opinions on starting rentals with consumer debt

[Fernando Jimenez]

need input from people that have been in this situation and survived. I am conflicted with this situation at the moment.

I had 3 rentals several years ago and got rid of them after getting married. it's been 3 years since then and am getting the itch to get back in the business. the problem is that my situation financially is completely the opposite of when I had the rentals before.

I was debt free, except rental mortgages, with a big safety net to help with the unexpected rental problems that always seem to come up. right now we are in deep debt and little to no savings. I know the answer before even asking but it is our nature to ask.

we are $60k in consumer and have $70k left on the mortgage of our home. we're working the debt snowball and calculate to have all the debt paid in about 4yrs. not counting raises and my wifes bonuses she gets.

I guess here is the question; should we consider getting 1 rental to start now or wait till we are debt free and have a substantial safety net? our main goal is to get 1-2 rental a year, sfr, until we reach 25 units.  

if you guys need any more info ask away. thanks for your responses ahead of time.

[Frank Jiang]

Refinance might be difficult in your situation. You can theoretically refinance out up to 75-80% of property value but in your situation, your DTI will probably be your bottleneck for how much you can withdraw.

If the interest rate on your debt is lower than your mortgage, it actually doesn't make sense to do the cash out refinance anyway.  You still want to look into refinancing your mortgage loan in general because 4.375% is on the high end these days.  Also, any student loans above the new loan rate you'll also want to roll into the mortgage, but you won't want to roll in any of the lower interest rate debts.

My biggest gripe with your post is the 22k car.  I can understand if it was a purchase made during better times, but the car loan is a pretty significant portion of your debt.  Can you sell the car for loan value or above?  Otherwise I don't see a ton you can do just from shifting liabilities around.

The 17k personal should technically also count against the house and I wouldn't categorize it as consumer debt in my own mind.