Rich Dad Academy real-estate training

Rodney Huffman assumed a stoop-shouldered posture at the front of the room and his voice turned from jovial (with a hint of Southern accent) to sniveling and shrill.

He didn't know it, as he stood in front of a group of 70 people at a free Rich Dad Education seminar in Braintree, Mass., but he was talking about me.

I'm someone who comes up with a reason to be cautious about doing things, rather than jumping in willy-nilly. Huffman said he has a name for people like that; he calls them "whiners." And so he adopted the persona of a whiner.

"Whiners ask 'What percentage of your students are successful?' " Huffman said in the nasally tone of a whiner.

"What kind of loser question is that?" he roared back, retaking his own persona. "People who ask that question are giving themselves permission to fail."

That could be, but the people who accepted Huffman's logic and plunked down their money to attend the Rich Dad Academy's basic real-estate-education course were making a Stupid Investment of the Week.

Stupid Investment of the Week showcases the conditions and characteristics that make an investment less than ideal for the average investor and is written in the hope that spotlighting trouble in one case will make it easier to uncover elsewhere. While investment training is not a traditional investment like a stock or mutual fund, it is the outlay of money with the expectation of a return, namely the ability to deliver the results touted in the seminar, that entices you to sign up in the first place.

Rich Dad Academy is an extension of the brand created by Robert Kiyosaki, author of "Rich Dad, Poor Dad" and several other bestsellers. Last year, Kiyosaki's Rich Dad created a joint venture with Whitney Information Network, forming Rich Dad Education to teach the Rich Dad philosophy.

That relationship with Whitney may be why the whole presentation from Huffman felt so familiar.

In a Teach Me to Trade seminar in 2006 — another Whitney offering, and a past Stupid Investment of the Week — the instructor all but singled me out by talking about people who find all of the negatives in any situation.

But what's different in this case is the message, because it's Kiyosaki who is behind it.

In general, Kiyosaki's philosophy revolves around generating passive income through investments and continuing to build up these investments until their passive income can support you. In other words, look for and buy investments that can generate income for you, using leverage to turbocharge the process.

Kiyosaki's world is full of platitudes, and is not so rich in specific advice. The question is whether that works when you are paying hundreds or thousands of dollars to get the specific help needed to make this work entirely on your own.

Ironically, in most of Kiyosaki's books — written before the educational deal with Whitney — the author eschews education, saying that formal training tends to be for people who will be satisfied as an employee or being self-employed, which means they will never be rich.

Now, of course, Rich Dad Education is all about classroom training. The free come-on seminar was pitching the most basic real-estate course, one that focuses on taking advantage of foreclosure and distress situations to find ways to finance your deals.

While Huffman showed a diagram with 11 different three-day training courses — and he mentioned the possibility of hiring a mentor instead of going to the classes at all — the focus was just on doing the one class.

Most people might have thought they were getting a one-and-done deal and at a significant discount (attendees at the free seminar were offered the chance to register for the class, normally $995 online, for just $495).

But there's little doubt that one training seminar will lead to hard-sell pitches for others. Several members of the audience had previously paid for Rich Dad training; the three I talked to said they have yet to turn a profit, but expect to soon.

That hope certainly is a positive, but it's also what Rich Dad training seems to feed on.

Huffman noted that people who ponied up for the three-day class would learn Kiyosaki's "66 Ways to Find Bargain Properties and Motivated Sellers," including 17 "Key Internet and Realtor Search Criteria."

He promised that the rising national rate of foreclosures was making it possible for "everyone" to succeed in this one segment of the market.

But those same secrets are being shared with hundreds of investors, presumably everyone who signs up for classes.

If my free seminar was typical, the four-day swing through Boston would result in 200 people signing up for the longer class. Multiply that by a trip through every big city in the country once or twice a year, and suddenly the competition for those properties is huge, and the ability to succeed is diminished.

Indeed, it's easy these days to find stories of home flippers and foreclosure buyers talking about how the market has changed and the glory days are gone. What's not easy is making a fortune in distressed properties. That's why the success-rate question becomes so important.

If you're paying because you want to "live the dream," you should have some idea what percentage of people actually get there.

And while it might be losers who think they might fall into the part of the populace that fails, it's suckers who give their money without doing the background check needed to decide if they truly can be successful with whatever strategy they decide to pursue next.

A quick check of the most recent quarterly report on Whitney shows that the company is facing several investigations and lawsuits, including one from the Securities and Exchange Commission, with much of the trouble stemming from advertising pitches and claims promising success.

Clearly, everyone who liked Huffman's pitch and bought Rich Dad Academy training has the potential to be the next success story, but most won't be; Kiyosaki's advice — however flawed some people find it — has worked for at least a small-but-dedicated group of followers.

But that success story is not likely to be the "average" attendee, but rather the exceptional one, the person who dives in with a passion and single-mindedness that stand out from the crowd.

Chuck Jaffe is senior columnist for MarketWatch. He does not own or hold short positions in any securities covered by Stupid Investment of the Week. If you have a suggestion for Chuck Jaffe's Stupid Investment of the Week or a comment about this week's column, you can reach him at jaffe@marketwatch.com or Box 70, Cohasset, MA 02025-0070.