from this investment education system. If their succes stories prove to be true, not only will I write a posting as long or even more as this one, I will actually enroll myself. (But hell knows that's never gonna happen)
Plus what kind of name is Noveau Riche University.. thats french for NEW RICH.. which in society means hillbilly with money. Aren't these people educated?
From Casual Visitor, Sunnyva;le CA I am not a NRU customer, but I have friends who are and I am looking into it. I am relatively analytical, with two degress from MIT and ten years in Silicon Valley. NRU has not yet convinced me, but in my opinion your article does nothing to dissuade me. You use big money and fancy cars to scare people who react badly to those sort of images. Most importantly, you ask questions such as "Is NRU a scam??" to scare without saying it outright. Pretty cowardly.
From Charlotte Culina This article was totally shocking to me. I've been a student of NRU since December last year. Previously I had been rehabbing properties, not fix n flip, but wanted to learn new strategies. Contrary to some of you bloggers out there (this is my first and most probably last blog) We are not all complete idiots. I have purchased seven properties since March, am now refinancing five and will end up with aprox 60K more than I started with, still have 25% equity left and $3000/month positive cash flow. I am now starting to look at my first apartment buildings. The education is excellent and thank goodness they let you repeat the classes for free! My goal in 22 months is to have a passive income of 20K per month and the great thing is that there is absolutely nothing stopping me, I know exactly what to do. This article was so riddled with inaccuracies. I simply cannot take the time to go over it piece by piece as it is far too late but here is one example. The journalist, if you can call her that, states that the tests are self-graded. Well that is wrong, end of conversation. As to the CEO's past indiscretions, who really cares? I have certainly done some very strange things in the past and who is to say that what she writes is true. So many other things were not. I would urge the editor to seriously take a look at this reporter; she clearly had an agenda before meeting anyone. Just more spin I guess. But I would call for her dismissal if she is on staff and certainly question rehiring her on future projects. I had no intension of being an ISA when I first attended college but I have seen this program change so many people's lives for the better that I simply cannot help but share. I have one question for all you rather silly bloggers out there. How big is your real estate portfolio? If anyone wants to get the real scoop please feel free to contact me on lottieca@aol.om.
From Joe In your opinion of this story…is Jim Piccolo eventually going to be called a major scam artist, or is he innocently just getting uneducated
suckers to by a pieces of property and sell themselves down the river after a couple of years…
They sure make the program sound good.
Thanks.
From Charlotte Culina This article was totally shocking to me. I’ve been a student of NRU since December last year. Previously I had been rehabbing properties, not fix n flip, but wanted to learn new strategies. Contrary to some of you bloggers out there (this is my first and most probably last blog) We are not all complete idiots. I have purchased seven properties since March, am now refinancing five and will end up with aprox 60K more than I started with, still have 25% equity left and $3000/month positive cash flow. I am now starting to look at my first apartment buildings. The education is excellent and thank goodness they let you repeat the classes for free! My goal in 22 months is to have a passive income of 20K per month and the great thing is that there is absolutely nothing stopping me, I know exactly what to do. This article was so riddled with inaccuracies. I simply cannot take the time to go over it piece by piece as it is far too late but here is one example. The journalist, if you can call her that, states that the tests are self-graded. Well that is wrong, end of conversation. As to the CEO’s past indiscretions, who really cares? I have certainly done some very strange things in the past and who is to say that what she writes is true. So many other things were not. I would urge the editor to seriously take a look at this reporter; she clearly had an agenda before meeting anyone. Just more spin I guess. But I would call for her dismissal if she is on staff and certainly question rehiring her on future projects. I had no intension of being an ISA when I first attended college but I have seen this program change so many people’s lives for the better that I simply cannot help but share. I have one question for all you rather silly bloggers out there. How big is your real estate portfolio? If anyone wants to get the real scoop please feel free to contact me on lottieca@aol.om. Charlotte Culina, Los Angeles, California
From Hildi L Hello Patricia,
I enjoyed reading your article on Nouveau Riche. I'm from Hermosa Beach, CA
and have been invited to one of many Nouveau Riches meeting. I was very
concerned over what the rep was selling since I am a Realtor. I did not buy
into their program I feel that it is a scam. Being a Realtor I know where
and how to purchase property in the USA and not have to give my hard earned
money ,$20,000, to a third party, like Nouveau Rich, to be taught real
estate investing. However a fellow Realtor did purchase the program and
spent $20,000us. I hope for his sake he is sucessful.
How did you discover all this information? Do you believe it is a scam and
that the only people that are profitting is Mr. Piccolo and all the Reps
that sell the Nouveau Riche program?
From Joe You are the biggest yellow journalist i have EVER seen.
Horrible article on an incredible company.
Not sure how you have a job.
From Nnika, Tracy-Ca I find this article and some of the comments very interesting. I own five properties. I am one of those folks who thought she new what she was doing afterall I had been in the mortgage industry for over ten years, closed millions of dollars in loans and bought my first home at the age of 24, I am now 35. I have a degree in Management and Economics from the University of California at Davis as well as a CA Real Estate License. I bought my properties knowing they didnt cashflow but figured as long as I could cover the monthly losses (with my 6-figure income) at the end of the year when I did my taxes I would breakeven or even get a refund (which I did get nice refunds), use that money to pay down my loans and in a few years with decent appreciation refi to a fixed rate and lower payments. I had been a six figure income earner in sales for over 5 1/2 years so I was very confident in my abilities to make money. However, in recent years with the shift in the market and suffering from personal burnout in my job I found myself not making the same level of income that I had grown accustomed to. My mortgage payments adjusted up, the market adjusted down, my income adjusted down and I was not able to refinance like I had planned to stablize my payments. Its been a combination of learning experiences to say the least. I have managed to keep tenants in properties for the most part with a few exceptions. I recently learned of Nouveau Riche and though I haven't attended the college courses yet I can say that if they give a person even half of what they claim the tution is well worth its weight in gold. What its cost me to learn the lessens I have experinced in the last couple of years far out weighs the tution they charge. Getting my B.S. degree from UC Davis was a great accomplishment that I am proud of. However UC Davis did not teach me how to make money (six-figures consistently) nor by real estate and it cost me way more than $16k for that degree! Everything that I know now is from self-study, trial and error, my former employers (I have worked for several lenders as well as a Bank), former co-workers, and business clients. I have read some comments that Nouveau Riche is an MLM. And it's not, though there would be nothing wrong with it if it was one. Some of the most solid companies are MLM's (like Avon, Watkins, Mary Kay to name a few) NR has a direct sales component to it which allows anyone if they chose to market the university's products and earn a commission however you cannot build a downline. In MLM you must build a huge downline in order to make significant income. I can tell as many people as I want to attend UC Davis and if they do UC Davis doesn't pay me a dime for those referrals. Actually UC Davis calls and sends me letters on a regular basis asking for money to support the school. I see nothing wrong with NRU paying students referrals fees for sending them new students. At my last employer of over 7 years I got a whooping $300 bucks for referring someone to the company provided they got hired and made it past their 90 day probationary period. Lastly, now is the perfect time to buy because the majority thinks that it isn't. You buy when things are on sale not when it's a bidding war going on. Getting the right Education and mentors is the key in whatever you do.
From Juan Acosta, Zephyr Cove, NV The timing is NEVER right if you are so skeptical and seemingly uneducated about the way that LOCAL real estate markets work.
However, should you decide to invest 16k in yourself and get educated at Nouveau Riche, you could, like me, find that ONE class out of 31 specialized classes can help you through a deal worth over 100k!
NRU is worth every penny and then some! Spending time at college with other 2500 investors that are as positive, excited and encouraging as you, has to be one of the better experiences I've had in a long time.
As for you… the writer of the biased article… NRU is probably not for you. you seem to be one of those crabs that we try to stay away from.
NRU Rocks! and the market is "just right" if you're educated…
From Jason Fairman Reno NV Over the years I have been to many seminars that promised "the world". They would "herd" you to the back of the room to "BUY TODAY" and the price be slashed. You see, the seminar companies know that once you walk out the door they loose the sale. Nouveau Riche University is the only Real Estate wealth creation system that I have found that DELIVERS. From world class education, to properties that cash flow and a community of support. Today I own a vast real estate portfolio, diversified around the country. My personal and generational wealth is endless, and I owe it all to Nouveau Riche and Jim Piccollo. To the author: Your facts in this article need to be improved!! In the future, you shouldn't be so skeptical about an opportunity that will create extreme wealth for you. My only hope is that you don't end up in the 95% club of American's that are broke or dependant on others, because they never took the time to create a passive income portfolio.
From Roger, St. Charles, IL To quote Jeffery Combs, "You don't need permission from anyone to make your own decisions."
I have not been made any empty promises by anyone at NRU. My wife paid a lot more for her college degree than I did for NRU and she is not even working in the field of her degree. I'm 40 years old and I can never remember my dad walking into the room to tell my mom,"Well, I just found out our house is worth absolutely nothing." There are risk but that is why you get the education. Then YOU make your own decisions how to use that knowledge.
Skepticism is simply the fear of stepping out of what you have been raised to believe is "normal".
So I feel unless you were raised wealthy, then the idea of being wealthy is going to create skepticism. Don't let fear keep you from following your dreams.
Final thought, Sherry, if you don't want to go to the circus, then stay home. I believe it is a law for someone to bash(think it's called slander)someone with doing their due deligence and having supporting facts……..send in the clowns…….
From Darrel Smith, Kihei, Hawaii I thought the article was more than fair. It just wasn't biased in favor of Nouveau Riche, unlike one of their pep rally seminars.
It seems suspicious that the Nouveau Richer's are upset by the content. That seems to lend credibility to the suggestion that the majority of revenue is generated from tuition rather than real estate. Otherwise why would they care? If their investments are sound than CNN's reporting shouldn't change that in the least.
I have an open offer to pay for a private financial audit of 5 Nouveau Riche success stories, not from school staff. If there success is based on the model of the school, then they should be more than happy to help demonstrate the legitimacy of their fortune. The audits will remain private and the property of the individual,they will only be done to validate the efforts of the "school"
From Cameron, Redondo Beach, California I'm a natural skeptic when it comes to business opportunities. They say most sophisticated investors take up to 6 months to make up their mind on a deal, and thats how long I took before investing my time and energy into NRU. The business model is rock solid. Whether you're a seasoned investor or newbie, there are excellent resources and information to take advantage of. I haven't attended the college yet, but I sure plan on it after seeing how well my family members have done. They have a diversified portfolio in some hot markets, and have made plenty of income just by people asking about what they were doing to improve their lifestyle.
I have done my due diligence on NRU, and found out about the Mercedes thing long before this article came out. Jim Piccolo is a living breathing human being like all of us, and living breathing human beings make mistakes. If you don't, you haven't been doing much in life. Besides, I don't see how that incident has anything to do with NRU. It sounds like typical trash-talking you would find in politics these days. Any tid-bit of dirt makes the whole thing a scam, right? I say wrong.
NRU is all about paying it forward, and yes, they make money at it. If they didn't, what would be the point? NRU proves you can make money by helping people who WANT to be helped. I would never force my will upon someone who is not interested in changing their life as it is. Some people are entirely happy at their jobs, and I respect them 100% for it.
I believe this article was written as an attempt at a muckracking piece. However, it didn't rake up much muck at all if you ask my opinion. One thing NRU tells you long before you sign up is that real estate is indeed a risky investment… which is precisely why they teach you how to avoid being burned. They got their bases covered. Congratulations to him, Bob Snyder and Mary Piccolo for their success. I wish them, and all the members of the NRU community much more in the future. Keep up the excellent work!
From Lindsay, Riverside, California Sherry, don't say Nouveau Riche is a scam until you've experienced it. I'm at the college RIGHT NOW learning far more valuable information than I ever learned at CSULB.
The University is real. The education is real. The community is real. And the $16,000 tuition? WORTH EVERY PENNY!!! Can you say that about your college education, that perhaps, led to a degree you're not even utilizing now?
And congratulations to you, Jeremy in Chicago!! I've been meeting people like you all week at the college. Keep up the good work!!!
From Susan, Ashburn, VA I look forward to hearing how the "students" are doing in a few months.
From Mike La Sorsa Is this an article of news or advertisment?
It reads like an inducement even though it has apparently revealed unsavory facts.
When news is a come-on why should I trust the source at anything?
Mike La Sorsa
From Rick Venus, Detroit, MI Your all out of your minds. Hear that sound? It's a CRASH! Wages did not go up over the last 4 years did they? NO. The only thing that happened was interest rates went down. That's it and it was not permanent. What makes anyone think these prices are remotely sustainable over the long run? Answer? They aren't ! (Repeat that three times). It was a good deal for people the first year or so, but that's it. Once investors started cranking up the prices, it became gambling for the buyers and it turned alot of sellers/brokers into thieves…not real estate as usual. There is going to be a huge market correction, bigger than anything anyone has seen. Prices will stabilize at the affordability level, where they always do after a crash (look up the price of your home in 2000 and that should be a pretty close ballpark of your houses true worth). Cash is King. Those of us who kept their heads and didn't buy in will be ok. Anyone who bought a 100,000 home for 400,000 will lose. Don't expect anyone, including the Govt. to bail you out. They shouldn't and won't. You gambled and your are going to lose. Wait 2 or 3 years at least for all these people who think their properties are worth 300% more than they are get their wake up call. The problems are just starting and it's going to take awhile for the masses to "get it".
From Yadgyu, Harkeyville, TX I myself am looking into buying houses that are in bad shape and disarray. I then plan on demolishing the properties. I will hold on to the land until the market picks up and rebuild new houses that will price 10-20% above what other homes are going for. My houses will be better because I plan on taking a two house lot and building one house with more square footage inside and more land outside. All of my houses will have nice lawns and pools. This is really the time to start investing and and waiting for the time to make a good amount of money when the market picks up.
From JD Davis, Las Vegas, NV Hi Agree with Daniel, If you are not educated and understand how to properly purchase properties in fluctuating markets you will have a difficult time making profits. As for the question of who would buy real estate now? I am buying more than ever. I have been investing in single family homes for the last 7 years, currently controlling 104 sf homes in several markets, 34 of which were purchased this year.
What do you expect to happen when speculators drive up the price of homes 25%-100% in a matter of 2-3 years??? The educated investors were not buying much during the boom.. they were selling. You will have a bit of a market adjustment of 2%-15% in different markets… fine with me, I prepare for it, its part of the game.
The only people that should be concerned about buying real estate now are "speculators". As for homeowners, this is the best time to get exactly what you are looking for at extremely reasonable prices. Does the author of this article invest in real estate or is she part of the "bad news sells" club?
From Sherry, Montecito, CA I think Nouveau Riche is a scam. The $16,000 'tuition' is just the hook to find P.T. Barnum's infamous suckers. if they can hook you for $16,000 -They can hook you for more.
There ought to be a law.
From Daniel Silver, Marin County, CA This is an excellent time to buy real estate IF you are a knowledgeable investor. As in any market, you want to buy when prices are cheap, not follow the crowd and buy after the prices have gone up. Right now, in many markets, real estate is on sale. Of course, you need to know what you're doing. Understand your investment horizons and make sure you have sufficient cash flow and reserves to sustain your investments. To be safer, invest in good cash flow markets. Betting on short-term appreciation is a risky strategy. The only reason not to buy now is if you believe that American real estate is a poor long term investment or if you can't sustain your investments over a 5-7 year minimum horizon.
In addition to this being a good time to buy real estate as a long-term strategy, it is an excellent market for some active short-term investing strategies. Again, you MUST know what you are doing or you can end up on the wrong end of the deal. If you don't know which strategies to employ in a volatile, flat or down market, you should not be engaging in active investing.
From Jeremy, Chicago, IL Regarding this article:
Who would buy real estate in this market? Nouveau Riche University makes money …
By Patricia B. Gray,
http://money.cnn.com/2007/08/06/magazines/fsb/real_estate.fsb/index.htm?postversion=2007080706
This article is a disgrace to the journalism industry. How can someone with no knowledge of real estate bash those that ARE MAKING money and create more FEAR in the general public about EDUCATION! What do you suggest? That everyone gets a job? How pathetic! Thanks to Jim and Bob and their educational program, I have been able to walk away from a 6-figure job in IT that lead to back problems and strained my marrital relationship due to extensive travel. We now control over $5,000,000 in real estate and earn over $20k a month.
This article should be removed from your archives and re-written by an unbiased and honest source. Yellow journalism is like mortgage fraud to our industry and you should be ashamed!
Full response to "Dean."
Dean's post is full of misinformation and an obvious bias that he makes no attempt to hide.
Below is a full response to his post, responding to each one of the numbers individually.
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The Company
1. Piccolo and Bob 'the General' Snyder, the founders of NRU, have MARKETING backgrounds. Look it up. They have no prior experience with real estate investing before NRU.
–Even if this IS true, a) I don’t know how anyone could possibly “look up” what sort of personal experience any individual has with something as broad as real estate investing…Can you tell me where one might find this information? Perhaps it would be more readily available for a more well-known businessman. Exactly what experience does Bill Gates have with RE investing? How about Rupert Murdoch? Where is this information published?
b) Is it possible that that is a reason neither one of them teaches a single class? Neither individual is listed anywhere as an instructor of any specific course in the course catalogue.
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2. As a consequence of Number 1, NRU is primarily a MARKETING business. You can call it whatever you want, direct marketing, MLM, a pyramid scheme, a ponzi scheme, there may not be a perfect term, but it contains aspects of all of these concepts.
–Great comment. Spoken like a true lawyer. With that last sentence fragment you get to say almost anything you want before it, and by the end of the statement alleviate yourself from all claims of libel or falsities. You could say the very same thing about almost any business. Depending on how far you’re willing to stretch your claims, you could even say nonprofit organizations "contain aspects" of direct marketing, MLM, a pyramid scheme and a Ponzi scheme…The truth is, Nouveau Riche, like MOST other business is not any of those, other than maybe direct-to-consumer marketing.
First of all, there is nothing wrong, immoral or illegal about multi-level marketing businesses. That acronym "MLM" is thrown around as if it were a terrible thing. Multi-level marketing is a perfectly legitimate business model. But even still, Nouveau Riche is not a multi-level marketing business. Multi-level marketing businesses DO function by enrolling unsalaried salespeople (also called distributors, Independent Business Owners, Franchise Owners, Sales Consultants, Consultants, Independent Agents, etc…) to sell products and earn commissions on those sales. This is the only similarity.
In an MLM, distributors earn a commission based on the sales efforts of their entire organization, which includes one's own independent sale efforts as well as the leveraged sales efforts of their down-the-line hires/distributors. This is much like franchise arrangements in which royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager. In an MLM there can be multiple levels of people receiving royalties from one person's sales.
Examples of well-known MLM companies are weight-loss, nutrition and skin-care giant Herbalife and Mary Kay cosmetics.
In the case of Nouveau Riche, a marketer never gives up a part of their sales commission to multiple people in different levels of the organization. As a trainee, the commissions on the marketer's first few sales go directly to the trainee's Independent Student Associate (ISA), just as if it were the ISA that made the sale. After these first few "training sales" the trainee becomes "certified" to sell the products and never again does ANY of the sales commission go to anyone else. Once certified as an ISA, the marketer is the sole profit taker in 100% of his sales commissions. An example of this elsewhere might be in the insurance industry in a situation in which an agent's apprentice might first open a certain number of new accounts for new customers before he is allowed to handle clients/accounts of his own. The new accounts that he opens as a trainee go to his direct superior.
A pyramid scheme is a non-sustainable business model that involves income generation through recruiting other people into the scheme, usually without any product or service being delivered. The individual makes one payment, but is promised to somehow receive exponential benefits from other people as a reward. A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people (the offer of course being the ability to sell the offer), or receive bonuses through other people they refer. Each sale includes a fee to the original seller.
Clearly, the flaw is that there is no end benefit; the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers. Of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves.
Nouveau Riche is a normal product/service-providing company. There are services offered: the mainstay of the college, which is education/instruction in real estate investing strategies, and in addition ancillary credit services, mortgage brokerage services, accounting and legal services, property management services, etc. There are also physical products sold such as educational literature and other materials such as investment software and company branded consumer merchandise (polo shirts, tote bags etc.).
Many people purchase these products directly and do not even attempt to market them to other people. For those that CHOOSE to market the products, and make a sale, a commission on the sale is paid to them for their effort. This is no different than any other direct-to-consumer sales business, aside from the fact that NO ONE is hired as an employee of Nouveau Riche strictly for the purpose of selling the products.
A Ponzi scheme is a fraudulent investment operation named after the Italian immigrant Charles Ponzi. It involves paying or at least promising abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business activities.
The scheme essentially consists of a single individual offering a high return, say 30% in 30 days on an investment. Investors submit their funds, under the impression their money will be invested in a lucrative venture, arbitrage of some kind for instance. The scam is that there is no real investment activity taking place. The money from investor D goes to pay out "profits" to investors A, B, and C. When investors X, Y, and Z put in money, that money is available to pay "profits" to investors A through W.
The scheme initially works well because the early investors get paid their returns as advertised, so they usually reinvest (i.e. keep) their money in the scheme as it generally pays a higher return than most other alternatives. This means that those running the scheme do not actually have to pay out very much (net) – they simply send statements to investors that show how much the investors have earned by keeping the money in what appears to be a great place to get a high return.
The scheme eventually collapses because:
a) authorities get wise to the illegal activity and shut it down
b) the originators take the money and leave town
or
c) the promoters have trouble getting new investors and eventually run out of funds to pay out all the promised returns and more and more people start asking for their money, similar to a bank run.
Obviously none of this has any similarity to Nouveau Riche. There is no "investment opportunity" offered by the company and there is certainly no "promised return." A product is marketed, purchased and then provided. Again, if any individual wishes to market the product to someone else, and ends up making a sale from the referral, a commission is paid for the effort.
As for "direct marketing", yes, Nouveau Riche only markets its products and services through individuals, contracted as independents. There are no television ads, billboards, radio spots or any use of any other kind of intervening media paid for by the company itself. Sales of the company's products are generally made by face-to-face contact with the customer.
The author appears to believe this is a negative thing.
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3. Real estate investing and education is an ancillary part of NRU. It is the 'product' that they sell, but it might as well be long-distance phone plans, an internet web-based business, vitamins, or make-up.
–This makes little sense. You admit investing tools and education are the products sold, and then say, “it may as well be [any other product].” Yeah. Businesses sell products and/or services. Nouveau Riche is a business. It sells a product just like Time Warner Cable, Amazon.com, GNC and Estée Lauder. What’s your point?
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4. NRU's success is a direct product of the real estate mania this country has experienced over the past 7 years, not anything inherently great about the company's products or services.
–This is a complete statement of opinion from an individual who obviously has a negative bias. There is no evidence or factual information to even support such a claim.
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The 'Education'
5. For $16,000, you really don't get very much. You receive a certain number of 'college' credits that expire after two years, but the catch is that you have to fly to Arizona to use them and you can only do that four times a year for a one-week period each time. There is an on-line option, but it is sub-par for a variety of reasons.
–Again, a statement of opinion, a misleading “fact” coupled with a complete falsity followed by another fact coupled with another opinion. For anyone that really wants to know, it’s on the website (collegeinfo.nouveauriche.com). Yes, one tuition package is offered for $16,000. It includes 120 hours of class time. There are three tuition packages offered:
30 NR hours = 5 days – $6,000
60 NR hours = 10 days – $10,000
120 NR hours = 20 days – $16,000
The classes are currently held at the Renaissance Glendale Hotel in Glendale, AZ. According to the feature in the June/July 2008 issue of Success magazine construction on the permanent Nouveau Riche campus in Scottsdale, AZ is expected to be completed by the end of 2010, after which time all classes will be held therein.
Classes are held quarterly throughout the year, usually for a period of 6 days per session. Tuition purchasers can attend any combination of days, and under the $16,000 package have 1.25 years (5 college sessions) to take courses (and repeat any if they wish) and another 1.25 years (5 college sessions) to repeat any courses they wish. Each tuition package is also good for two people. The reason we always hear about the $16,000 tuition is because it is the most popular one, and well over 95% of students enroll with it.
Students can take up to 9 hours of class time per day if they desire, for at least 4 days of the week, then another 2 days where they can take up to 6 hours of classes. This calculates to up to 48 hours of class time per week per partner. Each partner has full control over their own schedules and can choose classes they want, and can choose to attend for any combination of days during the sessions. Calculation:
10 weeks of school over a 2.5 year period. 48 hours per week x 10 weeks = up to 480 hours of potential in-class time x 2 people is 960 total in-class hours for a Regents Tuition. $16,000 divided by 960 = $16.67/hr of class time.
Over 20 courses are also offered in online format, with audio and video of the instructor teaching a live class, which Regents tuition holders can view an unlimited number of times, not counting against their purchased credits.
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6. The courses are amateur hour and taught in seminar-fashion. They may dazzle people who don't have a college degree, but will offer little to those who are generally versed in basic real estate and financial concepts. The educational materials are photocopied, hand-bound booklets, sometimes just an outline of the power point presentation. The instructors appear to be knowledgeable in their field, but they are mainly interested in consulting fees and fees for other services that they offer to NRU members (not altruism as many NRU shills would like you to believe).
–I’m not exactly sure what accredited university the author attended to get his “college degree” but if by “seminar-fashion” he means a group of students sitting in chairs with a table or desk sitting in front of them, facing an instructor standing at the front of the room, then okay: 99.99% of all courses taught in every major university (and high school and middle school for that matter) are taught in “seminar-fashion” and I suppose Nouveau Riche is no exception. The author also implies that instructors spend class time pushing their own products and services on students…something they are contractually bound AGAINST doing by the company.
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7. NRU does not 'teach' you anything you can't learn by spending a few dollars on Amazon.com. There are no secret tips to learn that haven't been published in the hundreds of real estate books you can buy on your own.
–While an obvious stretch of a statement to begin with, one could say the same thing about nearly every class at any institution of learning. Can you name one thing you learned in any course, throughout your entire tenure from pre-school through a bachelor’s degree, that wasn’t already published somewhere? What’s more, isn’t one of the major costs of college matriculation “books”? What is the purpose of paying the LARGEST cost of college (tuition) when you could avoid college all together and just buy the books the professor makes you read? (which, many times, if you go to a decent university, he/she wrote themselves anyway…uh-oh…instructor pushing his own products???)
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8. The 'education' is primarily a vehicle for the direct marketing aspect of NRU, just as Investor's Concierge is there to give members credibility when they market the course. The Concierge, however, is also another mechanism by which NRU extracts additional money from its students. More on this later.
–Good call there. Essentially, you called out the company on its “crazy practice” of using the products it sells as a draw to get customers. Wow.
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Real Estate as an Investment Class
9. In marketing the tuition, a great deal of emphasis is placed on how real estate can make you rich. There is little or no information on how risky investing in real estate can be. At the 'briefings' (the 2-hour presentation designed to lure new members), the presenter will talk a lot about how great real estate is because of the availability of leverage and certain tax benefits. At several briefings I went to, the presenter would literally make the representation that real estate prices only go up. Finally, the presenter will talk about how terrible it is to work for a corporation and how useless a college education is (ala Robert Kiyosaki). This usually manifests itself in the form of derisive acronyms, such as JOB, which stands for 'Just Over Broke', or how only NRU can give you an MBA that's worth anything, a 'Massive Bank Account' (crowd usually goes wild here).
–First of all, real estate investing CAN make you rich. Just like nearly anything else if done right. This is not wrong or false. In fact, more wealth is generated from real estate investing than nearly any other business venture. The Forbes 400 list makes this blatantly obvious year after year. Do a Google search of “what the wealthy invest in.”
Second, no one ever talks about college education being "useless." Nouveau Riche's MAIN PRODUCT is college education.
Third, name one company that when first introducing you to its product (especially if it’s a product you’ve never used before and/or are unfamiliar with) goes into all the things that could go wrong with it. When selling a car does the dealer put up statistics of how many people die annually in car accidents? How about just some simple warnings about how many things can go wrong with the auto and how many different ways you could get hurt because of it and how much it might cost to fix it? How about a new computer system…do the instructions go into detail on the value and amount of information that could be lost should the system crash, or the possible detriment to your livelihood should your personal information be leaked on the Internet while you are using the machine?
The point is
a) everyone is responsible for learning about what they’re getting into before they actually get into it…it’s called “due diligence”…a phrase most often used in—real estate.
b) the risks involved in real estate investing are exactly one of the main focuses of some of the courses. This is why there are classes such as “Real Estate 101” covering the basics, including the RISKS involved in RE investing…as well as others entitled “Market Analysis”, “Legal Strategies”, both of which include content related to possible pitfalls. There is even an entire course entitled “Buyer Beware.”
And in general, real estate value DOES go up over time. The fact is even stated many times that since such figures have been logged (1968) the average appreciation in RE has been 6% annually. In the past 20 years, it’s been more than twice that.
P.S.
The term is “À la”…not “ala.”
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10. NRU never mentions the special risks inherent in residential real estate investing, such as problem tenants, financing and interest rate risk, structural and environmental risks associated with housing, the cost of maintenance, the prospect of asset depreciation or declining rents, and the risk of litigation including from eviction and foreclosure. Bottom line, investing in residential real estate is very risky and comes with a host of hazards you would not find in other asset classes. NRU discounts all of this and presents real estate as a perpetual money tree.
–Again, these are ALL risks covered in the actual courses. I would love to see you run a company selling a product by only talking about its negative aspects.
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11. We will likely never experience again in our lifetimes the type of appreciation in residential real estate that we have seen these past few years. There are several reasons that this is very likely to be the case: reversion to the mean, unsustainable public/private debt burdens, massive transfer of wealth to developing nations, slowing economic growth, an aging population, greater regulation in the financial sector, etc.
–Once more, a complete opinion statement, and a SPECULATIVE statement at that…one which would require an EXTENSIVE knowledge of residual real estate markets and trends, economics and historical data to make…all of which I seriously doubt the author possesses.
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12. Historically, residential real estate prices have appreciated at the rate of inflation.
–This is a completely false statement. Either the author just made it up or heard it somewhere and didn’t bother to check it. It is something that is easily verifiable. Since 1968 the average inflation rate in the United States is 4.71% (http://inflationdata.com). Over the 36 year period (when RE appreciation data was first recorded/collected) up to 2004, the average price increase in the U.S. has been 6.4% (http://www.realestateabc.com/graphs/natlmedian.htm).
And that is the AVERAGE appreciation of the MEDIAN home price over the past 36 years…imagine if one had a little EDUCATION and foresight enough to be a little smart about which markets, locations and specific properties they chose to invest in…
In one particular online forum discussing this very issue, one user stated his own property values:
1978 condo purchase in Diamond Head Hawaii 9%
1986 SFH purchase in SFBay area 10%
1994 SFH purchase in Vegas, baby, 8%
2003 condo purchase in Diamond Head Hawaii 20%
2004 condo purchase in Waikiki Hawaii 15%
And while the average median price has dropped considerably in the couple of years, this shift is remarkably unique and uncharacteristic of the market trends overall, making it unlikely to occur in the same fashion or in the near future…not to mention, it means that currently many markets of real estate are being offered and sold at extremely discounted prices.
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13. Real estate, like any other asset class, carries risks that are commensurate with the returns you are likely to generate. For example, leverage is great in good times, but people are quickly learning how easy it is for your equity to get wiped out a result of relatively small declines in home prices.
–This is for the most part a true statement, which is also covered in class…but again, as stated before, what we are currently seeing is not a “relatively small decline in home prices”.
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14. Investor Concierge deals are generally market-rate deals, but they are advertised to NRU students as amazing deals that generate positive cash flow. There are other sites that break this down, but generally speaking, the appraisals are usually 2-3 pages long and contain nothing more than a broker's opinion of value, the financing is almost always interest only or neg-am, the rents are inflated, and the only way you get 'positive cash flow' is if you include certain seller incentives like pre-paid HOA or guaranteed rent, most of which will expire within 2 years. Additionally, maintenance and vacancy will almost immediately eat away at the $100 of positive cash-flow a month you get. NRU members hate talking about the details of the Investor Concierge deals.
–Most of this is either untrue or a stretch of truth. For a clear general breakdown of Investor Concierge deals see http://newrich.wordpress.com/2008/02/01/are-the-investor-concierge-deals-any-good/
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15. Typically, there are only 15-20 available properties on the Concierge at any given time, so the pickins are slim. NRU encourages you to reserve a property you like as soon as you see it online, because it could get snatched up by someone else unless you do. The non-refundable fee for reserving a property is $350.
–Again, see the link above.
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16. Investor Concierge deals are mainly located in historically depressed or undeveloped, sub-urban or rural real estate markets, you will generally not find properties on the system in established, urban markets. These properties are likely to experience declines in this market and will not likely appreciate much at all when the economy recovers.
–Again, see the link above.
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17. Anyone who has purchased a deal off of Investor Concierge over the last two years has either lost all of their equity or is underwater. This is a terrifying prospect for many people in NRU because at the briefings, many of them go up to the front and brag about how they have bought 5, 10, 15 or even 20 properties over the past few months. Many of these people are going to have to walk away from their homes in the coming years, which will destroy their credit and eat up any ponzi money they made from the marketing.
–Another completely unfounded speculation statement presented as fact from someone without evidence or figures to support such claims.
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The Marketing
18. The real estate investing component of NRU is used mainly to support the primary business of the company which is selling tuition packages. There are three options which cost different amounts, but most people are pressured to purchase the 'Regent's' packing together with the 'Encyclopedia', which total almost $20,000. There are certain commission and tuition-related perks you get for buying the most expensive package.
–Gee. The product the company sells is mainly used to support the primary business of the company, which is selling the product it sells. Go figure.
The rest of the information in #18 is mostly true, as there are different commission and tuition-related perks that are included with the different tuition packages. Basically the higher price you pay (i.e. the more you buy), the more you get. Again, go figure.
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19. The commission system is what really drives NRU. NRU members can get a 50% commission for each package they sell, so sometimes that amounts to nearly $10,000 a pop, and there is an added wrinkle that causes that number to multiply very quickly if people you sign up also, in turn, sign up additional students. The mathematics make the commission structure extremely lucrative IF YOU ARE GOOD AT SALES. This is hook that gets most people to fork over the money.
–I don’t see anything wrong with this statement, other than a possible implication of a pyramid scheme setup. There is no “sign up fee”. Commissions are made only when a product is sold…just like any other business. The author might claim “signing up” and “buying tuition” are the same thing, but in the definition of illegal pyramid schemes, this is an important distinction to make. There are tangible products and verifiable services marketed and sold. Once a marketer is “certified” to sell a certain product or service after giving up the commissions on the first few sales to his Independent Student Associate, he is the sole profit taker in his sales. Never after those first few “training sales” does any of the marketer’s commission go to anyone else. Even during the training phase, the commission he gives up to his ISA ONLY goes to his ISA. There is no one at any other level that partakes in those commission profits.
The only time the “added wrinkle” the author refers to occurs is when a marketer, still in training, makes a sale to a person who then also makes a sale of his own before said marketer is certified himself. In this situation, said marketer does not have a right to the sale commission, as it is still his ISA, not himself training the new marketer that just made the newest sale. In other words, even though it was the trainee who referred the person who made the latest sale, it was not the trainee who was responsible for that referred person. The trainee cannot receive commissions for someone else’s sale before he can take commissions on his own sales.
Example:
-Jane is an ISA (certified marketer) and makes a sale to Vivian.
-Vivian wishes to be able to market the products, so she becomes an Independent Training Associate (ITA/trainee), and Jane is responsible for training her.
-Vivian makes a sale to Tom.
-Tom likes the education and decides to market the products as well, making him a trainee under the certified trainer (Jane) because Vivian is not qualified to train him. Vivian has no connection with Tom other than the fact that his purchase counted as part of her certification process. Tom is now a trainee with Jane, just like Vivian.
-Tom makes a sale to Jessica.
-Because Tom is a trainee, the commission from the sale goes to his trainer, Jane. Nothing goes to Vivian from Tom’s sale.
That is basically the “added wrinkle”. Once Vivian and Tom are certified, they no longer have any connection to Jane. As a certified ISA, Vivian is now the sole profit-taker, taking 100% of the commission in 100% of her sales, forever. She is now free to mentor her own trainees. This is essentially a direct mirror of many brokerage firms as well as the insurance industry in general.
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20. Most people are unsuccessful at selling tuition packages. It's akin to trying to sell a used car, except you would probably get more value from a junker than the 'education' that NRU offers. It's obvious why the 'education' NRU offers is not worth $20,000, most of that needs to go subsidize the commission system, which is needed to lubricate the entire NRU machinery.
–The first sentence here is by definition a factual statement, yet it is not based in any fact whatsoever. I would be interested to see any sort of evidence suggesting “most people are ‘unsuccessful’ at selling the tuition packages.” To be sure, there are plenty of people that pay for the tuition and attend the college that are not interested in marketing it. They are interested in doing what they attended the college to do in the first place: invest in real estate. I don’t believe anyone would NOT pay the $75 licensing cost for the ABILITY to market the college and collect any commissions they might be privy to when they refer friends and family, but there are many students of the college that have no interest in making a business out of marketing it.
Interestingly, the author suggests the education is useless, and that the only “real” product is the commissions to be made from selling it, which he in turn claims most people are unsuccessful at selling in the first place…even though the college has grown tenfold in the past two years. What’s more, CEO Jim Piccolo has invested nearly 100% of year 2007’s revenue from the college into the development of a 30+ acre permanent campus for the college complete with nearly 400 housing units, the plans for which were featured in the June/July 2008 issue of Success magazine.
If the product being sold is so horrible, and the people marketing are so bad at selling it, why the growth? Why the investment of a state-of-the-art campus facility?
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21. The commission system places a lot of pressure on NRU members to sell, sell, sell. This is how all the top 'producers' have made most of their money. This also creates a massive conflict of interest. More on this later.
–It is an oxymoron to equate a “commission system” with “pressure on the seller.” It is even more ridiculous to claim commissions somehow create a "conflict of interest." The commission is an incentive to refer others to the college. No one HAS to do it. No one is “pressured” into marketing the college. You have to pay a licensing cost to even do it. No one is hired to sell the product. It is never stated to be a sole means of income.
Many people state that they have been able to replace their W2 income with the marketing and have therefore decided to quit their former job, but there is no reason for any person to feel “pressure” to sell. There is no quota to be met in some time frame to lock in a Christmas bonus. There is no number of “team sales” needed to reach a “company goal” so that you can get a promotion and finally make ends meet. Where does the “pressure” come in?
And even if anyone was in such a position that they felt they needed to make a sale, how would it be any different from any other commission-based sales job? And wouldn’t it be fair to assume one understands what commission-based sales is before one takes such a job…especially when it is explained to him multiple times?
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22. The direct marketing aspect of NRU preys on the greed and naïveté© of all sorts of people, but mainly lower-middle class individuals, young people just starting out, and real estate agents/brokers, many of whom don't have a lot of education and work crappy jobs that they aren't happy with.
–So that would mean you consider yourself naïve and in one of these categories.
Interesting, here you seem to infer you have little education while elsewhere in your post presume to have such extensive knowledge of the inner workings of major universities.
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23. NRU is tied in with the likes of Robert Kiyosaki and 'The Secret'. I'm not going to bore you with the analysis, but try Google and you will find plenty of critiques.
–And of course by “tied in with” you mean “mentions the names of and quotes from…”
And it would be incredibly useful if you HAD provided any sort of “analysis.” Not only are there no ties whatsoever to those authors or their books, even if there were it would be nice to know what would be wrong with that.
The fact is “I’m not going to bore you” really means “I really have nothing to say, I’m just hoping you’ll take this and assume it’s another negative example.”
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Conflicts of Interest
24. NRU generates tremendous income directly from its students. They make money not only from the tuition, but also from marketing materials and services, credit services, mortgage brokerage services, accounting and legal services, special seminars, Investor Concierge transactions, all of which cost extra, and they're not cheap. You also have to pay for lodging and the plane ticket to get to the college. All of the NRU instructors also offer consulting deals and other professional services, which also cost extra. The $16,000 for the Regent's tuition only buys you 'college' credits, you get NOTHING ELSE. You even have to buy the forms and brochures you need to sign up people for NRU. I take that back, you do get a tote bag, but it looks ridiculous.
–The first sentence here essentially translates to: “The company generates a lot of its income directly from the people who buy its products.” …Yet another revelation for the record books.
Let’s see if the exact sentences and phraseology can be used to describe anything else…perhaps replace “Nouveau Riche” with, say “Harvard”…It would then read: “Harvard University generates tremendous income directly from its students. They make money not only from the tuition, but also from marketing materials and services, credit services… [at this point the services become unrelated, but you get the idea.]…all of which cost extra, and they’re not cheap. You also have to pay for lodging and the plane ticket to get to the college.”
Gee. This “Harvard University” sounds like a really sour deal, doesn’t it?
The statement of “the $16,000 for the Regent's tuition only buys you 'college' credits, you get NOTHING ELSE” is completely false. The author completely contradicts himself here, as he specifically stated in #18: "There are certain commission and tuition-related perks you get for buying the most expensive package." So which is it? Are there "added perks" or do you get "NOTHING ELSE"?
The truth is not only is every tuition package good for TWO people, each one also grants a certain level of access and usage to the Investor Concierge website, with the highest level of access reserved for the Regent’s tuition holders. The "tote bag" the author speaks of is actually a black business-type satchel that comes with myriad other marketing materials which are all covered by the $75 marketing startup cost, supposing you even wish to pay for that.
The extra services are just that: extra. They are not required, not inherently necessary, not actively marketed to students in any way. They are barely even mentioned when introducing potential students to the college. They are offered as services to aid in different facets of a student’s individual investment and business development strategy. Many students may not need or ever use some or any of the extra services offered. What is so wrong with offering extra services that some might find useful? If you don’t want em, don’t get em.
It would not be a far stretch to contend that if such services WEREN'T offered, the author would then complain that "students are left to fend for themselves" with "no helpful means with which to help them protect their assets or set up the mortgage deals they learn to construct in their classes" or any of the other things the services provide.
It seems this author wishes to only mention the things he feels will help his complaint sound better and in a way that makes normal and even additional business attributes sound negative.
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25. NRU members are supposed to be 'mentors' to the new members who they sign up, but what they really want from you is for you to sell the tuition to others, because they will get a cut of the first few sales you make. There is a huge conflict of interest here because there is a big incentive for NRU members to sell the tuition, irrespective of the quality of the product or the unique situation of people to whom they are marketing.
–I’m not sure what sort of services you expected to get from your ISA, but there are no false claims presented at any stage of the process. If you wished to know what is exactly provided to you for any cost you pay, be it the $75 startup cost to be a marketer or the $16,000 tuition to take 120 hours of classes, I’m sure all you had to do was ask.
And again, if you want to claim that a commission on the sale of a product provides a conflict of interest for the person selling it, then there’s not much anyone can say to you. Talk to any business that pays any sort of sales commission and ask them if that’s what they call it. Or better yet, start a company of your own and try to sell your product while paying your sales people an hourly wage only.
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26. NRU encourages you to sell to friends and family, which destroys relationships when people are dissatisfied or feel cheated, which is often the case.
–Another completely embellished, more than likely fabricated speculative statement made without evidence. No one is “encouraged” to sell to anyone. No one even has to market the college at all.
And one just has to love the rich verbiage used by the author here: “destroys relationships” followed by the complete lie of “which is often the case.” That entire sentence is an obvious and ridiculous attempt at defamation of a company the author obviously has a bias against.
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27. The most distasteful defense of NRU to me is that 'it's not for everyone, but it worked for me'. It may be that there are some people who are successful and make lots of money in NRU, but the system cannot support a situation where most of the people in NRU make tons of money. This is the inherent, mathematical limitations of these types of marketing structures. I'm sure someone smarter than me can prove this. Likewise, the real estate market cannot support most people in NRU making money in residential real estate investing. Case in point is the short sale strategy, which NRU shills tout as the way to make money in a down market. Well, there is so much competition in short sales right now, and even more with each 'college' I suppose, that short sale investors are bidding up pre-foreclosures pretty much to market. These fundamental concepts virtually guaranty that only a small minority of 28. NRU members will make any money either from the marketing or the real estate investing, and REQUIRE everyone else to fail in order for the system to sustain itself. This is the biggest conflict of interest of them all and lends to NRU's reputation as a 'scam'.
–First, the statement of “it’s not for everyone, but it worked for me” is not a “defense” of anything. Direct sales and real estate investing ARE NOT for everyone. I believe that is an empirical fact that no one can rightfully deny. The “…but it worked for me” part is a statement of fact for anyone who truthfully says it. As for “lots of people make tons of money” there is truth and falsity there. It depends on what you mean by “lots of people” and “tons of money”. It also depends on whether you’re talking about simply selling Nouveau Riche products or real estate investing.
There is essentially an infinite amount of money to be made in real estate. Not only is the urban development expected in the next 30 years worth trillions of dollars in the U.S. alone, there are deals constantly being made on currently existing properties all the time, and situations are created in which all parties involved win, many times with the “fast nickel vs. slow dollar” outlook. The problem is the average person is not versed well enough in real estate to understand or even see that such opportunities exist, much less know how they work, how to spot them and most importantly, how to take advantage of them…which is why as of 2001 the top 1% of households (the upper class) owned 33.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 51%.
And again, doing a simple search into “what the wealthy invest in” you’ll see most of it is real estate. If real estate is so bad, and is really just the bottomless pit of risk and losses the author makes it out to be, why do the rich (who invest mostly in real estate) keep getting richer? Are they just that lucky? Or is it possible they know a few things other people don’t? Sure a large bankroll makes certain deals and acquisitions easier to come by and having more money to invest and utilize does open more doors as to the types and number of deals someone can get involved in…but not everyone with money knows what to do with it. There are plenty of those who made and are currently making their fortune in real estate using their own knowledge and utilizing the funds of others who have money, wish to make a return on it, and don’t know anything about real estate investing and/or don’t wish to put in the time. And just as the more money you have the greater the number of (and types of) deals you can be a part of, the more knowledge and experience you have, the more deals you can create for yourself…in any industry.
So can “lots of people make tons of money” in real estate investing? Well, what is “lots of people”? 10 million? 50 million? 100 million? And what is “tons of money?” $300k a year? $750k? $1million? $10 million? There is no question there is that much available. Another problem is people cannot easily grasp such large numbers. How much is 1 billion? One thousand seconds is a little less than 17 minutes. One HUNDRED thousand seconds is a little over a full day: 28 hours. Count off 1 MILLION seconds, and you’ll be busy for over a week and a half. And 1 billion seconds? That accounts for almost 32 years of your life. How about 1 trillion seconds? 31,709 years.
Nouveau Riche actually mentions in lecture the November 2005 feature article from Business 2.0 magazine detailing the outward growth and eventual connection of major U.S. metropolitan areas into 10 megapolitans…the resulting estimated development market by the year 2030? $25 Trillion. That’s with a “T.” There is plenty of wealth to go around in real estate.
(http://money.cnn.com/magazines/business2/business2_archive/2005/11/01/8362817/index.htm)
As far as making money marketing the college, there are currently over 300 million people in the United States and the number is constantly growing exponentially. Even though nowhere near all of them would be interested in attending Nouveau Riche, there is far too large of a market for RE investment education for it to be completely tapped any time soon. People are constantly looking for ways to learn more and leverage their time and money to get ahead and advance in their lives. There is virtually no realistic scenario that could occur in the next few DECADES in which the market would be so saturated with current NR students that a marketer could no longer sell the product. The numbers are just far too big.
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Conclusion
NRU is a marketing business that encourages and monetarily incentivizes its members to use high-pressure sales tactics to sell a highly expensive real estate 'education' package with questionable value to unsophisticated people with the lure of quick money and unlimited riches in real estate. Success in NRU is highly dependent on (1) a booming real estate market and/or (2) a unique talent in sales and marketing. What makes NRU so insidious is that it plays on the fear and greed of ordinary people, often friends and family, most of whom will go bankrupt by following NRU investment strategies during a severe and sustained real estate down turn such as the one we are experiencing now, and most of whom will fail in selling the tuition package because they lack the sales and marketing expertise, which is further exacerbated by a declining real estate market. Taken as whole, NRU may be perfectly legal, but many people will feel like they were cheated out of thousands of dollars by someone they trusted. If after reading this, you are still interested then by all means sign up. But just be prepared to live with it if at some point you find yourself either financially bankrupt, morally bankrupt, or even worse, both.
–Again, no facts to be found, but plenty of personal opinion without supporting evidence: “ 'education' package with questionable value”, “…friends and family, most of whom will go bankrupt by following NRU investment strategies” “many people will feel like they were cheated”.
And not to mention still so self-deprecating: “sell […] to unsophisticated people”, “plays on the fear and greed of ordinary people”.
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Epilogue
Finally, you're not going to see a whole lot of posts like this from people who have joined NRU. Most are very disillusioned at the loss of thousands of dollars and don't even want to give it another thought. The rest are out searching for marks. I can only hope that NRU won't survive this bear market in housing, and if this post can hasten its demise, so much the better. I don't blame the person who signed me up, he incidentally has had to find a full-time job now since NRU is apparently not doing it for him. I walked into this with my eyes wide open, which shows you how greed can overcome any good judgment you may think you have. But I am thankful that I didn't end up dragging anyone else into this apart from a good friend as my partner in this scheme, but with whom, as a result of NRU, am no longer on speaking terms. So for all of you NRU shills out there who still think you are doing God's work, why don't you try calling each and every person you have signed up and ask them exactly what they think about NRU. I think you will find that my experience is not so unique. If you can keep on selling after that, well then, good luck to you.
–Wow. You’ve got every angle covered don’t you? You claim that “MOST people are BANKRUPT from implementing strategies” they learned from seasoned investors…so of course the next question becomes “Well how come we aren’t hearing from all these people?” Which is definitely a fair question, because I haven’t read ONE single negative review in which the poster makes any claims of bankruptcy or even loss of revenue or income.
So what’s the answer? Well apparently that’s easy: The fact that we don’t hear from any of these poor, “financially and morally bankrupt” souls is of course because all those THOUSANDS of “cheated” individuals are so “very disillusioned at the loss of thousands of dollars and don't even want to give it another thought.”
Are you kidding me? Thousands of people have attended Nouveau Riche college sessions. The author claims that “MOST [of those] people are BANKRUPT from implementing strategies” they learned there, and the only reason we haven't heard about it is because they all would just rather not think about it? Give me a break.
The truth is that entire "report" is made up of about 2% semi-truth, 48% opinion and 50% attempts at defamation with no supporting evidence, and, in multiple areas, statements that are complete lies.
The truth is Nouveau Riche is a legitimate business, it is what it says it is, and it does what it says it does. It offers specialized education and tools in a realm of investment that not many know about or even know how to learn about, and it does so through seasoned investors, all teaching techniques and strategies they personally use in their own businesses.
Is the product sold worth the money charged? That is for the individual to decide. There are many people not at all interested in real estate investment who would probably say $50 is too much, as they have no interest in the product. They would rather spend their money elsewhere. There are many other people who have actually attended the college who have said the college has changed their life, and that the information they gained from the courses has offered them opportunities they would not have otherwise had and they have subsequently made their financial investment back, many times over.
If you are reading this it is fair to assume you are considering attending the college and are doing your due diligence, which is exactly what you should be doing. Just as with any other major purchase or investment, find out as much as you can about the business and the products it sells. Most importantly, seek out the opinions of those who have been exposed to the services as well as identify your own interests, personal attributes and goals. Attend one of the weekend events. Nouveau Riche calls them "intensives". One can attend such an event for free as the guest of an ISA. The event is basically a day of free instruction from one of the college instructors. There is nothing offered for sale other than the college itself. "Intensives" are essentially a free and almost literal "test drive" of the college and are the best way to see the type of service one would be paying for with a tuition purchase.
The business IS legitimate and is what it claims it is. The only question, as with any other business/product is: do you find it useful for you?