To MBA, or not to MBA?

105 Replies

Originally posted by @Christopher Christian :

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!  

 I have an MBA, and I think its great.  It helped me to get my current job etc.

The knowledge you get from an MBA is fine, its helpful.  HOWEVER, if you want to go into real estate I think there is marginal value in helping you get a job.  Those in real estate dont care about your college background, and the only benefit is understanding the concepts like discounted cash flow, compounding interest, cap rates etc.. 

 More to the point, I would NOT go back full time, lose 3 years and run up 60K in debt.  IF you factor in say 40K/year in opportunity cost, you are giving up 120-140K in income.  ($140K=60+40 from not working yr1+40K from not working year2.)

That money would be better served as your initial investments into real estate.

Plus honestly at your age, a premium MBA doesnt really help.  Its not like you are trying to get a job on Wall-Street or with some top level consulting company. 

IF anything, keep working full time, and take some night classes to get your MBA.  Have your company pay for the tuition, and get investing as soon as possible.  

Its more important to buy a couple of properties than it is taking classes to prepare to become a real estate investor.

@Christopher Christian , I would isolate the decision down to getting the MBA vs anything to do with Real Estate Investing.  Will you stay in the area your entire life or the bulk of the next 15 years?  If you move out of the area the MBA will dramatically lose value in other markets.  If you aren't going to a top 20 MBA (better if top 10) I feel they don't hold their value longterm.  Can you apply for the same job without the MBA?  If you plan to stay in corporate America for a 15+ more years, stay in your regional area, and the MBA will land you a job that pays more but you maintain your same level of happiness on the job then I think the MBA is a great option to consider.

Do the MBA my friend, it is the BEST thing I have done to my career personally. I can break down to Pre-MBA and Post-MBA and I can tell you, atleast for me it has been chalk and cheese.

Btw you do NOT need the HARVARD, Stanford, type Ivy League.

It does not matter as long as the MBA & the University is ranked in the Top 200. 

After 2-3 years post MBA, wages equalises and all MBAs are equal.


The skills requisite for a successful career in real estate are largely acquired outside the classroom:  People skills. Value discernment. Sound judgment. Etc.

There is a growing awareness that MBA degrees are not worth the cost, hence why a lot of business schools in the US are scrambling to change the way they market them (see the recent Washington Post article on this). An MBA program is a scaled up version of an undergrad business program...just way more expensive and time consuming.

Sure, you could do it and even land a job at a place like Marcus & Millichap (which is no means to successful investing), but during your years of working on pointless accounting projects and working with groups of non-English speaking peers who will frustrate the mess out of you, you’ll see investors pass on by acquiring properties and building wealth while developing and expanding their professional networks.

I wouldn’t invest in an expensive program like an MBA any more than I wouldn't invest in a $60-80k course that promised to teach no money down investing.  Maybe instead, you could get a real estate license and develop a unique niche (I got mine and serve as a referral agent on the side of my main w-2 job - good money for a fraction of the work). There are so many creative ways to make a path for yourself. The MBA is not one of them (IMO) - it was simply designed to be a cash cow for colleges and universities.

@Christopher Christian I can not speak on formal education, have been self employed for most of my adult life. Sounds like you have plenty of responses to decide in the MBA. As for the REI..... house hack 203k seems like a perfect fit for you to get started. Even if you have to move to a cheaper area away from the city or make some sacrifices to get started.Take the smaller of the units for yourself and rent out the the other(s). Become a real estate agent for extra income. You'll have access to deals, investors, HML partners etc. This should help you get a jump start into investing. Good luck with whatever you decide.
@Christopher Christian why not do both your goal is to increase your income. I work in telecom sales and our company would allow you to both achieve your W2 earnings goals and pay for your MBA. So best of both worlds. The beauty of sales jobs is you learn the valuable people and negotiating skills and you can also increase your earnings, which sounds like your immediate goal.

@Christopher Christian

MBA will teach you a lot. 

If you are doing it just for a higher paycheck, then I agree with most here who say it is not worth it.

I finished my MBA. I didn't spend a smashing amount of money either. I went to a lower end school "Keller" and learned a crazy amount. One of my good friends went to Georgia Tech for his MBA and spent crazy money. We had the same everything. In fact, we took the same accounting classes and studied together helping on projects. 

So... I don't think you need to go to the #3 school unless you want to say you did it.  

Again, I did that for me. I didn't care about cost because the knowledge I knew I would get will pay me back and then some. (Which it has very much)

What MBA you focus on is important. Basket weaving will not be a good idea, but if you focus on entrepreneurship (my focus), finance, or something that is in demand and more importantly something YOU LOVE, then that is where it will make a difference.  

My MBA has helped me better understand and see things that many others do not. 

That said, I have skipped over almost everyone because of my knowledge about finance with what I had learned. I also learned/understand how to make very good business decisions(thank you accounting). I have a good ability to turn technology concepts into business concepts, reflect what it means financially, and present that information. 

Before, in my head, I fully understood this. It wasn't until after my MBA I learned how to properly articulate the information so it could be understood.

So in my opinion, go be a learning machine and get your MBA if you plan on using the skills it gives you. Other wise, I agree with some here. I don't think it will pay you back.

@Christopher Christian

Many of the folks on BP are more concerned about profits in RE than your standard audience so the advice you're getting here is skewed.  I too, agree with the majority that the cost of higher education (if I boil it all down) is inflated and not worth it when looking at it on a spreadsheet of assets and liabilities unless you're going for a specific degree to be a doctor or a lawyer or an engineer.  

Having said that, some people love learning new things, love having the comfort of knowledge and love the prestige that having some letters behind their name can bring.  If you really do feel the desire to increase your knowledge in business, go for the MBA.  You won't regret it and in truth, 60K really is a drop in the bucket in the grand scheme of things.

Best of luck

Stephanie

Hi Christopher,

I understand the dilemma you're facing. I went to law school with the same intention of having it be a means to an end through real estate. I would be a little skeptical of the statistics you've presented. Law schools (and I imagine business schools) would often present similar statistics with the top 10 percent getting jobs well above the average and then most people who don't get jobs or get lower paying jobs not reporting their salaries. This over representation of the top earners and under representation by the lower earners inflates the average even if 90% have employment within three months of graduating. 

I think you should do what will make you happy. If you want to work for Marcus & Millichap or a similar firm and the MBA will get you closer to that job, then the MBA is probably a good idea. If you're intention is only get a better paying job to be able to buy more properties, your time and money is probably better spent researching areas within a few hours of you and buying less expensive properties or developing your network to find partnerships.

Best of luck,

Ben

@Tony Kim Hey Tony. You aren't being a jerk at all! Those are all very valid questions. It's a long story, but basically I left Texas and moved to NYC in 2008 at a time when the economy was doing terribly. On top of that, I entered the music business which was on it's knees at the time since it hadn't adjusted to new consumer habits. My dream was always to be in the music business in NYC, so when the largest music company in the world offered me a full time position I jumped on it. The position was EXTREMELY low paying, however, and wasn't one I particularly loved doing. Keep in mind I was already making around 80K a year in Texas in my late 20s and gave that up to follow what was my passion at the time. Over the next several years I made a couple of lateral moves to try and figure out what I wanted to do at the company (without promotions/raises), and it wasn't until two or three years ago I figured it out: Finance! 

My performance reviews, particularly since I have moved over to finance, have been excellent. I often come in on Saturdays and work extra hours during the week although I am a salaried employee who doesn't get overtime. I don't want to come across like I'm trying to make excuses, however. I can definitely up my game and am always striving to do so. So to answer the question, what I wanted and worked towards when I was 25 has drastically changed, and I have only really figured out in the past couple of years. I envy those who figure it all out from the very beginning, but this is the path I'm on and all I can do is look towards the future! 

Thanks so much for the response. 

@Jim Goebel Super helpful advice. Thanks so much for your response and for pointing out the debt to income ratio issue as it relates to capital access. At this point, I'm not sure that I would have a competitive application for a top 15 school. The more I think of it, maybe it makes sense to try and find an employer who would cover a part-time MBA at a cheaper school if I do take the MBA route. 

Thanks for the reply! 

@Christopher Christian

Absolutely would recommend you DON'T do it.

I have an MBA with an accounting focus. I had my MBA paid for as I taught a class as a graduate assistant. If you are paying for it yourself, it's just not worth it.

The honest truth is that I did not learn a single new thing in my MBA that wasn't covered in undergrad. They have to tailor the courses to students that don't have a business background. 

It's honestly a waste of time. Use the money instead to buy assets

@Christopher Christian I guess I’ll provIde the less popular opinion on here. I am able to do my MBA online and work full time. I feel that it provides me with a foundation just as bigger pockets does as a bisIness owner. I was able to take my pay from 92k a year to over 260k annually as is and am due to meet with administration for another raise simply through the knowledge my MBA is providing me. I am also using it to structure my real estate business. I am new in the real estate business, I started this last June and am at 6 houSES currently. I have been able to leverage myself with my company, my W2 employer and even local banks with the knowledge and respect an MBA brings with it. There is always a cost analysis associate with each option you choose. I am for the MBA if you choose to help your unique position with thE knowledge You OBTAIN FRoM IT. I am currently doing a market analysis and using it for my personal company. It is great so far. I still read about real estate and business passionately. I am extremely motivated and work 10-14 hours a day in neurosurgery as a nurse practitioner while working on my MBA, business and maintain as a Memeber if the Army Reserves and exercIse daIly. As time goes on and I can transition my pay from my primary job to my business I will work less hours as a nurse practitioner and more in the world of real estate. For my unique situation an MBA is a must. However, every situation is different and you may find it’s not needed for you. I am glad I’m doing it!

@Christopher Christian getting an MBA is a fantastic idea if your goal is to be employed. Most people on this forum have the goal of quitting their day job and being self-employed as an investor. This may be the wrong audience to get advice from on the subject. If your idea of success is making $100K per year in NJ, an MBA is probably a great plan. Hopefully, you can use that income to invest in assets that will allow you to retire early. 

Okay, so here's another idea. Take IT and computer science classes online (Udacity, etc) which are relatively inexpensive and look for jobs in the tech management sector. If your only goal is to get a higher paying job to have more expendable income, you might think of ways you can leverage yourself without as much time and money invested.

To "Learn" real estate is to "do" real estate,,,,,,an MBA will not teach you to do real estate at least initially, you seem to be interested in real estate job at the corporate level, if that's the case go for the MBA.  If you want to develop a base of passive income start "doing" real estate at you will learn here at Bigger Pockets

@Christopher Christian When faced with the same decision, I decided to purchase a business instead. I bought commercial real estate. But everyone situation is different and everyone's goal is different. I know it is not helpful, but ... just my personal perspective. 

@Christopher Christian . if more money is the objective - Investigate taking a Sales position in your immediate company or somewhat similar industry. 

If you are not destined for the corner office suite - sales will give you the biggest bang. My experience is a little grey around the temples gives you more credibility over the "fresh out of college" crew and it doesn't require an MBA. My experience is in Residential Sales and Property Management - but commercial real estate sounds more your forte. Visit with and interview with some commercial practitioners and brokers in your area to size you the opportunities. 

Good Luck! 

I‘m in JD currently with scholarship and no loan, but still considering quit. You can still learn so many out of the school. Save your money and buy some good books and focus. Good luck bro

@Christopher Christian Christopher, I woukd consider the MBA route if available. It has definitely paid off for me. I’d consIder thIs approach: Check with your employer about tuition assistance or reimbursement for the MBA. Take the student loans that are available. They shouldn’t be any more than 6% or 7% APR. When (if) your employer reimburses you at the end of every semester, don’t pay on the loan just yet. Now you’ve got some cash to invest in RE! When you’re done with school, refinance your student loans at a lower rate; maybe 4% or 5%. The revenue from your RE investments should cover your student loans, plus leave you with some extra cash! Just a suggestion... 😊