Business Classes

[Sandy Paris]

I signed up for Business Finance classes hoping it will help me with numbers. Does anyone think this is a good idea?

[Bill Gulley]

Very good choice and it will absolutely help in RE, as RE is part of the financial industry. Introduction to Business Finance is an basic overview of financial management and lightly examines the use of funds, timing of work flows and capital requirements. Types of investments available to businesses, use of bond financing and stock as well as depository accounts. You'll be learning financial performance ratios and when they are applicable, an area often abused by RE investors. Learn it all, don't go in with a preconceived idea that the material has to be applicable to RE as most won't be initially.

It gives a big picture of management concerns in business, you'll probably look at examples from large corporations like GE or Ford and you'll look at small operations. Expect to see different types of business structures.

The Uniform Commercial Code, SEC, Treasury and financial regulatory functions will be touched on. How government influences financial management decisions along with taxation. It is not an in depth study but an overview.

You'll look at economic and business cycles, start ups to mature business operations. You'll see that finance takes in aspects of all other business functions or specialties, such as accounting, marketing, management, inventory and process of work flows as you are measuring the efficiency of the overall business.

It's not going to teach financing in residential RE, you will probably touch on commercial financing in a conventional sense. It's not going to be a creative financing class but what it will teach is the use of assets which is what creative financing is based on.

As to difficulty, it's a class usually offered at the 2nd year of undergraduate work in college. You will have some basic statistical analysis that will be explained in class, you don't need statistics class. Probability distributions will probably be used but it's nothing more than weighted averages and you don't have to come up with probabilities, so it's nothing a 9th grader can't do. Accounting 101 and 102 is generally required or helpful, but only to the extent of understanding the effects on assets, liabilities and reading financial statements in a management decision, but again you can catch on.

How will it help in RE? It will give you the foundation to understand the financing system and flow of capital, economic considerations and banking as applicable to you. With this foundation you should be able to basically assess any small business operation, meaning you can better judge what commercial tenant you might select. You can see if partners, like a contractor can carry off a job without going broke trying (no, you don't get their financials for a rehab, but through general conversation you'll find how strung out they may be, you'll get an idea of their overhead and you'll make a better informed decision).

I taught the class many years ago, while much has changed, much remains the same. I suggest you ask questions and participate (don't take over the class, LOL) hopefully you'll get an instructor who has financial experience that can relate the materials to real life instances and not just read the book. That would be a plus, but just taking this class will broaden your thinking which is the key in making deals, deals come from ideas and selecting the appropriate methods to transact any business. Good luck! :)

[Anthony Martin]

@Sandy Paris

As long as you learn how to apply the general rules and it makes the number easier for you to understand, then it can be a great idea! But essentially it comes down to how much you can take away from the class. It can be a great idea for some and not so great for others and without knowing you, personally, it's more difficult to form an opinion.

Aside from that, it never hurts to have a little more knowledge of basic business finance :)

Anthony

[Robert Leonard]

That sounds like a very good idea to me. Understanding business finance will go a long way for you in your RE business. You will see lots of people on here trying to figure out how to get financing. Whether its from banks, HMLs, PMLs or you name it. Just go in there with an open mind to what I'm pretty sure will be some very conventional concepts. The more you understand about conventional business finance, the easier it will be for you to understand the unconventional finance methods you will encounter in REI.

Although you will see some people on here and elsewhere who use all kinds of formulas to analyze RE deals, it's really not any harder than 5th grade math. You just need to understand when to apply a few basic rules and know your market well enough to know what is reasonable to expect in your local market or whatever market you choose to invest in.

[Bill Gulley]

Very good choice and it will absolutely help in RE, as RE is part of the financial industry. Introduction to Business Finance is an basic overview of financial management and lightly examines the use of funds, timing of work flows and capital requirements. Types of investments available to businesses, use of bond financing and stock as well as depository accounts. You'll be learning financial performance ratios and when they are applicable, an area often abused by RE investors. Learn it all, don't go in with a preconceived idea that the material has to be applicable to RE as most won't be initially.

It gives a big picture of management concerns in business, you'll probably look at examples from large corporations like GE or Ford and you'll look at small operations. Expect to see different types of business structures.

The Uniform Commercial Code, SEC, Treasury and financial regulatory functions will be touched on. How government influences financial management decisions along with taxation. It is not an in depth study but an overview.

You'll look at economic and business cycles, start ups to mature business operations. You'll see that finance takes in aspects of all other business functions or specialties, such as accounting, marketing, management, inventory and process of work flows as you are measuring the efficiency of the overall business.

It's not going to teach financing in residential RE, you will probably touch on commercial financing in a conventional sense. It's not going to be a creative financing class but what it will teach is the use of assets which is what creative financing is based on.

As to difficulty, it's a class usually offered at the 2nd year of undergraduate work in college. You will have some basic statistical analysis that will be explained in class, you don't need statistics class. Probability distributions will probably be used but it's nothing more than weighted averages and you don't have to come up with probabilities, so it's nothing a 9th grader can't do. Accounting 101 and 102 is generally required or helpful, but only to the extent of understanding the effects on assets, liabilities and reading financial statements in a management decision, but again you can catch on.

How will it help in RE? It will give you the foundation to understand the financing system and flow of capital, economic considerations and banking as applicable to you. With this foundation you should be able to basically assess any small business operation, meaning you can better judge what commercial tenant you might select. You can see if partners, like a contractor can carry off a job without going broke trying (no, you don't get their financials for a rehab, but through general conversation you'll find how strung out they may be, you'll get an idea of their overhead and you'll make a better informed decision).

I taught the class many years ago, while much has changed, much remains the same. I suggest you ask questions and participate (don't take over the class, LOL) hopefully you'll get an instructor who has financial experience that can relate the materials to real life instances and not just read the book. That would be a plus, but just taking this class will broaden your thinking which is the key in making deals, deals come from ideas and selecting the appropriate methods to transact any business. Good luck! :)

[Sandy Paris]

Thanks everyone. I thought even though it doesn't have to do with Real Estate Investing it would teach me how to better work with numbers so I can do the right thing and understand the numbers a little better. I also it would help me to keep me organized as well.

[Pat L.]

All good advice ...

but keeping the course material on point to add value to your level of expertise in the REI realm will be an interesting exercise.

During my Engineering studies we had to take 2 years of a Finance elective (after the required micro/macro econ., ordeal).

But the Business/Financial faculty had little to offer other than pure theory so I approached a visiting prof in the Ag Science faculty. We owned a sheep & cattle station that was not producing any worthwhile income. He was amazing & we completely changed the operation of the property & made a nice profit (until the next drought & a couple of 'IRS type' issues).

He had actually worked in my 'real world' & what I learned from him has influenced my 'financial approach' to many deals since.

Enjoy the experience.

[Rob Strawder]

Sandy Paris finance has A LOT to do with RE. The ability to finance RE assets is one of the main reasons why investing in RE in so attractive. Taking the class will for sure be useful. Good luck with the class!

[Account Closed]

I started in a business program after retiring from the military. It took me three years to get my BS in Biz Admin but the benefits have been well worth the effort. Get in a program and chip away at it. Finance is definitely a great class to start with as well as accounting. My one caution to you is not to get caught in the "always learning, never doing" trap. Learn something, do something. Good luck.

[Joe Fairless]

@Sandy Paris - depends. As with anything, I look at the opportunity cost. While you are taking the classes, what are you not able to do? If the reasons why you're taking the classes is because you need education on a particular aspect of real estate financing then would it be better use of your time to learn that specific aspect from someone who knows it and then practice it in the real world?

Or, do you need to learn all the content that the business finance class teaches? Without seeing the syllabus and without knowing your specific objectives I can't answer this question for you but those are the things I'd consider to determine if it's a good idea or not.

[Bill Gulley]

You'll never understand what the opportunity costs are without the opportunities! Doors open with knowledge.

I agree with Bryan, you can't get stuck in the world of academia, but learning is a life long goal in any industry, if you were in plastics, the process and dyes would keep changing and you'd need to stay current. Any profession requires it, if you're going to be a professional. Get to it! :)

[Account Closed]

Opportunity cost? I had never heard the term, along with other business terms such as sunk costs, until I went through my business program.

[Sandy Paris]

I would love to learn from someone but I cannot find anyone in my area to learn from. I just feel that Business Finance will teach me about all kinds of finance.