To MBA, or not to MBA?

105 Replies

Hello!

I have been driving myself crazy trying to determine whether or not I should go the MBA route, so I'm hoping to tap into the wisdom of the BP community to help with this huge decision.  I'm considering Rutgers Business School in NJ, which is the #3 rated MBA program in the NYC metro behind NYU and Columbia. Average starting salary for graduates is right at $100K, and upwards of 90% of graduates obtain employment within 3 months of graduation. The cost of the program is $60K.

A little about me:

-38 years old (would finish the program at 41)

-I currently work in corporate finance at a large media company with 2 years of experience in the department. I have been with the company for 10 years but worked in operations then account management for the first 8. Basically, I have 2 years of corporate finance experience in media.

-Current salary: $60K-$70K range (I live in the NYC metro, so this doesn't go very far.)

-My ultimate goal is to build a real estate portfolio to help me reach financial independence, but I currently own zero properties. Again, living is expensive out here!

Why I'm Considering an MBA:

-To increase my income to have more money to invest in real estate (I have already cut spending about as much as I can). 

-To (hopefully)  land a job in acquisitions at a large real estate firm (ex. Marcus & Millichap) to develop a deeper understanding of commercial real estate and to expand my network in the industry. I also hope to work in an industry I am passionate about.

-I love learning new skills

Concerns:

-That the $60K in student loans I would take out will be detrimental to obtaining financing for my own real estate acquisitions.

-That I may be able to make the career change without an MBA by teaching myself the necessary skills and by networking. I don't know how realistic this is, however

Ok. That's it in a nutshell. What do you think?

Thanks!  

If your goal with an MBA is to earn a higher income with the end goal being passive income, a $60K 3 year delay is not something I would do.

Start soon. Doesn't have to be a home ru out of the gate. 3 years is a long time when you look at what starting now with compounded results over time would do for you. 

Lend money, partner up while you build the knowledge and experience to go solo. sure how much cash you have. 

@Christopher Christian You’re not going to find a lot of support for an MBA on BiggerPockets. In fact, many will discourage even a bachelor degree, in favor of just diving directly into real estate. I happen to have both degrees, and definitely see pros and cons. As has been stated, the two largest cons are the money and time it would take to obtain the MBA and then pay off the debt. I happen to be very supportive of continuing education, but there’s no guarantee for the returns that the average statistics portray. And for me, the debt load would be the biggest challenge, tying up precious capital and borrowing capacity for a long time. I wonder if you could either get a job, or otherwise just get involved somehow, in the real estate industry in a capacity that would give you the kind of continuing education you’re seeking, that would set you up to venture out on your own. Just some thoughts to consider. - Chris

Christopher - I respect your desire to further your education. I also am considering getting my MBA. My primary motivations might be a little bit different though. I enjoy learning in a structured environment and also want to "rebrand" myself away from being a CPA to more of a businessman.

Since it sounds like you want your MBA to increase your earning potential and get a job at a large firm, I definitely would stick to your guns about going to a prestigious business school. Maybe you should apply and see if you get in?

If you don't get in then it's a mute point. Plus you have corporate finance experience already. I think employers would find that more useful than a MBA...

Either way, I like @Ernesto Hernandez 's idea of starting soon instead of delaying. If we keep setting more obstacles for ourselves, we'll never reach those passive income goals that we have!

@Christopher Christian Thanks for the post. 

I am sure you like hearing this, but it all depends on what you want out of REI. Are you looking for REI to reach financial freedom then "retire" or will you continue to work in the corporate world? I am currently earning my MBA here in Massachusetts, and I will say that it is A LOT of work. If you take a step back and take a realistic approach you will be neglectful on one of the three areas you are considering( Work, School, REI) and maybe even family. Do you think you can handle a full-time career, MBA program, and pursuing REI? Are you willing to put your REI goals on hold while you focus on your degree and advance in your career? Or are you okay with putting your effort into investing while you have a steady job and 60k less student debt.

If you purchase several investment properties in that two years it would take you to complete the MBA, would you rather have passive income producing properties or have 60k in student loan debt without any investment properties. I am fortunate enough to receive income from going to school through the VA, and this allows me to focus on school and REI while not having a 9-5 job. If things were different and I had this much passion for REI, I would delay the MBA in a heartbeat and reach financial freedom then consider returning to school.

That is my 2 cents!

Good luck with your decision.

@Ernesto Hernandez This is a good point. My current problem is that my income makes it difficult for me to save anything substantial to invest in real estate at the moment. To your point, however, taking on $60K in debt at 38 years of age is certainly not ideal. Perhaps I will explore other ways to increase income that requires less of a time/money commitment. Thank you for the response! 

@Chris Jensen Great points. I am considering the MBA to increase my earning potential as well, but taking on all of that debt and then not being able to land a higher-paying job would be a nightmare. As you mention, the loss of borrowing capacity is a huge concern for me as well. I love your idea of trying to get a job in the real estate industry without the MBA. For some reason I have it in my head that making a career change like this would require the MBA, but maybe not! Thanks so much for taking time to reply.  

@Caleb Heimsoth I considered this as well. From what I have read (and what admissions at business school reinforced), the part-time MBA is more suited for those trying to advance in their current career while someone trying to change careers would benefit more from the full-time program. I wonder if it's still possible to change careers with the part-time MBA, though. 

@Ryan H. Joseph I love what you said about setting more obstacles for ourselves. The time and money commitment would certainly be a huge obstacle to financial independence, but up to this point I have only been viewing the MBA as a way to overcome obstacles. Fantastic point.

While Rutgers is the top public business school in the Northeast, it is certainly no Harvard or Columbia. It is, however, less than half the cost. To your point, I have read many times that unless you enroll in a top program you are wasting your time. I wonder how true that is.  

While I do have corporate finance experience, so many of the real estate industry jobs I have seen require prior experience in that industry. I also want to get more into the acquisitions side of things which is not something I am exposed to in my current role. I work in the music industry, so it would be quite a jump! 

Thanks so much for the response, and best of luck!

Put your personal  real estate investment desires aside, in fact forget them when making the decision. Your only consideration should be the job you desire at the time you graduate. If the MBA gives you a career that you desire to be at for the rest of your working years then go for it. If that is not motivation enough to get your MBA then don't waste your time.

Real estate investing does not require any formal education. Anyone can do it with little more than average intelligence, research and motivation.

Unless it is Harvard, Columbia, Stanford Ivy League, your mba will not likely get you a higher paying job unless your current employer promises you a supervisory position paid by them. 

Wall Street prefers to train young mbas who are fresh out of college with no prior work experience. Certified Financial Planners many do well. Suggest you also see a career counselor.


@Alexander Wardell Thanks for the awesome response! I do tend to overestimate the amount of workload I am able to handle, so you are bringing a much-needed dose of reality to the table. My ultimate goal is to be able to retire from the corporate world and do REI full time, but I'm guessing it will take at least another 10-15 years of working a 9 to 5 before I get to that. I was considering putting my REI goals on hold to pursue the MBA since they are effectively on hold anyway. It is proving to be very difficult to save anything substantial for investing at my current income level. I don't know how I could purchase several investment properties in the next two years, but maybe I'm looking at it wrong.

Thanks for the insight and for reinforcing that getting an MBA is a ton of work. That's great that you are able to focus on the MBA without having a 9 to 5! Out of curiosity, why are you getting your MBA? Do you see it helping with your real estate investing, or is there a specific job that you are aiming for? 

@Christopher Christian My suggestion is to decide which will provide a higher ROI. 100K would be spread over 2 years - what’s the opportunity cost? Could you generate 40K in additional gross income YoY in those two years, do you have a plan? If you don’t have a solidified REI plan but rather a career plan to boost W2 income to then use leverage to buy REI then MBA is the right choice for you. No one, except yourself should answer those questions. I’m going for my Master’s in Science (Data Science) from Syracuse. I choose to invest in myself as that always provides a ROI for ME. Plenty of folks who go get a MBA only to not use it to advance their career. Goodluck either way.

@Thomas S. That is a great way to look at it. The reality is that I don't want to work at any job until I am 65. I was looking at the MBA as a "stepping stone" to a higher income for real estate investing, but perhaps that is the wrong approach. Thanks so much for the input.

@Sam Shueh Thanks for this insight. The absolute worst-case scenario would be to go through the trouble of getting the MBA then not being able to get a higher-paying job. I'm glad you brought up Wall Street's preference for younger MBAs. I thought I may have been a bit naive/overly optimistic about what kind of job I would be able to land at my age.

Seeing a career counselor is a fantastic idea and not one that I have considered. Thank you for the suggestion!

@Christopher Christian If your goal is to retire from REI then I would not delay any further. I know your income is limited but you have a long work history. Would you consider house hacking? Not sure how many MFR are in your market or if you are willing to commute a little further. There are so many ways to make it work, and people have done it making less.

To answer you question I originally started college in 2013 after separating from the Marine Corps and bounced around from criminal justice to business management without a goal in mind. I ended up getting my BS in business management and decided to go right into the MBA program offered at my college. The program began in January, which was before I started to pursue REI. To be honest I want to have as many options available if this REI venture does not pan out the way I hope. I am okay with entering the corporate world, or getting a job related to real estate but for right now I am focused on finishing up the MBA and landing my first deal!

Just to add @Caleb Heimsoth comments, look at what options your company might offer for tuition reimbursement. I was in a simular crossroads as you, but the 70k+ I’d spend at University Washington for an MBA doesn’t pencil. I work in Supply Chain and my company offers $5,000 in tuition reimbursement and I make sure to use every dollar of it each year to obtain certificates, etc. That has helped me get progress in my career all while making and saving more. @Christopher Christian

Hey Christopher - i’m in the process of applying to business school now, so I can relate to the dilemma!

The best advice that I have been given on this topic is that if there is a job that requires an MBA to get access to, then go for it. This is typical in management consulting and investment banking, for example.

Have you applied to any of those roles that you are interested in to test the waters? As you know, applying to business school is a huge commitment of time, energy, and money. Before you dive too deep into the process it may be worth just seeing what happens if you try to network into some of those roles.

Best of luck!