Should Universities Create a Real Estate Investing Degree?

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Should Universities Create a Real Estate Investing Degree?

Avery Rustad
Member since 2020 · 48 posts · 32 votes

My thesis statement goes as follows: 

The University of Minnesota should offer a real estate investing degree that enables students to use a student loan to make a down payment on an investment property. A percentage of the profits and the home’s equity would go to the university, while the rest remains with the student. This equity and profit sharing can be used to pay off the student loan while gaining excellent experience in real estate investing, personal finance, and accounting.

My idea is that many high school and existing college students would be fascinated by this degree path, and both parties would profit. Obviously, not every investment works out, but I will explain the insurance plan later in the paper so try not to worry about that right now. 

What are your thoughts on this degree?

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Jerry Lucker
Flipper/Rehabber · Seattle, WA · Member since 2015 · 333 posts · 459 votes
5y

In my experience there are much cheaper, better, and faster ways to learn real estate investing than plodding through several expensive years of college. Many college courses in business and similar disciplines are taught by instructors that have no real world experience. 

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  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    5y

    I doubt it would fly.

    The schools want that money 100%.

    And if they teachers there could do this, they would be doing it for themselves.

    3Reply
  • Jerry Lucker
    Flipper/Rehabber · Seattle, WA · Member since 2015 · 333 posts · 459 votes
    5y
    Originally posted by @Avery Rustad:

    My thesis statement goes as follows: 

    The University of Minnesota should offer a real estate investing degree that enables students to use a student loan to make a down payment on an investment property. A percentage of the profits and the home’s equity would go to the university, while the rest remains with the student. This equity and profit sharing can be used to pay off the student loan while gaining excellent experience in real estate investing, personal finance, and accounting.

    My idea is that many high school and existing college students would be fascinated by this degree path, and both parties would profit. Obviously, not every investment works out, but I will explain the insurance plan later in the paper so try not to worry about that right now. 

    What are your thoughts on this degree?

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  • Avery Rustad
    OP
    Member since 2020 · 48 posts · 32 votes
    5y

    Hey @Scott Mac, I appreciate the quick reply! The plan would be to have a mentorship program of sorts where the University hires veteran real estate investors who have already done their fair share of investing and are looking for a way to give back through teaching. These teachers would be paid by the school and the school would take short term losses, but long term gains from the equity in real estate they acquire over the following years. 

    @Scott Mac

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  • Jerry Lucker
    Flipper/Rehabber · Seattle, WA · Member since 2015 · 333 posts · 459 votes
    5y

    In my experience there are much cheaper, better, and faster ways to learn real estate investing than plodding through several expensive years of college. Many college courses in business and similar disciplines are taught by instructors that have no real world experience. 

    10Reply
  • Avery Rustad
    OP
    Member since 2020 · 48 posts · 32 votes
    5y

    @Jerry Lucker Thanks for the reply. I believe I hadn't explained the plan well enough initially. The student would be assisted by veteran real estate investors who are hired by the school to walk the students through their individual investments. You wouldn't be paying for curriculums to just educate oneself on the topic, but instead one would pay for the investment with veteran coaching on top of that. The only true cost on the student's end is equity and shared profits in the first investment property- and for what I've heard, no real estate investor only has one investment property. That being said, I believe it would be a great gateway drug into the realm of real estate investing. I hope that cleared things up!

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  • Corey Hawkinson
    Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
    5y

    @Avery Rustad I like that you’re thinking outside the box. Keep doing that. It’ll serve you well in life.

    How would the financing work? You mention student loans for a down payment, let’s say for this example that you can make that happen. Where would the remaining money come from? Will a lender give a loan for the remaining amount knowing that the down payment is from a student loan and the borrower likely has no experience? Will the loan be guaranteed by the University? (and in turn the state taxpayers)

    I actually think that finding veteran investors to “teach” the program would be the easy part. I don’t see how the financing and ownership structure would work. You mention insurance which will also need a lot of details because losses will occur on some properties. I would imagine that those pieces would need to be spelled out well to gain any traction on this thesis. I am local so feel free to reach out.

    2Reply
  • Account Closed
    Rental Property Investor · Torrance, CA · Member since 2016 · 724 posts · 1k+ votes
    5y

    @Avery Rustad

    Universities serve the purpose of producing individuals with employable skill sets. They aren’t meant to teach people to become wealthy. Think about it. How many economics or finance professors are wealthy? How is it possible to have a doctorate degree in the subject of money itself, and not be rich? The reason is because that isn’t what college is for.

    6Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    5y

    There is an unstated fallacious premise to the underlying basis of your thesis...

    I'll attempt to state that premise in my own words: "I believe colleges should provide the source to learn about everything the world offers"...or possibly 

    What you want as far as an educational opportunity exists in mentorship or coaching programs, and if properly vetted can help you achieve your objective. So why should a college be involved in that process? The only reason is if a college is the standard for what educated is.

    But what value is provided by a college degree? It is valuable to prove to another person your education pedigree...and is therefor only of utility when the person being presented the proof requires that education standard e.g. a Dr, Engineer, Lawyer...obviously there is more to it than that, but the premise stands. 

    So who requires a REI degree to hire...a REI...no one. Now there are certainly people who work in RE offices and complete acquisitions, or manage etc...but they aren't 'investor' they are employees who often need business management degrees...

    So again who need to hire someone with a REI degree? And if you have a REI degree, why would you work for someone else instead of run a business? But that's often what an MBA is used for, so again why the REI degree?

    2Reply
  • Avery Rustad
    OP
    Member since 2020 · 48 posts · 32 votes
    5y

    @Corey Hawkinson Hey Corey, thanks for the input. I am currently writing the paper and have yet to work out all of the details, but I’ll get back to you when I do! Obviously students wanting to take this course have zero hands-on experience, so at face value this seems risky for banks. The argument I’m making is that about 40% of college students drop out at some point during their formal schooling(educationdata.org/college-dropout-rates) That being said, they still have to pay the loans, however, they would have nothing at all to help them pay back their loan whereas the real estate students have a home that the bank could seize if EVERYTHING goes wrong or at least some steady cash flow to pay it back. And if I know one thing about real estate investors it’s that nobody owns just one property.

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  • Avery Rustad
    OP
    Member since 2020 · 48 posts · 32 votes
    5y

    @Matt Devincenzo

    The main premise would be student loans are easy to get, but bank loans aren’t necessarily-at least at decent rates. If the school is helping these students with mentors to guide them along the way, not only would there be less risk for the bank, but also make it easier for the students to learn as they go and to have a more local and instant community to assist one another with problems they face. It’s not so much about the degree than it is the opportunity to get hands on experience with an easy loan option and assistance. Hope that helps answer your question!

    0Reply
  • Todd SolbergPro Member
    Rental Property Investor · Byron, MN · Member since 2015 · 71 posts · 34 votes
    5y

    You can use your college loan to buy a property..

    0Reply
  • Avery Rustad
    OP
    Member since 2020 · 48 posts · 32 votes
    5y

    Hey @Todd Solberg I understand this. The issue is that many students can't afford to pull more in student loans or frankly don't want to spend student loan money on classes outside of real estate investing. Also, this would improve the first time investing experience as you have instructors to not only teach you more about investing and situations, but to guide you through inevitable problems whether small or large that come with the first time experience. 

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  • Benjamin Branson
    Monterey, CA · Member since 2019 · 15 posts · 6 votes
    5y

    @Avery Rustad hasn’t it already been tried? Several times? I think the reason it fails is because real estate just like any other business usually has people succeed who didn’t always do the best in school. They have a screw or two lose that allows them to reject what conventional wisdom is trying to tell them. Instead of satisfying credentialism they satisfy their own vision. School does the opposite of set you up for success as an entrepreneur. It sets you up for being an employee.

    1Reply
  • Avery Rustad
    OP
    Member since 2020 · 48 posts · 32 votes
    5y

    @Benjamin Branson The idea is that the course would be led by professionals and would allow for autonomy amongst the students if they wanted, aside from the formal education regarding the basics and some situational learning. This also wouldn't be a traditional degree. It's essentially a plan for people who don't want to go the traditional route and want some help getting started in real estate. The majority of investors fail because they never buy, and this course is centered around buying and tending to a real estate property. I understand most schools go against entrepreneurship and many entrepreneurs are not fond of traditional schooling, nor am I, however there are kids who need the help funding and a bit of guidance along the way. The premise is that the first property is a gateway drug into more. 

    0Reply
  • Peter M.
    Rental Property Investor · DFW, TX · Member since 2013 · 953 posts · 910 votes
    5y

    @Avery Rustad So let me see if I understand. The university will forego getting paid by the student loan and instead allow the student to use the money to purchase real estate with the help of seasoned investors who are being paid by the university to teach the course and mentor. In exchange, the university will be entitled to a portion of the profit but will have to pay insurance premiums in case the student fails in their investment. Then the university will have to determine a way to grade the performance and award a degree. Meanwhile the loan money they want to get paid is tied up in an illiquid asset owned by the student. To me the cost and risk is more than they could ever hope to make off of 18 year olds buying a house that they are going to throw parties in and destroy. If this model worked then universities would be doing it with more established industries like medicine and law. But you're thinking outside the box and getting practice defending your thesis.

    0Reply
  • Todd SolbergPro Member
    Rental Property Investor · Byron, MN · Member since 2015 · 71 posts · 34 votes
    5y

    In addition, this is promoting the corpretocracy that is very apparent in todays society. Its similar to the government "investing" in solar panel mfg. (Solindra)  so if I was really good at real estate investing why wouldn't I just open up a course (aka business) that trains people and take a cut plus fee? The only thing missing that you speak of is a "degree".  Not sure this is much different than jack Welch university...not sure if they take a cut but might be a recruitment tool for companies who need middle and upper mgt. Staff. I like where you are going but would be less headache to just start your own as a degree program.  

    0Reply
  • Adam Martin
    Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    I like where your heads at but like others have said I see this as more of a mentorship and not necessarily something where you need a degree.  From my understanding your primary reason to have it through a university so you can get student loans which is clever yet risky.  For me the number one downside for the university though outside of financial is the negative publicity.  If I have a tenant paying who happens to be in a bad situation I am going to evict and protect my property if they are unable to pay.   Lets say that same tenant who is a single mother who has terminal cancer and is a minority that is getting evicted due to nonpayment but it comes out the university is behind it, that's someone's pr nightmare at the university.  As an individual no big deal but could really hurt the reputation of the university.  If the school decides they don't want to pursue that is a students finances they are hurting.  On a side aspect I'm sure that this would add some real world experience for their law school.  

    0Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    5y

    That would be a good move for schools I would of went to real estate classes in college for sure!

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  • Amber Boskers
    Rental Property Investor · Scottsdale, AZ · Member since 2018 · 36 posts · 33 votes
    5y

    @Avery Rustad I like where you are going with this idea! Think of schools that offer trades apprenticeship programs (electrician, powerline, carpentry, etc) and then align your thesis to coincide with what they do and how they do it. Then spin it with your vision for the program and see how that looks. I think you may have a more favorable position if you do that since real estate investing and the trades exist outside the confines of the traditional college model of career development.

    0Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    5y

    A lot of them already have a degree or course schedule in real estate.  Most of real estate investing is learned outside of a classroom .

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  • Krishnan T.
    Real Estate Professional · Tampa, FL · Member since 2017 · 104 posts · 47 votes
    5y

    Yes, and a college project would be to find and assist for free someone who is active in real estate of any kind.

    0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Avery Rustad:

    Hey @Scott Mac, I appreciate the quick reply! The plan would be to have a mentorship program of sorts where the University hires veteran real estate investors who have already done their fair share of investing and are looking for a way to give back through teaching. These teachers would be paid by the school and the school would take short term losses, but long term gains from the equity in real estate they acquire over the following years. 

    @Scott Mac

    I would think that in order for the classes / degree to be recognized for accreditation and as valid education credits (transferable?) the instructors would need to be successful investors, yes, but also degreed / qualified educators. 

    Actually partnering on deals should probably be part of such a curriculum (or collection of curricula). However, the actual partnering activity would likely be outside the purview of an educational institution or an educator.

    My $0.02 ...

    1Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    5y

    If you want to partner up with someone just partner up.

    If you want a mentor, find one and pay for it.

    Why add another layer of hand holding.

    2Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    @Avery Rustad if you are using this as the basis for a research paper, it seems fairly original. The purpose of college papers is to explore an idea and they don't need to be practical or even good ideas. This is a good idea in my opinion, so at a minimum it would be an interesting research paper.

    Universities already have entrepreneur and business incubator programs, so that is a similar concept you could use as basis for the program. Using student loans to fund a down payment would require a change in loan programs. That seems unlikely to change, so I would explore other ideas for funding. University money, grant money or even investor money could be used. Universities regularly participate in research projects that use government or private industry funding. Universities often end up owning intellectual property as a result, such as patents. Google was founded by Stanford graduate students. The original Google search algorithm patent belongs to Stanford. When Google became a company, Stanford exchanged exclusive rights of the patent for shares in Google. In the end, Stanford sold the shares for $330 million dollars.  

    Also be aware there are real estate degrees at some universities, so that type of program could be a good basis. I applaud your willingness to think outside the box and use your time in college to explore real estate investing. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Ian Walsh:

    A lot of them already have a degree or course schedule in real estate.  Most of real estate investing is learned outside of a classroom .

    Yes I took one in collage in 1975 ish. My prof who taught it was the first one to computer ize the MLS system.. before that it was all the big book LOL..

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