There’s a natural progression within Real Estate education, it’s a lot like school. I’m going to try and paint a picture of what I think this looks like for Canadian investors. I’m using the metaphor of school because it’s familiar to us all, but don’t think that it’s literal. For many investors there’s a 10-20 gap between elementary and middle school, of from high school to university. Some people never go to university and fewer still become grad students (Masters and PhD), and an exception group of individuals become full professors.
Play Nice and Share
The Elementary School experience for most of us is the time we spend early in our lives when we learn our own basic financial literacy (or lack there of). It’s the important experience of receiving an allowance and having to decide what to spend on what. I’m sure my parents could come up with several examples where I foolishly decided to spend all $10 on a cap gun or something else “big” which broke or was used up in the first hour. There’s a pretty big gap between a made-in-china toy and success in real estate investing, but these are the experiences which start to define our attitudes, values and goals. The whole point of the game during this phase is learning to play nice. More than any other time, this is where you learn how to work together and start the skills that will ultimately define your success.
For lots of us we start to move towards Junior High or Middle School we take our first part-time job. Maybe we go through the adolescent phase where we just want to be rich. Beyond being a teenager, there’s some physical objects here for the first time. The working tools of the “real estate teenager” are books like Rich Dad, Poor Dad
and The Wealthy Barber. Those are two great books that the university graduate might turn to again for refreshment or to help educate others as they move towards teaching, but with very different eyes.
Now we’re into the exciting years of High School. Lots of people don’t start learning this stuff until well into their 20’s or even their 30s or 40s. In life you likely have a career, possibly a family and hopefully you’ve had experiences like going away to college or university, traveling on your own or buying a house for your principle residence.
You start to move on to move complex books, and some of the more basic courses. You might take the book learning into the real world but you don’t have a true focus or idea of what you want in the end. You’re probably still thinking in terms of ‘retirement’ or simply saying you don’t want the conventional experience of learn-work-retire. You’ll buy more complex books, probably American. There’s an enormous variety of them on Amazon. You’re learning in a very simple way what works and what doesn’t.
Just like in the real world, the skills in high school you can theoretically make it in the wide world. The problem is that you’re still just following someone else’s tactical system. From an education standpoint I think that most of the seminars you see advertised in the newspaper or on TV, and almost all the ones you see online are the educational equivalent of grade 9 or 10. The Rich Dad (by which I mean the Darren Weeks sales-pitch) seminars might be able to hit the high school graduate level if you’re very dedicated and take the extra training beyond the $1k weekend, which starts to put the total cost up around the $10-15k mark. I also have heard a number of people saying the content isn’t sufficiently Canadian.
There’s a number of other seminars which are at the same level, and offer some mentoring (often again at the $10k mark) including Ozzie Jurock. The Robert Allen crap is purely American, and the tactics don’t apply to our market. There’s lots of options, some of which will help you graduate from high school, and might even make the community-college diploma level, but there’s a lot of crap here too.
College Frosh Week
Welcome to University/College. I put the REIN materials here as a solid undergraduate education. The ACRES home study is like your first two years. You can learn some solid skills, and use it to execute some tactics, but it’s kind of like you dropped out after year two. You’d have be a very dedicated person to keep things moving forwards. The real live in-person ACRES weekend, with all the material you get to review after is a pretty solid Bachelor’s Degree in Real Estate Investing (that’d be a BScREI). I think it’s true because more than any other group I know of people attend the weekend, go out and take action. Even if it’s a simple as putting together their banking binder and getting pre-positioned, they get things moving. And there’s an awful lot of people who go out and write offers within the first month or two after. I did (it was a dual-offer with a 30% VTB as the second offer!).
Your Thesis and Continuing Education
The thesis of your undergraduate education is the first three properties you buy. This means you’ve had to deal with financing, legal issues, possibly joint ventures and property management. You’re learning how to speak the language of more sophisticated investors, and developing a clear picture of what you don’t know.
The continuing education component for your undergrad is going to come in the form of a REIN membership, listening and learning from other investors, news and some of the same resources (books and seminars) which characterized the junior high and high school years. The difference is you’re looking at them with new eyes. You can start to put them into the strategic plan you’ve started to develop (or the 50,000 ft view to use David Allen’s
term). Before they were little more than entertainment; the flaw in those programs is they’re not aligned to support your long-term education and success, they’re intended to make their champions money first, and ‘educate’ you to support that goal.
Graduate Seminars and Masters’ Degrees
photo credit: Miguel Vera
Now you’re fully able to begin taking a 360-degree view of your portfolio, team, goals, family, the local, provincial, national and global economies, and you’re ready to diversify. You have the ability to effectively raise Joint Venture money, consider moving to a multi-family property (6-units +) or small commercial/mixed use. You might even have a good enough team to try a condo conversion. Towards the end of a Masters (M.REI) some people make the jump to going big: public offerings, large multi-family and development.
The important part is you’ve developed the ability to assess your own knowledge, and the more important skill of valuing and implementing advice from more experienced professionals. There’s a great discussion on myREINspace right now about leverage and financing. There’s a strong theme running through it talking about risk at a more abstract, full portfolio and long-term perspective.
The Doctor is In
In the academic world your PhD takes 2-3 years, assuming a masters takes 18 months to 2 years. It’s completely variable because the whole operation depends on your research, the creation and the defense of your thesis. A senior PhD student might be someone like Thomas Beyer, whose thesis defense might be a visible sign like his presentation to the REIN meetings in Alberta and this interview with Russell Westcott. You’ve been successful, you’ve made some colossial mistakes and you’re now into sharing them with others.
Who would I award a doctorate to? In REIN circles: Don Campbell, Russell Westcott, Greg Habstritt, Michael Milner, Owen Shaw and Tasha Adams, Valden Palm, Thomas Beyer, Brent Davies and Arlen Dahlin.
The skills these people have is that to work from a 50,000ft view, provide the same detailed level of analysis for multiple investments, businesses and to take it beyond to other areas of your life.
Maybe I’m completely out to lunch, but that’s what I think the landscape looks like. I’ve been really happy with the level of discussion on myREINspace lately, as I think we’re moving to a more sophisticated, more intelligent place that also welcomes the complete newbies with thoughtful, helpful commentary.
I like the progression of different foundational materials and resources, as well as real estate investing experience. Great post.
Thanks! I’m a fan of the whole metaphor of education, and thing it absolutely applies to this situation.
I too like the comparison between Real Estate investing and education, but I think you might need to point out some other aspects of the comparison.
There are many different types of students that draw comparison to investors. You have the perpetual student who continually learns and just stays in school getting degree after degree (or avoiding some classes to delay getting degrees!). These are the equivalent of investors who continual to learn and never take action.
There are the students who kind of coast through and never really apply themselves, they just know they are supposed to get a degree or diploma. You see these landlords with poorly maintained records, properties and no sense of direction, much like the student.
I’m sure you can come up with several other types as well!
magnificent points altogether, you just gained a brand new reader. What would you recommend about your post that you made a few days ago? Any positive?