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John T. Reed's analysis of Carleton H. Sheets' books and tapes 1 Copyright 1998, 2001 by John T. Reed I received two cartons of Carleton Sheet' books and tapes from his associate in the spring of 1998. (Sheets" name is sometimes misspelled as Carlton Sheets or Carelton Sheets.) I appreciate their generosity in sending all that material, but I wonder why they did it considering my approach to real estate and what is contained in Sheets" material. Where to begin? Last updated 4/7/02 Overview Sheets targets beginners. The curriculum he devised for those novices is not what I think beginners need to know. In fact, it appears to me that the topics he chose to write about were selected to maximize Carleton Sheets" income, not to increase the incomes of his customers. The customers that most real estate gurus go after are relatively uneducated, inexperienced, and poor. Sheets spent much of his adult life as a salesman. One of the main things salesmen must do is overcome objections. As you would expect, one of the objections you run into when you try to sell investment advice to poor people is, "I don't have any money to invest." How do the gurus part these fools from what little money they have? They push approaches which do not require money to invest, namely, nothing down, partnering with wealthy people, and lease options. Sheets" books include "How to Buy Your First Home Or Investment Property with NO DOWN PAYMENT" and "Creating Quick Wealth With Partnerships." Those are, at best, rather advanced topics for beginners with weak finances. More accurately, they are a waste of time for such people and may even be dangerous to the wealth, credit, and freedom of novice real estate investors. The president of the Robert Allen Nothing Down Club of Atlanta went to federal prison for doing illegal nothing-down deals. He is not the only nothing-down follower to suffer that fate. Sheets also writes about foreclosures and other distressed properties. That' a bit advanced for his beginner audience. And he writes about property management. Bingo. That's the kind of information his readers really need. An agent wrote me a letter telling me stories about Sheets graduates coming into his office. Prices The worst gurus outrage me with their incredible multi-thousand-dollar "boot camps" and "mentoring" services. Sheets' prices range from $9.95 for a "World's Greatest Wealth Builder Booklet" to a $799.95 "Wealth & Empowerment Training Seminar." Not as bad as the worst, but still too high. Unfortunately, once you pay those prices, you are on the call list and you will be telephoned to get you to buy far more expensive stuff. On writing a book I have written ten full-length books. Writing a book is like running a marathon. You write and write and write for months. You figure you"re almost finished. Then you count the number of pages you"ve written and you are amazed to find that you"re only half done. Most people do not have the stamina to finish a marathon. And most writers do not have the stamina to finish a full-length book. They quit at that half-way point, or sooner. Then what? If you have a major publisher, the publisher demands the advance back. If you are your own publisher, you either abandon the project or spend months and months and months more writing the other half. But many of the gurus take a third path. They puff up their half book with blank paper to make the number of pages come out to that of a full-length book. They double-space text. They quadruple or sextuple space between paragraphs. They expand the margins. They find many excuses to have totally blank pages. They put in filler like

directories of government officials or agencies or forms that are repeated dozens of times with just minor changes on each form. Carleton Sheets" books generally have directories of stuff like HUD regional offices, repeated blank forms, pages for "notes." His books, other than the one on nothing-down, are double spaced, have large type and huge margins, skip lines between paragraphs, and have lots of blank pages and pages with just four or five words on them. People who do this will generally protest that they made legitimate book-design decisions. Yeah, sure. But the effect is that what is being marketed as a "book" is much less than a book. And in the case of the typical real estate guru, he demands much more than the price of a book for it. Sheets charges $159.95 to $209.85 for his various "programs." The "programs" include both a written and audio cassette version of the material in question. In short, I believe Sheets" "programs" (other than the no-down one) are really booklets that have been puffed up with blank paper, fancy binders, and extraneous audio cassettes to make them weigh a couple of pounds and therefore seem worth the high prices he charges. The actual book-store value of his programs, if they were sold as books and created with normal typesetting, margins, and so forth, would be about $9.95 to $12.95 because of their low page count. Furthermore, they would not sell because they stink. Only by using TV infomercials can he sell this junk. Sheets' background Many real estate gurus have embarrassing backgrounds. High-school dropouts. College dropouts. An uninterrupted string of failures after leaving school. Sheets, on the other hand, has a few legitimate accomplishments. He was born 8/25/39 in IL and received a Bachelor of Arts in psychology, business, and speech at age 21 from Ohio Wesleyan in 1961. Ohio Wesleyan in currently an expensive private school ($25,000 a year) suggesting that Sheets came from an affluent family (or that he got a scholarship). It is a slightly selective school, rejecting just 15% of applicants. The average SAT score at Ohio Wesleyan is 1210. (The national median SAT score is 1000; the maximum, 1600.) Salesman Sheets" career has generally been in sales. I would suggest that it still is. He was awarded the Specialist in Real Estate Securities (SRS) designation by the Real Estate Securities and Syndication Institute (RESSI), a subsidiary of the National Association of Realtors'® (NAR). Sheets mentions his RESSI membership and SRS designation prominently in his biography. All NAR designations are legitimate indications of expertise. However, there are a few things that would-be customers of Sheets should know about RESSI. It went out of business on 4/22/90. So it is a bit odd that Sheets would still be mentioning it in 1998. That is an indication that he markets almost exclusively to beginners. Experienced investors know that RESSI is defunct. Sheets current real estate mode is ostensibly to help beginners make millions in real estate. That was not the purpose of RESSI. NAR is a national association of salesmen. Their designations generally recognize skill at selling or managing salespeople. In particular, RESSI members were engaged in selling shares in real estate limited partnerships to laymen. It is extremely unusual for a national trade association to go completely out of business. RESSI members were among the main players in an industry with few happy customers. The vast majority of real estate limited partners regret their investment. Thousands of lawsuits were filed against sellers of real estate limited partnerships. Some are still in the courts. Limited partnerships were generally tax motivated. So the Tax Reform Act of 1986, which devastated real estate, was a big factor in running the industry "out of town." And, it is also true that RESSI members' activities in selling tax shelters were probably an important reason why Congress passed the Tax Reform Act of 1986. In short, I would not regard either membership in, or a designation from, RESSI as much to brag about, especially when selling investment advice to consumers. It would be more appropriate to brag about being a RESSI designee if Sheets were applying for a job as a stock broker. There is an old saying in real estate, that at the beginning of a limited partnership, the general partners have the experience and the limited partners have the money. And at the end of the limited partnership, those positions are reversed. RESSI was the trade association of the general partners. Real Estate Investor's Hall of Fame Sheets says he was inducted into the Real Estate Investor's Hall of Fame in 1992. I have never been inducted into that Hall of Fame. That would make me feel bad---if I had ever heard of the Real Estate Investor's Hall of Fame. I have not. Neither has the National Association of Realtors'® who checked for me. I have never seen anyone else claim to be one of its inductees. I also searched for it in various Internet search engines to no avail, which means it has no Web site and has never been mentioned in anyone else's Web site. It' apparently not very famous, which is odd for a Hall of Fame. If any of you have ever heard of this Hall of Fame, I would like to know who runs it and what their criteria for induction are. I do not want to apply for induction. I just want to know how Carleton Sheets got to be the only inductee I can identify. [After two years, No one has contacted me to say they ever heard of this Hall of Fame.] In August of 2003, a reader told me he found such a Hall of Fame on the Internet. Seems odd that it was in existence in 1992 but had no Web site until 2003'€”or until after I pointed out its nonexistence. In any event, it has Sheets as well as an application page where you can sumbit yourself. Seems odd that the famous would have to tell the"Hall of Fame" that they are famous. Isn"t that a contradiction in terms? Who's Who in Real Estate Sheets also brags that he is listed in Who's Who in Real Estate. I had not heard of that either, unless you count the Who's Who in Real Estate that was published for just one year, 1983, by Warren, Gorham & Lamont's Real Estate Review. Sheets does count that Who's Who. I received a free copy of it because the publisher was the first guy I wrote for in real estate, Bob George. Sheets is, indeed, listed on page 639. When it came out, I wrote an article in which I called it "Who Isn"t Who in Real Estate" because it left out such real estate giants as Gerald Hines, Trammell Crow, Harry Helmsley, and Bob Bruss. (I"m on page 574.) There are only two legitimate Who' Whos: Who's Who in America and Who's Who in the World. These are bought by libraries for reference purposes. All other Who' Whos are overpriced books which are sold almost exclusively to the biographees listed in the books. They are generally compiled from trade association membership lists and such. Who's Who in Real Estate probably sent an application to every SRS so Sheets" inclusion in that book is most likely just an echo of his receiving an SRS designation. Sheets says, "According to Who' Who in Real Estate, he has bought and sold more than $25 million of real estate using creative, no money down techniques." That must be another Who's Who in Real Estate. The one published by Real Estate Review in 1983 says no such thing. I"d like to see a copy of the Who's Who in Real Estate he is referring to, and I"d like to know who published it and when. So Sheets brags that he was awarded a defunct designation by a defunct organization, that he is listed in a defunct Who' Who, and that he was inducted into an unknown Hall of Fame. I think Sheets should, to use the classic phrase, "update his resume." Review of Sheets' booklet Creative Tax Strategies Sheets" No Down Payment program includes a booklet called Creative Tax Strategies , A Real Estate Investor' Guide to Tax Reform,which he describes as "Continually revised to include the latest changes in the tax law." Really? I would not have guessed that. Creative Tax Strategies is a slop job of a book on real estate tax law. If Sheets turned this in as part of a university course or real estate or tax law, the professor would give him an F and chew him out. Tellingly, Sheets did not put his name on it. All the other stuff he sent me was "Copyright by Carleton Sheets." This is the only one that is "Copyright by the Professional Education Institute [Sheets" book and tape selling company]." I am not surprised that Sheets did not put his name on this embarrassment. Nor am I surprised that no one else did either. Maybe he should have called it Creative Tax Strategy Talking Points. Like all of Sheets" stuff, it has a pretty, full-color cover. And the copyright page shows copyrights for every year from 1985 through 1998. But it appears to me to be a booklet that someone wrote around 1987 as a description of the Tax Reform Act of 1986. A couple of new paragraphs have been pasted in since 1987, but it most definitely has not been "Continually revised to include the latest changes in the tax law." The booklet' first sentence mentions the Tax Reform Act of 1986 and the Revenue Act of 1987. That' very professional and authoritative, as befits a booklet about those laws. But the booklet' copyright is 1998. What about all the tax laws since 1987? None are mentioned. Nada. Zip. Although someone has physically pasted in some post-1987 depreciation schedules in small print so they would only have to change one page per table. Creative Tax Strategies does does use another tax law name to impress us---on page 2. But they should have left well enough alone. Page 2' first sentence refers to "the Tax Reform Act of 1981 (TEFRA)." Even a non-tax expert ought to recognize that TEFRA is not the abbreviation for "Tax Reform Act." Tax Reform Act is abbreviated as TRA. Duh! Furthermore, there was no such thing as the Tax Reform Act of 1981 either. The tax law in 1981 was called the "Economic Recovery Tax Act of 1981" (ERTA). That was Reagan' first big tax law, the one that gave us 15-year accelerated cost recovery. It was in all the papers, except, apparently, the ones Sheets reads. By the way, there actually was a TEFRA: The "Tax Equity and Fiscal Responsibility Act of 1982." Sheets" copyright 1998 Creative Tax Strategies is strangely out of date as regards the Taxpayer Relief Act of 1997. That' the one that replaced the two-year rollover and over-55 exclusions on your residence with the $250,000-per-person capital-gains exclusion on residences. Sheets" 1998 booklet makes no mention of the 1997 Act. Indeed, it says the two-year rollover and over-55 provisions are still in effect, which they are not. They were both repealed by the 1997 Act. True, a one-page "Special Tax Update" letter from Sheets, which briefly mentions the Taxpayer Relief Act of 1997, did fall out of my Creative Tax Strategies booklet. Sheets had tucked, but not bound, it inside the cover. But I still do not understand why the bound book has copyrights for every year from 1985 through 1998, but mentions no tax law since the Revenue Act of 1987. Book buyers often ask what the copyright date is on a book before they buy it. They prefer current books. Only two of my ten books have 1998 copyrights. It' a lot of work to keep them up to date even though I am a full-time writer. But Sheets, who says he is a full-time investor, somehow manages to have a 1998 copyright on every single book he sent me. I guess it's easier when you only change the copyright page. Writing a book on real estate tax law and keeping it up to date is a vast effort. I know, I have written 18 editions of Aggressive Tax Avoidance for Real Estate Investors. Sheets" Creative Tax Strategies, on the other hand, is a half vast effort.

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