Finance Degree for investing in real estate?
Metro Detroit, MI · Member since 2020 · 3 posts · 0 votes
Hi all,
New member here from the Metro Detroit area!
I’m currently working as an engineer but was thinking about going back to school for a masters degree in finance. I know it’s not necessary, but could it actually prove to be useful? I’m intrigued by the idea of learning as much as I can about finance and money in general in order to make smarter financial decisions. I’m still in my 20s and my goal is to start investing in real estate soon and eventually scale up to large apartment complexes. I’m interested in hearing about what you all have to say, especially those with a finance degree or similar and your experience
trying to apply your degree to your everyday life and real estate journey!
Thanks!
I don't disagree, but I just think its overkill. Just like my engineering degree vs. trade example. You can do it. It depends on one's personal taste. It depends if OP just really wants to learn more about "money," or wants to also learn "lots of other stuff." For some people they need the book learning or can apply the book learning to real world applications. The APPLICATION of the principles and critical thinking is what separates those who find higher education useful. I think one needs to also understand that not every degree program is the same.
I would also second your notion that the degree could provide a basis for multiple avenues. Many people think of only one career and that education only provides value for it. Higher education, when obtained and received properly can provide many tangible and intangible competencies that are applicable to multiple fields or business endeavours.
Hi all,
New member here from the Metro Detroit area!
I’m currently working as an engineer but was thinking about going back to school for a masters degree in finance. I know it’s not necessary, but could it actually prove to be useful? I’m intrigued by the idea of learning as much as I can about finance and money in general in order to make smarter financial decisions. I’m still in my 20s and my goal is to start investing in real estate soon and eventually scale up to large apartment complexes. I’m interested in hearing about what you all have to say, especially those with a finance degree or similar and your experience
trying to apply your degree to your everyday life and real estate journey!
Thanks!
Great post! I'm mulling the same thing right now. My son is a junior in High School and would like to follow in dear old dad's footsteps of real estate investing. I think a MBA or Finance degree would definitely be helpful just as a life skill not just in real estate. You are young, invest in your education now - you have the rest of your life to invest in real estate. I would also say pick what you have a passion for! You may find down the road real estate is not your thing.... have a good backup plan.
Thanks for such a thoughtful reply! I really appreciate it.
@Lawrence Harris
Have both the engineering and finance degree is definitely good for your career, if you enjoy doing that. Not sure whether it will help the real estate side though. Maybe getting both degrees will land you a higher paying job, which in turn allows you to borrow more money!
Welcome to BP and thanks for posting.
I'm currently getting an MBA at a school known for a strong finance program and have lots of overlap with the Masters in Finance(MSF) folks. Being a REI and seeing what the focus of an MSF program is I don't think they align terribly well. Maybe if you wanted to work at a huge RE Private Equity shop(think nine figures plus) it could be useful, but at the individual asset level there wouldn't be a ton of overlap in applicable material. The difference in the level of complexity between the bond market and an apartment building is just to great to of much use.
That being said, the education of thinking about any asset class in a discipled manner and getting exposed to how good business run in general can only help you in the long run.
Good Luck
@Lawrence Harris
Honestly, I think it's a waste of money because by getting a master, you're technically investing in a college degree. Now, what's the return on investment on that? How long will you get your money back? You can start reading some books on Amazon for like $10-$20. Those will teach you the majority of the info on how to make money in real estate. My opinion, instead of investing in a college degree, use a portion of that for books, RE courses, etc and the rest in buying a property. That's more realistic I believe.
@Lawrence Harris I own a PMC and have an MBA from Penn State with a concentration in Finance and real estate. IMO tradesmen, realtors and property managers make abnormal returns on Real estate investment because of their special skills and market knowledge. If you pursue a degree in finance, you will make plenty of money to invest and will understand financing and investment in a different way that will help you. I often shake my head at stuff people are chasing or trying to make happen because they don’t get it.
@Lawrence Harris
If you want a real education get a job working for a bank or a CPA that works with real estate investors. Learn that side of real estate finance. Take the money you would have spent on the college education and put that into your 1st investment. Experience is the greatest educator. Just my opinion. 😀
A finance degree is overkill. Also, its specializing in so many other topics that have little to so with real estate investing. Being an engineer, i know you already have enough mathematical training/background to do the necessary calculations for REI. It sounds like you are looking for more "applied" knowledge. To put it another way, this is sort of like you pursuing a mechanical or perhaps civil engineering degree to perform a tradesman's job like a plumber or electrician.... If you did a hands-on / applied engineering program, you may learn how to solder, etc. but its ancillary to being a plumber or electrician...
Good luck.
I have an MBA and am just finishing up a REI course... I can attest that the only thing from my MBA that overlaps with the REI course is negotiation. And I wouldn't recommend getting a $100-200K MBA (or MSF) just for one class. I recommend researching REI courses—invest in that, and you'll learn specialized knowledge in the field you want to work in, instead of investing in a degree that barely overlaps with the field you have your eye on. (That said, my MBA was an investment in my education and career and it has paid off... just not in regards to real estate investing knowledge. That, I'm learning as I go.)
@Lawrence Harris you will definitely find it useful. Most investors have very little grasp of finance concepts and even math in general. Half the landlords I meet can't even calculate interest on a loan without using an online calculator. It is not necessary, but wicked smart people an advantage.
@Lawrence Harris
Out of all of the most successful real estate investors that I know, including myself, take some quick courses I’m being a loan officer and go work at a mortgage company for a year.
My son is 19 and in college, he has already owned eight houses and he is a business and economics major. I already told him the exact same thing to get licensed as a loan originator in Ohio and work part time for a couple of years writing loans.
This will teach you more than a finance degree ever well about the real estate investment business.
Hopefully that helps! Good luck!
I have an MBA and am just finishing up a REI course... I can attest that the only thing from my MBA that overlaps with the REI course is negotiation. And I wouldn't recommend getting a $100-200K MBA (or MSF) just for one class. I recommend researching REI courses—invest in that, and you'll learn specialized knowledge in the field you want to work in, instead of investing in a degree that barely overlaps with the field you have your eye on. (That said, my MBA was an investment in my education and career and it has paid off... just not in regards to real estate investing knowledge. That, I'm learning as I go.)
I respectfully disagree. I think comparing a REI course to a MBA and saying there is no overlap is a bit disingenuous. Not saying every REI needs an MBA at all, in fact I think the opposite, but a RE Course is supposed to be training, where as an MBA is education that teaches critical thinking and the application of concepts to problems: it isn't a how to degree.
Off the top of my head here are the things I've gotten from my MBA which I've applied to my RE investments
Accounting: Fixed vs variable costs, profit vs cash flow.
Marketing: customer segmentation and place/promotion for when/ where to advertise
Economics: Opportunity costs, agency costs, supply and demand
Strategy: Competitive advantage, value proposition.
Basic finance: Time Value of money, DCF modeling, operational vs financial leverage
Operations: process flow
At least for me, those concepts won't change much over time and thus I'll have a long runway to apply them vs some RE training that focuses on how to apply some specific tool within a sub niche of RE.
As someone who got an MBA a year ago, I'd like to pitch in here.
Before I got my MBA, real estate was not on my radar. I had zero financial knowledge or skill (outside of the everyday stuff) and that greatly impacted any confidence that I had in myself when it came to pursuing business. Getting my MBA, learning about loans and different forms of financing, and different business models was huge for me.
That being said, this is all stuff that you can learn on your own, through podcasts, this forum, Udemy courses... but only if you have the drive to do so on your own and the confidence to pursue something without the formal education. The drive and the confidence have proven to be MUCH more important that the skills I earned in graduate school, however, I wouldn't have them if I hadn't gone to get my MBA.
So, if you're driven and believe in yourself, hit the books and the internet. You will save a lot of time and money. If you think that you will need the education in order for you to believe in yourself, do it!
I'm still in my 20s and my goal is to start investing in real estate soon and eventually scale up to large apartment complexes.
Outside of potential future contacts, think schools are a bit disconnected from the real world. Perfect example - They have marketing classes all day long, but not ONE class in sales (they probably think it's a dirty biz, which it is).
Experience is easily the best teacher. If stuff is cheap in Detroit, buy a rental that need rehab and you'll learn quick.
I don't disagree, but I just think its overkill. Just like my engineering degree vs. trade example. You can do it. It depends on one's personal taste. It depends if OP just really wants to learn more about "money," or wants to also learn "lots of other stuff." For some people they need the book learning or can apply the book learning to real world applications. The APPLICATION of the principles and critical thinking is what separates those who find higher education useful. I think one needs to also understand that not every degree program is the same.
I would also second your notion that the degree could provide a basis for multiple avenues. Many people think of only one career and that education only provides value for it. Higher education, when obtained and received properly can provide many tangible and intangible competencies that are applicable to multiple fields or business endeavours.
@Lawrence Harris
I appreciate this post and the responses you have received. This is a very timely post as I was just discussing this topic yesterday for my own consideration. Thanks everyone for the input!
I appreciate everyone for the input! Some very good points have been made. I would add that I'm not interested in completely changing career fields. REI would be a side gig, at least for the mean time until I can no longer juggle both and the RE starts to surpass my salary. That being said, what I'm interested in most about getting the degree is what it would provide for me such as the possibility for advancement in my current field, overall knowledge of money, finance and investments, and some of the business skills and models @Bill F. mentioned that I know I currently lack but that I would be able to apply to my RE investing.
These replies have given me a lot to think about so I really appreciate that!
@Lawrence Harris look at it from an investment perspective.. will it provide a better roi than if you don't? If it is solely for investing purposes my guess would be no
@Lawrence Harris I guess it truly depends on the curriculum, but I would say no. I have a finance degree for my undergrad and looking back I wish I would of done economics and marketing. Here my three reasons. 1 for why not finance, and 2 for why economics and marketing.
1) Why not finance, because college is meant to train you for a job. So finance classes, at least in my case, focused on being good at an analysis on stocks, companies, and real focus on corporate banking. Their goal is get you to work for those companies and work your way up into a CFO role. Out of the 2 years of focus on major only one class, finance 1101, was helpful in trying to become financially free because it focused on the basics of investing.
2) Why marketing, because marketing is selling and every type of industry has to sell. No matter if you are in finance, real estate, farming, etc you must now how to sell a product or yourself. Marketing helps teach you how people react to certain ads or pitches. Also it helps you understand why people choose X over Y. This can help you greatly in your overall business future no matter what it is.
3) Why economics, because economics teaches you on how to understand/read the broader market movements. Finance teaches you how to analyze a single investment, while economics teaches you how to analyze a whole market. So again no matter what the business model you can better grasp at when and what to buy, when and what to sell, when will be good time for expansion of product, when would be a good time for a new product and so on.
Hope this helps in your decision!
Good luck
@Lawrence Harris You don’t need that finance degree for RE investments. I have an MBA and I don’t use it, although you can argue the critical thinking is useful. I think finance degrees are very useful but get it for your broader business strategy not for only RE.
Also...don’t wait to eventually get into apartment investment. Start with that first. There are many ways to start in that segment without money.
@J. Mitchell Bernier @Lawrence Harris
Just to add on, finance is a sub-specialty. So, yes, its training is specialized in the business section of academia.
If I may disagree, college isn't supposed to train you for a job. I think only trade schools are supposed to train you for a job. College is supposed to produce more educated, well rounded individual for greater good of society -- yes, its a pretty loft, high-minded sentiment. That is why a major is really only 30 semester credits of the 120 to earn a bachelors. You are supposed to take a variety of courses.
Specialized curriculum/degrees sort of hide that aspect. For example, engineering is still really 30 semester credits, except there are some 60-90 credits of pre-requisites. Even then, some programs are more theoretical and some are more hands-on. Different approaches to educating to achieve a common goal.
Good luck.
@David M. Yes David I would agree that is a lofty and high goal for college. I also would agree that was colleges initial intentions of educating people.
However, I think what most recent graduates are finding, at least in my circle of friends, is that’s no longer the case. Again just my personal perspective.
Yes, of course. I think that's why a report came out several years ago saying that the "bottom third of colleges" weren't worth it. I think the mid-third are going that way to cater to what the "students think" they want out of their education.
Good luck in your endeavors.
I don't disagree, but I just think its overkill. Just like my engineering degree vs. trade example. You can do it. It depends on one's personal taste. It depends if OP just really wants to learn more about "money," or wants to also learn "lots of other stuff." For some people they need the book learning or can apply the book learning to real world applications. The APPLICATION of the principles and critical thinking is what separates those who find higher education useful. I think one needs to also understand that not every degree program is the same.
I would also second your notion that the degree could provide a basis for multiple avenues. Many people think of only one career and that education only provides value for it. Higher education, when obtained and received properly can provide many tangible and intangible competencies that are applicable to multiple fields or business endeavours.
I totally agree that for most ppl degrees are overkill in RE. If all someone wants to do is buy SFRs and rent them then really any degree is overkill. The SFR rental game just isn't that complex that it can't be self taught out of a few books. Now if OP works in a finance role and grow their RE investing to higher levels (syndication, commercial RE,ect) that is when a degree can help. At a certain point investing turns into running a business and that's when the education and its exposure to broader concepts can help.
You hit on a great point, when most people talk about RE education they are talking about training ie. I want to learn a system of how to BRRR or buy tax liens or whatever. What education does is hone the intangible skills and thought process which can be ported over to many different areas of RE and investing overall.