Phil makes a real estate deal. A bad one. Why? Simply put, he lacks the knowledge, experience, expertise and guidance of a trusted adviser. In other words, he failed to engage a Mentor for his new business. Stay with me while I share just how powerful the right mentor can be.

So here's the story. Phil (not his real name) is about to take an intensive, three-day real estate investment workshop. He knows very little about real estate except that where he lives (somewhere on the West Coast) properties are expensive even in down markets. While trolling along the internet for "deals" he comes across one in the Midwest which is just too good to pass up. It's only $17,500 for a small house and renters are abundant at $500.00 a month (at least that's what the website reports). "Gee", the novice says to himself "What could possibly go wrong. Prices where I live are literally fifty times higher". And so, he impulsively buys sight unseen without any due diligence or recourse.

Fast forward to the end of the three-day course when Phil asks his instructor "Can you take a look at this deal and tell me what you think?" The instructor takes a glance and within moments intuitively asks "Can you get out of this?". Phil, a bit shocked replied "Why would I want to do that?" And thus the real lesson begins.

The instructor, a seasoned real estate investor and mentor himself, knowing that area as he did, explained it was a high crime area in which renters are plentiful, they just don't pay. To collect long distance would be impossible and no one would take money to venture into that neighborhood to do it for him. Within a few minutes the mentor showed Phil the online crime reports (easy to get when you know how) which confirmed seven time the national murder rate. Phil also did not know the local tax laws which made his newly acquired property almost double his anticipated holding costs. The Mentor knew. Then things really got bad when Phil, now being made to check things out for himself (that's what good Mentor's do), discovered the house was on the market for 6 months at only $2,900. It then sold to an out of state investor for $2,000 even. To his dismay, Phil realized he overpaid by $15,000, was stuck for property taxes and other ongoing expenses that he will never get income to cover. All in all, Phil's tuition just went up by around $25,000 and that's if he can sell it quick for, yes you guessed it, about $2,000.

Was this avoidable? Of course. The problem? Lack of guidance. The solution? A Mentor. Now when I say Mentor, I mean a real, street-certified, done-it-all themselves, seasoned (really means they've made their own costly mistakes) Mentor. Not some False Profit (yes, that's how I meant to spell it). The ideal Mentor charges a lot of money for their services and does not take profit. Some only work with fees and a cut of profit. How much? Well, the good ones will want $1,000 - $5,000 and hour. Profit share is case by case. Is that expensive? Sure it is but if you are serious about your business shouldn't you minimize your risk and maximize your profits?

Let's look at what 15 minutes might have saved Phil. If a Mentor charged him $500 for 15 minutes or even $2,500 to review his deal, Phil would be thousands ahead right? Wrong! Phil would be tens of thousands ahead maybe even hundreds of thousands. Why? Easy, Phil now has about $20,000 stuck in a worthless deal. If he can't get out it will take him months to sell or give it away. That money is completely out of play and could have been leveraged to buy about 4 decent properties in an area about 7 miles away. An area that the mentor knows because he successfully invests there.

The mentor would also bring his network of contacts into the deal. Contacts the student would never find or have access to. As an outcome, Phil would likely earn sufficient cash flow allowing him to pay off all 4 houses in 5 years with a few dollars in his pocket each month as a bonus. If the market did not change, he could easily sell them for $25,000 a piece having made 9 times his investment. He could then use that profit to leverage and perhaps buy a small apartment building. We call that trading little green houses for big red hotels (think about a well-known real estate board game). And just for fun, when it comes time for the tax man to take his share, another Mentor, could show him how to defer paying anything using a widely accepted but poorly understood strategy called a 1031 Tax Deferred Exchange. That same Mentor would have also shown Phil how to protect his newly acquired assets from lawsuits and death taxes. Important? You think?

So I'll ask again. Are Mentors expensive? Not nearly as much as it will cost you in mistakes, missed opportunities, and madness.

Author's Bio: 

Stephen Libman is a Performance Strategist specializing in personal and professional growth. As a mentor, author and international speaker he focuses on the "What to be" and "Why", while providing strong content foundation of the "How to" on topics within Wealth Education and Communications such as; Sales, Customer Service, Networking, Marketing, Leadership, and Real Estate. He is the author of the forthcoming books "The Drive to Achieve" and "The WHY Factor: Living Life on Purpose. For more information contact Stephen at