(Money Magazine) -- A hand shoots up in the back of the room.

"Alexis, she's got one," a student says.

Alexis McGee, real estate instructor and president of Foreclosures.com, scoots around her desk, sits down and picks up a headset.

"Tracy, look up. I'm on the line," McGee, 47, types into her computer, which is linked to a giant screen at the front of the room.

Tracy Romero, 31, and her 17 fellow students have reached the heart of McGee's $9,000 three-day seminar on foreclosure investing: They are cold-calling homeowners who are behind on their mortgages, getting them to talk and, the students hope, convincing them to sell.

But Romero is struggling. The home owner on the other end of the line demands to know who she is and why she's calling. Romero puts the call on hold as McGee reminds her of the sales technique.

To smooth-talk prospects, she teaches, be courteous, ask questions but don't answer them, listen and, if possible, be funny. Romero gets back on the phone. "Sorry to keep you waiting," she says. "Who I am isn't important. What's important is we figure out how to save your house." It works. The woman starts talking.

She lost her job, and poor health has kept her from finding a new one. She's afraid she will have to put her dog to sleep if she moves because most rentals don't allow pets. She begins to cry.

McGee prompts Romero to comfort her and then move in for the key piece of information any foreclosure investor needs. "Find out how much she owes," she urges. "Now or never, Tracy."

Now or never. That could well be the rallying cry for an eager new generation of investors flooding into workshops like McGee's, crowding ever more frequent bank foreclosure auctions and snapping up real estate bestsellers like The Pre-Foreclosure Property Investor's Kit.

Foreclosure investing is nothing new, of course. Its simple and seemingly foolproof premise has long captured the imaginations of aspiring real estate millionaires: Buy at fire-sale prices from homeowners desperate to avoid foreclosure or from banks eager to unload seized homes, then sell for an easy profit on the open market.

What makes the old formula so compelling today is the unprecedented volume of distressed properties to choose from. Earlier this year, homes in some stage of foreclosure hit a 30-year high of 640,000, and a recent congressional report estimated that 2 million homes would be in the process or have gone through it already by the end of 2009.

No wonder newspaper ads are touting today's foreclosure environment as "the greatest fire sale in history."

Maybe so. But a close look at one group of foreclosure investors in action suggests that today's supposedly once-in-a-lifetime opportunity isn't all it seems.

This writer sat in on one of McGee's much-sought-after seminars, talked to dozens of her students and even went prospecting for deals with one of her most successful protégés.

And while her disciples are nothing if not optimistic, none of the seminar grads she referred to Money made anything close to the income she says a rookie should expect.

What's more, Money could not confirm how much McGee and her protégé themselves made in foreclosures, since neither was willing to provide a list of properties they have bought and sold.

This is not to say that you can't make money investing in foreclosures. Even skeptics concede that you can earn a decent, though not stupendous, living at it. But it's frustrating and time-consuming work, and today's market doesn't change that.

"The public thinks real estate is a great way to make money and foreclosures are a way to get property on the cheap," says John Reed, a real estate author who tracks the claims of industry gurus.

"But in the real world, foreclosures rarely work." In this as in any other investment market, the no-free-lunch rule applies. Says Reed: "There are generally no easy bargains in real estate."

Whether or not today's foreclosure market is a golden opportunity for investors, it has been a bonanza for Alexis McGee. Her twice-a-month, three-day intensive class has been sold out for most of the year. Visitors to her popular Web site are up 71 percent so far this year, she says.

Her brand-new book, The Foreclosures.com's Guide to Making Huge Profits in Pre-Foreclosures Without Selling Your Soul, hit No. 4 on Amazon.com's list of real estate bestsellers.

McGee got her start in real estate 24 years ago as a broker in Sacramento, selling foreclosed commercial properties for banks. In the early 1990s, as home prices headed into that decade's bust, she began buying houses in foreclosure.

In 1992 she and her husband bought a company that gathers court records into a list of properties in, or about to be in, foreclosure, which they eventually put online as Foreclosures.com. Her first classes, taught in the late 1990s, were tutorials on how to use that database.

But much of the soup-to-nuts foreclosure investment method she's been teaching since 2000 grew out of what she did before real estate: telemarketing.

While in college at Arizona State University, McGee spent two years at Dial America, selling, among other things, magazine subscriptions (including for Time Inc., the parent of Money magazine).

It was there that McGee began to figure out how to sell on the phone. The most important thing she learned was to leave the script behind.

"I used to duck my head low so my boss wouldn't see me and just start asking questions," she says. "That's the only way you can figure out what a person wants."

Today students come from around the country to learn these techniques at McGee's foreclosure "lab" on the first floor of a small office building in Fair Oaks, Calif., a Sacramento suburb.

Motivational posters adorn the walls. One, a picture of a sailboat on the ocean, reads, "Embrace the Challenge." The screen saver that pops up on inactive computers shows three children on a beach next to the line "Enjoy the lifestyle of success!"

Real estate experts trace the allure of foreclosure investing to several factors. For one thing, foreclosures do often go for less: A study by title company First American found that foreclosed homes sold at auction went for an average of 14 percent below the market value.

Because the properties sometimes sell for a pittance, there's a perception that you don't need to put much cash down to get in. And the process is just technical enough - with jargon like "REO" (real estate owned by the bank) or "short sale" (when a bank agrees to take a loss on the loan so the house can be sold) - to add to its mystique.

"If it is fairly complex and it involves dollars, most people will say you can make money off it," says James Webb, who teaches real estate investing at Cleveland State University. "And that's certainly the case with foreclosures."

To her credit, McGee readily admits that foreclosure investing is hard work, at least at first. While some gurus advise clients to buy already foreclosed homes at bank auctions, McGee's strategy is to go directly to a homeowner in trouble, catching him after he's stopped making mortgage payments but before the bank has foreclosed.

As long as he owes less than the house is worth, you can buy him out of his loan, give him some walking money and still resell the house for a profit. That protects the homeowner's credit - a good part of McGee's pitch is that her method is the most ethical - but it's also, she says, the way to get a house at the lowest price.

McGee's students begin by searching her site for people in their area who are behind on their mortgage. Then they start calling. Often homeowners have changed their number or disconnected the phone. So McGee suggests trying neighbors and relatives.

When students do reach the homeowner, he usually won't be happy to hear from them. They are, after all, calling to remind the guy that he is losing his house. It takes a salesperson with a particular kind of confidence and determination to keep such a homeowner on the phone and eventually convince him to sell.

As McGee and others debate how easy it is to profit from the pain of thousands of overextended homeowners today, foreclosure teachers continue to send more would-be tycoons into the market.

Classic economic theory would say that this, if nothing else, is the beginning of the end of the quick money in foreclosures. Any fat source of profits inevitably attracts competition, and as the field gets more crowded, easy dollars are squeezed out.

Which brings us back to McGee's classroom and Tracy Romero. With McGee's help, Romero has built up a rapport with the troubled homeowner on the phone and finally seizes the moment to ask how much she owes on her home.

The woman says $175,000 and estimates that the property is worth more than $200,000. Romero looks up at McGee: That sounds promising.

But then the woman continues: Romero will have to pay more than $195,000. Why? Because that's how much she has already been offered. By whom? An investor named Susan Thomas.

McGee, still listening in, laughs and tells Romero to wrap it up. Susan Thomas took McGee's class a few months earlier, McGee explains. "What are the odds of that?" she muses as the class stares back at her. "This just doesn't happen."