Higher Education



There are many dangers in today's society. Take fire, for example. We are ready to deal with fire, we have a fine fire fighting force that can put one out quickly. But in today's new world we must be prepared for a new danger. The Rich Dad righteous.

Now you may believe that the best way to deal with a follower of Kiyosaki is simply to duck and cover. But the best defense is knowledge.

You can identify a fervent follower of that infamous dispenser of hurrah by their spiffy, though often pithy, catchphrases, such as:
- "I don't want to work for money, I want money to work for me."
- "If you invest OPM (other people's money) you can't lose!"
- "Colleges teach you to be a good employee."

Listen to that last one again. John T. Reed says that one common claim made by B.S. gurus is that they will tell you that education is worthless. It makes sense to them, because traditional education is their competition. They'd much rather you spend you $40k on two weeks of their seminars than 2 years of a good university.

Astute readers may know that I ranted about education a while back. But to be sure, let me emphasize that my beef was that I felt that our educations in the US are incomplete. We teach a lot of useful, and even necessary, skills. But we omit many skills that are crucial to living a good life (personal finance being one of those topics). So why am I discussing education again? Simply because I'm currently seriously considering going back for a Masters degree.

Kiyosaki has it all wrong. Colleges teach you skills. And while most people use those skills to become good employees, do you think that entrepreneurs don't need them at all? If you are serious about making real estate investing your career, consider that Virginia Tech (both Biff and I's alma mater) offers a major in Residential Property Management, which covers topics such as:

- Real Estate Law
- Real Estate Appraisal
- Maintenance for Property Managers
- Managing Real Estate as an Investment
- Marketing Real Estate
- Consumer Rights
- Real Estate Finance

That's by no means a comprehensive list of the courses included in this major. For a resident of Virginia, you can major in Residential Property Management at a cost of $2,886 per semester (plus fees for insurance and the like), or $23,088 for four years of top-grade education. Compare four years at a university to our old friends at Nouveau Riche, who want to charge you as much as $16,000 for 20 days of instruction.

Not enough for you? What could the successfully real estate investor want to go back to grad school for? How about an MBA? Most MBA programs teach similar material, though the quality of instruction will vary. But take a look at the skills taught at the creme de la creme, Harvard Business School:

- Finance I
- Finance II
- Financial Reporting and Controls
- Leadership and Organizational Behavior
- Marketing
- Strategy
- The Entrepreneurial Manager
- Negotiation

What real estate investor wouldn't benefit from that education? In fact, what entrepreneur wouldn't benefit?

I'm not saying that you have to get an MBA from Harvard to succeed in real estate investing. But it's important to remember that as an investor you are going to face a lot of very tough situations. Which house to buy, understanding true cash flow and how to measure risk, how taxes work and how to maximize your return, how to keep correct books. To be honest, all of these topics are capable of being self-taught, thanks to the wonders of the wiki pages.

But learning such complicated subjects takes time. That's one of the reasons that I strongly advocate moving slow in real estate, buying only when you've saved up a good down-payment, and making each property cash-flow positive before moving on to the next. The small mistake you make along the way won't be enough to sink you, and as you become more adept, you'll be able to handle more houses.

If real estate is just a hobby for you, or a side-investment, than this approach will work fine. But if you feel that you want to enter the industry full-time, you need a jump-start on these subjects, and that's something that a 20-day boot camp isn't going to give you.

Now it's confession time. I'm not going back to school to get an MBA or to study real estate. Landlording is, and always has been, a side-investment. I'm actually going to apply to the London School of Economics and Political Science to pursue a Masters in Finance. Right now I feel the best investment for me is in my W-2. And there's no shame in that.

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2015/08/26