Investor · NC · Member since 2020 · 30 posts · 30 votes
So I have 40k saved up and was looking to buy an duplex or triplex in Philadelphia area but not seeing much that the numbers will work out for me. Should I use that money to pay off my MBA loan (23k) and invest the rest in crypto (Bitcoin, etherium, etc)? Or should I wait and buy an property when I find something early next year? Appreciate any advice
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
4y
You have cash. Cash gives you options to do lots of things.
You could pay off your loan. Your "return" on that cash will be exactly the interest rate on your student loans. I'm guessing that means you will make about 5%. As an MBA graduate, you should know that is not a great return on capital invested.
You could buy crypto. Crypto is a completely speculative bet because you really don't know whether it is going to go up or down. Some people have made billions. Some will lose their shirt. In my opinion, get good at poker and go to Vegas. Your odds will be better.
I still prefer real estate because before I buy, I have a pretty good idea the profits I'm going to make. Profits are way higher than 5% and there is zero speculation; the results are nearly certain.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
4y
You have cash. Cash gives you options to do lots of things.
You could pay off your loan. Your "return" on that cash will be exactly the interest rate on your student loans. I'm guessing that means you will make about 5%. As an MBA graduate, you should know that is not a great return on capital invested.
You could buy crypto. Crypto is a completely speculative bet because you really don't know whether it is going to go up or down. Some people have made billions. Some will lose their shirt. In my opinion, get good at poker and go to Vegas. Your odds will be better.
I still prefer real estate because before I buy, I have a pretty good idea the profits I'm going to make. Profits are way higher than 5% and there is zero speculation; the results are nearly certain.
I wouldn't invest in crypto, but that's me. What is the interest rate on your MBA loan and how much can you borrow from the bank with and without that debt? If your interest rate on the loan is low and you can borrow enough for a duplex with the loan, that is a pretty easy decision to make.
Rental Property Investor · Raleigh, NC · Member since 2016 · 393 posts · 995 votes
4y
Be honest with yourself for a moment, if you invested the 40k into crypto, what would you do if you woke up the next morning and your 40k had suddenly turned into 25k? If you're answer is panic, then you shouldn't invest in crypto because I 100% guarantee you that at some point you WILL lose 20-50% or more of your value in a 24 hour period. While I firmly believe in crypto and how various layer 1 protocols will transform how businesses operate, and that the 1-5 year price outlook is fantastic, that doesn't mean that in the short term its not soul crushing to see your portfolio balance fluctuate by hundreds of thousands of dollars on a near daily basis. Many people say they would stick it out and not panic sell during a market crash, but trust me when the crash actually happens, you're going to start second guessing your decisions.
Repaying the MBA loan is pointless. Even something as simple as lending out crypto stable coins to providers like Nexo, Celcius, Crypto.com, Anchor protocol, or others, can earn you a pretty risk free 8-20% return on your money. Why repay a ~5% interest loan when you could safely earn 8-20% instead and profit from the arbitrage? With the rise of DeFi, banks are obsolete dinosaurs for thinking that people would be content to earn 0.01% interest on their deposits.
Personally I make more money with crypto than I do with real estate, but the only reason I feel confident investing in crypto as heavily as I do is because I have other stable investments like my real estate that allows me to take much riskier bets on volatile assets like crypto.