Carry Personal debt while investing in RE?

5 Replies

I hope to get a lot of feedback from this post and I look forward to see what everyone thinks!

My portfolio currently consists of a duplex and in 3-4 days I will be closing on a single family home attempting to successfully perform my first BRRRR. With that being said I have been doubling down on the two personal loans that I currently have (student loans & auto loan). After I close on the single family home and complete the renovations would you guys recommend paying off my loans or continue to invest in real estate?

My loans are roughly $30K but what is keeping me from paying them off is I think my ROI in real estate will be more then the interest I would pay on my personal loans over the life of the loans. Is it smart to carry this amount of debt and to continue investing or should I pay them off and then get back in the game?

I would greatly appreciate any feedback on this.

Thanks in advance.

If your ROI is higher than the interest rate and you don't have access to other funds, there is no harm in keeping them. When you have excess capital available, I would prioritize paying off your student loans. The interest rate on student loans is typically lower, but they also follow you forever, even through bankruptcy, so the sooner they are gone, the better.


Following. I'm in the same scenario (minus the duplexes) I'm looking at pulling out a HELOC on my primary before or after paying down debt, and asking around i've gotten mixed input but more on the pay off debt first.

Jamestown Invest
Build a well-balanced portfolio with CRE
Considering CRE Investing?
Download this whitepaper and learn about CRE investing from a manager with a 38 year track record
Learn More

Keep investing in assets that will pay off your debt and pay for future luxuries. If you have a strategy that’s working you should double down.

@Kyle Root if there is one thing I would do differently in my life, it would be to skip paying of the $40,000 in loans my wife and I had when we were first married. It was 2010 and we had the opportunity to really buy discounted properties. Instead, we did the Dave Ramsey thing and paid off debt that was costing us very little. 

Today I borrow money for things when it makes sense. I bought a new van for my wife and took out a .9% interest loan. I feel like I can probably do better on my most recent value add deal than I can paying all cash for something to save .9% interest... 

Realistically, you want to grow your income and net worth as fast as possible. Make sure your debts are easily serviceable, but I wouldn't pay them off if I were in your shoes. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you