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
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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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  • Onan Dumas
    Investor · Rowlett, TX · Member since 2013 · 132 posts · 72 votes
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    @Jay Hinrichs

    I heard about those...also around the same time a thing called MAPSCO’s were used, no?

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  • Josh C.Pro Member
    Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
    5y

    Not sure the school wants to be involved with evicting single moms on Christmas. That would make the news cycle very fast. Good thought but cost outweighs the benefits, which are almost zero to the school IMO.

    A great lesson you’ll learn at school and in the real world is that big institutions like school and government actually don’t care about your success and are much more concerned about the optics of caring and control.

    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    Originally posted by @Onan Dumas:

    @Jay Hinrichs

    I heard about those...also around the same time a thing called MAPSCO’s were used, no?

    if your talking about the Thomas guide  then yes.. the listings all had Thomas guide coordinates on it that's how you found the properties LOL 

    a veteran agent would have multiple thomas guides all well worn..  Also the keys were usually at the listings brokers office and you had to check them out then return them..  But foreclosures still worked the same way they do today .. !!!

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  • Onan Dumas
    Investor · Rowlett, TX · Member since 2013 · 132 posts · 72 votes
    5y

    @Jay Hinrichs

    I'm mostly kidding. My uncle was, and still is, and agent back in the day and I remember those old books he had when I was a kid. That was your MLS back then...

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  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes
    5y

    Schools offer many Master's programs in Real Estate (i.e. NYU, Columbia, MIT) and many others offer Real Estate major, minors and/or concentrations at the bachelor's level and/or within MBA programs. 

    This is just adding an experiential component but can also be a bit of a gimmick. 

    Universities provide a service, they don't want to become small time landlords. 

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  • Robert Olinger
    Investor · Durham, NC · Member since 2016 · 16 posts · 9 votes
    5y

    @Avery Rustad the university would likely put its non profit status at risk, and student loans would not be possible.

    They could use their endowment to create a fund from which students invest, but that equity would stay with the university

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  • Angela Smith
    Member since 2018 · 161 posts · 152 votes
    5y

    write your paper.  But this concept is not going to happen.  The only way Universities act as landlords is in the form of student housing (dorms and on-campus apartments).  I don't see any possible way Universities would have an interest in providing and maintaining housing for any other type of tenant.  

    My questions:

    What happens when the student's loan comes due and they fail to make payments?

    What happens when the tenant stops paying?

    Who does the tenant contact when a repair is needed and who pays for the repair?  

    Who does the tenant enter into the lease contract with...the student or the university?

    There's a lot I don't understand.

    Furthermore, think about who becomes a university professor.  It is people who are degreed above and beyond the students they are teaching.  More questions:

    Where do you expect to find a master or doctorate prepared real estate investor to develop such a program?  

    How will this type of program become accredited?  

    What is the degree track?  

    What would a curriculum for this track look like? it must include theory, research and participation in professional activities.

    How will this be funded, universities are supported by endowments and taxes, programs cannot rely on tuition alone.

    This sounds like a very difficult paper to write, and impossible to defend.  But, none the less, I wish you well.

    2Reply
  • Paul Shannon
    Rental Property Investor · Fishers, IN · Member since 2016 · 335 posts · 470 votes
    5y

    I don't know about an RE Investing degree per say, but just basic personal financial education should be taught.  Probably even earlier than college.  Would we have fewer problems in this country if kids learned about credit card debt, mortgage amortization, pros and cons of leverage, compound interest, etc?  I think so.  

    1Reply
  • Kimberly Carver
    Member since 2020 · 119 posts · 56 votes
    5y

    @Paul Shannon

    100% agree

    What happens when people think they shouldn’t have to pay back student loans ?

    1Reply
  • Paul Shannon
    Rental Property Investor · Fishers, IN · Member since 2016 · 335 posts · 470 votes
    5y
    Originally posted by @Kimberly Carver:

    @Paul Shannon

    100% agree

    What happens when people think they shouldn’t have to pay back student loans ?

    that’s a slippery slope.  College tuition is out of whack. But should mortgages be forgiven in 5 years because people bought houses when prices were out of whack.  I don’t think so.  Free will.  If we start forgiving and giving handouts the whole system is at risk. 

    1Reply
  • Kimberly Carver
    Member since 2020 · 119 posts · 56 votes
    5y

    @Paul Shannon

    Yes- Tuition is too high. IMO Discussion should be about lowering costs not about “forgiving” (someone else paying off) loans.

    For the OP, the question is if this thesis paper covers the repayment of the student loans, are they eligible for forgiveness, are interest rates are the same as other student loans, who pays that insurance mentioned, etc.

    1Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Jerry Lucker

    I think it is a great idea. I’d like to see it on the high school level. It could be funded by grants and private donors. The money is out there. 

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    5y
    Originally posted by @Josh C.:

    Not sure the school wants to be involved with evicting single moms on Christmas. That would make the news cycle very fast. Good thought but cost outweighs the benefits, which are almost zero to the school IMO.

    A great lesson you’ll learn at school and in the real world is that big institutions like school and government actually don’t care about your success and are much more concerned about the optics of caring and control.

     Agreed. This ideal is unrealistic.

    1Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    5y

    @Avery Rustad When I attended the University of North Texas in the late 90s they did offer a Real Estate degree with different specializations. Not sure if they still do but the professors I had were excellent and very motivating. If I had not transferred out of the school to move to New York I would have gotten my degree in Real Estate!

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  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    5y
    Originally posted by @Robert Olinger:

    @Avery Rustad the university would likely put its non profit status at risk, and student loans would not be possible.

    They could use their endowment to create a fund from which students invest, but that equity would stay with the university

     A 501c3 is allowed to make money on investments, including real property, under certain conditions. Other than that, I agree with everything you said. I work for a few universities and it is all about the money.  

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  • Robert Olinger
    Investor · Durham, NC · Member since 2016 · 16 posts · 9 votes
    5y

    @Mike Reynolds it is possible. But there would be a great deal of limitations. You could create a for profit entity that is owned by the 501c3 Corp. The University would definitely want a corporate veil for that activity, and it would not qualify for tax exempt status. That would be the cleanest way to do it. I doubt the university would permit students to take equity risk though. There would be a lot of repetitional risk attached to it. I presently work at a university and negotiate contracts on international consulting engagements...

    1Reply
  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
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    Originally posted by @Robert Olinger:

    @Mike Reynolds it is possible. But there would be a great deal of limitations. You could create a for profit entity that is owned by the 501c3 Corp. The University would definitely want a corporate veil for that activity, and it would not qualify for tax exempt status. That would be the cleanest way to do it. I doubt the university would permit students to take equity risk though. There would be a lot of repetitional risk attached to it. I presently work at a university and negotiate contracts on international consulting engagements...

     Agreed. I actually know more about 501c3's than universities including doing taxes for one. We had a few fire depts that had rent property they used for income. They did have to pay tax on that income over 10k IIRC. That has been 15 years ago so dont know the current laws. 

    There is no way that university gives a chunk of that property to that student. At least not the ones I know of. The Pres would not let that happen. There was a BP member here a few years ago that took the money his parents gave him for college and bought a duplex with it. OKC I believe. Then he used the rent to travel all the way to the southern tip of south America. Took 2 years. Then took the money he saved and put down on another one when he got back. Now that's what I call an education there. 

    Maybe someone else here remembers his name. 

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  • Tim SwierczekPro Member
    Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Avery Rustad Sounds great in theory but won't work for at least 2 reasons.  1. you cannot use unsecured loan money as a down payment on a residential 30 year fixed loan.  2. The Federal government requires you to have the ability to repay said loan and that means you need to have either adequate & stable income or assets that exceed the purchase price.  There are probably 3-7 more reasons I could come up with but those two kill it, even if the U agrees to start the program.

    Here it is straight from Fannie Mae's guidelines

    https://selling-guide.fanniema...

    B3-4.3-17, Personal Unsecured Loans (09/20/2010)

    Share this answer

    Introduction

    This topic contains information on personal unsecured loans.

    Personal Unsecured Loans

    Personal unsecured loans are not an acceptable source of funds for the down payment, closing costs, or financial reserves.

    Examples of personal unsecured loans include signature loans, lines of credit on credit cards, and overdraft protection on checking accounts.

    2Reply
  • Forrest Faulconer
    Real Estate Agent · Oklahoma City, OK · Member since 2020 · 471 posts · 462 votes
    5y

    I don't think schools want to incentivize students to think outside the box, they need students to get pointless degrees in order to have them come back for their masters, dual-degrees, etc. 

    1Reply
  • Tim SwierczekPro Member
    Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Kimberly Carver:

    @Paul Shannon

    100% agree

    What happens when people think they shouldn’t have to pay back student loans ?

    @Kimberly Carver your comment made my day.

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  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    5y
    Originally posted by @Jay Hinrichs:
    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..

     Technology really has allowed and incredible amount of time leverage.

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  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y

    @Avery Rustad the argument is more of asking the U to form a course more like a trade school would. That's not what a University does. 

    REI is a sub-sect of Finance major, and real estate minor. Some may argue the opposite and i would point out, you don't do any real estate without the finance, and if you have the finance you sure as heck can get the real estate. Not to mention everything of securities which REI at a professional level predominantly involves securities, which is Finance major.

    Next is a University providing funding so a student can "play". Well, let me ask, does the Finance program provide brokerage account funding for student's to try there hand at options trading? Exactly.     

    It's a non-starter in my book. Not to mention it's investing, a great many do not reap profitable return's. And I am willing to best the vast majority, in early 20's, would not find what they came into it expecting to find. REI is not a printing press, it's a salt mine; where one can learn alchemy, to mine salt and turn it into gold. After a fair contribution of blood, sweat and tears.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Avery Rustad

    Most schools have an entrepreneurial degree

    That’s where it would fit under

    For a college I do not think there would be enough students to pursue this type of degree.

    I was a civil engineer and we had construction project management as an option

    Other schools have business and real estate development degrees as well which are better suited.

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