{"id":96032,"date":"2019-09-03T09:00:18","date_gmt":"2019-09-03T15:00:18","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=96032"},"modified":"2024-02-13T18:52:25","modified_gmt":"2024-02-14T01:52:25","slug":"invest-with-student-loan-debt","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/invest-with-student-loan-debt","title":{"rendered":"3 Ways to Invest in Real Estate When Burdened by Student Loan Debt"},"content":{"rendered":"

The average graduate leaves college with a five-digit student loan debt attached to them. Many owe $100,000 or more when it\u2019s all said and done. In addition to making large monthly payments for years to come, student loan debt often prevents people from making smart financial investments.<\/p>\n

How to Invest When You Have Student Loan Debt<\/h2>\n

If you\u2019ve been around enough financially savvy people, you\u2019ve probably heard the terms \u201cgood debt\u201d and \u201cbad debt.\u201d As you consider real estate investing, it\u2019s important that you consider good and bad debt. The latter could also be classified as high-interest debt. This includes things like credit card debt and car loans. The rates are high, terms are constricting, and carrying the debt is rarely, if ever, beneficial for your long-term financial picture. Good debt, on the other hand, typically has a low interest rate and is tax deductible.<\/p>\n

Real estate falls into the category of good debt. It\u2019s still debt, but there are benefits that come with investing. And in addition to getting the opportunity to deduct mortgage interest from your tax bill, you also gain access to an appreciating asset that will (by historic measures) increase in value over time.
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\nRelated:<\/strong> 6 Tips for Investing Despite Your Student Loans<\/a><\/em><\/p>\n

But how? How do you invest in real estate when you\u2019re already burdened by student loan debts? While it would be a whole lot easier to go to the bank and pull out a traditional loan, this probably isn\u2019t going to work. Assuming the numbers aren\u2019t in your favor, you\u2019ll need to consider some other options. Here\u2019s some food for thought.<\/p>\n

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1. Try alternative forms of lending.<\/h3>\n

The first thing to consider is an alternative form of lending that doesn\u2019t take your existing student loan debts into account. Thankfully, there are lots of alternatives in today\u2019s market, including private money lenders<\/a>, hard money lenders, home equity loans, and crowdfunding.<\/p>\n

2. Check out an income-driven repayment program.<\/h3>\n

The problem with your situation is that the student loan debt is like a black mark on your financial resume. When you go to a lender and ask for a loan, they look at your debt-to-income ratio<\/a>. What you really need to do is change how the debt looks on your application.<\/p>\n

In 2017, Fannie Mae made some changes to its requirements for individuals who are overwhelmed by student loan debt. According to MortgageLoans.co<\/a>, certain people who qualify for an income-driven repayment program can actually set monthly payments to $0 per month for a period of time. This offers buyers the ability to qualify for a mortgage, despite their heavy debt burden.<\/p>\n

3. Develop better strategies for attacking debt.<\/h3>\n

When it\u2019s all said and done, the best thing you can do is attack your student loan debt. If you\u2019re only making minimum payments, it\u2019s going to be years before you even make a dent. You need to get aggressive and start biting off big chunks at a time. Buckle down for 12-18 months and work your rear end off. Pick up side gigs and focus all of your energy on paying down debt.<\/p>\n

\"Man
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\nRelated:<\/strong> How My Journey Out of $2.5M in Debt Inspired Me to Live a Charity-Focused Life<\/a><\/em><\/p>\n

Don\u2019t Let Student Loans Hold You Back<\/h2>\n

By no means is this article saying you should<\/em> invest in real estate if you have a large amount of student loan debt. There\u2019s considerable risk that comes with investing in any asset you can\u2019t control and, as always, more debt means more payments.<\/p>\n

However, if you do it strategically and develop a strict budget for how you\u2019ll handle income and expenses in your life, an income-producing property could help you in your pursuit of paying off loans by providing you with additional fiscal resources.<\/p>\n

There are options and you should pursue them.<\/p>\n

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Are you looking to invest despite student loan debt? What’s your plan?<\/em><\/p>\n

Leave a comment below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

How do you invest in real estate while burdened by student loan debts? Assuming the numbers aren\u2019t in your favor, you\u2019ll need to consider other options.<\/p>\n","protected":false},"author":59534,"featured_media":114972,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7399],"tags":[],"class_list":["post-96032","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-diversifying-investments"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/96032","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/59534"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=96032"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/96032\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/114972"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=96032"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=96032"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=96032"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}