Merrill both warn that only those willing to put in a lot of work may achieve success. Asterisks with fine-print disclaimers abound, warning that “all income or earnings statements are only estimates of what could be earned, there is no assurance that your earnings or income will match the figures we present.” While the FortuneBuilders website has dozens of testimonials from satisfied customers, anonymous comments on the scam-spotting website Ripoff Reports were split: Some claimed Merrill’s three-day training sessions were useful, while others say it amounted to a $200 infomercial for his pricey mastery program. In market after market, the Better Business Bureau has issued warnings against such seminars, including Merrill’s. In particular, the entire Flip This House brand has come under fire. One star, Sam Leccima, was hit by major fraud allegations in 2007. A FOX Atlanta news investigation found what he portrayed on the show was almost entirely fictional: Leccima didn’t have a real estate license, didn’t own the home he was renovating, renovated only part of it and lied about selling the home at all. Another star, Armando Montelongo Jr., has also topped Inc.’s fastest growing education companies with his own brand of seminars. But Montelongo’s seminars have been branded with a Better Business Bureau “F,” and earned him a Forbes profile headlined “Meet Armando Montelongo: The Home-Flipping Huckster Who’ll Make $50M This Year.” Merrill takes pains to separate himself from Montelongo. As in any industry, he says, some people do it right and some do it wrong. “The [Better Business Bureau] is always cautious,” Merrill says. “Any time they feel you’re teaching people how to make money, you’re going to get that.” He says consumer advocates often haven’t even attended his seminars before issuing warnings. But at the Better Business Bureau in Cincinnati, Jason McGlone has. His verdict was that some people might learn a thing or two, but he doubts forking over thousands of dollars is worth it. “The longer we were there, the more it leaned toward, ‘If you give us money and enroll in this program, your potential earnings will increase,’” McGlone says. “It’s a big group sales pitch. It’s not that different than buying a car, in a lot of ways. The difference is you actually leave a car lot with a car. You don’t leave these seminars with a whole lot.”
IMPERFECT MARKET
In the radio ads, Merrill claims Spokane is the perfect market for his system. He explains that the region’s low price point — plenty of homes under $250,000 — make it ideal for flipping. It’s an iffy claim. In October, listing service RealtyTrac named the high-priced home-flipping markets as the hottest, with the low-end market having decreased significantly. The pricey Seattle, Portland and Las Vegas markets all made RealtyTrac’s recent list of the top 15 house-flipping markets. Spokane County ranked in the high 70s. Marianne Guenther Bornhoft, president of the Spokane Association of Realtors, says Spokane sale prices have been stagnant. “Prices are up 3.7 percent,” Bornhoft says. “If you’re a house flipper, you need to have increases that are way higher than 3.7 percent.” Merrill argues his system relies on solid home improvements, not appreciation. “If you’re relying on home appreciation, I think you’re gambling,” Merrill says. But Bornhoft names another massive catch, one Natoli never discusses in the seminar: Washington state law. In Washington, a 2007 law made it illegal for anyone who isn’t a registered contractor to buy a home, put more than $500 into refurbishing it and then sell it in under a year. “How many of you are brand new to real estate investing and are looking to get started?” Natoli asks. Nearly the entire class. “Good, that means we don’t we don’t have to break any bad habits.” When he asks how many are contractors, however, only a few raise their hands. “Just because you go to a seminar doesn’t make you an expert in real estate,” Bornhoft says. “It’s a very scary business if you don’t know what you’re doing.” n danielw@inlander.com
NOVEMBER 14, 2013 INLANDER 15