Looking for ways to get out of huge debt, using real estate.

9 Replies

I have lots of debt from student loan, credit cards, etc. Trying not to let it stress me out. 

Went against my credit building knowledge last year (all mortgage FICO scores were close, or over 700 at the time), and took out some personal loans, which I invested in things not related to real estate. (Side note: Almost bought two homes for one price in 2017 through FHA loan, thanks to information learned from Rich Weese's book "From Janitor to Multi-Millionaire.)

Living paycheck to paycheck, trying to snowball my credit card debt.

What have you done to get out of debt, or any real estate strategy to help get you out of the hole?

This is a question that might be for people who've been in my situation, but I'm sure there is knowledge from all over BP. 

Thanks in advance!

P.S. I hope I have posted this in an appropriate category.





 

@Ralph E. Real estate is not really a vehicle to get you out of credit card debt, the interest saved by just paying down your debt is guaranteed and a higher rate than most real estate investments. It isn't sexy but it is the smart play in this situation.

Buy and Hold real estate might not be a way to get out of lots of debt, but real estate as a broader category CERTAINLY is.  I personally was swimming in debt when I first started wholesaling in 2007.  Between my wife and I, we had well over 100K in student loans and credit cards.  I had a crappy job that wasn't paying the bills and we had young kids.  

Enter Wholesaling

The first wholesale I did was for $12K.  Do you think that paid down a huge chunk of credit card debt? Yes sir, it did.  

Now, we were using the snowball method of Dave Ramsey fame at the time and continued to do so, but every time I wholesaled a house, we would be able to chunk away at that debt faster than we ever could by using the snowball method. 

Back then, my marketing budget was non-existent and everything I did to get deals was free, or close to free.  Incidentally, all of those ways still work, most people just won't tough it out and go door-knocking on their day off for 8 hours.  

Fast forward a couple of years and we were living debt-free.  So from where I sit real estate and more specifically wholesaling got my family and me out of debt and quite literally changed my life. 

Good luck!

@Ralph E. The landscape was totally different when I started back then.  I'm not sure that biggerpockets was even around.  I read some books and actually attended a 5 day seminar from a "guru"   The seminar turned out to be a total sales pitch for other stuff but luckily I was so broke, I couldn't afford any of it.  I learned enough there to get started though.  Today, everything you could ever want or need to know is available online for free.  The trouble is figuring out what is solid advice.  Additionally, wholesaling laws vary from state to state so what might work great for one person in Montana, might not work for someone in Florida and vice-versa. 

@Ralph E.

Always always always pay off credit card debt before you start thinking about step 2. Get a second job, work OT, do whatever you can. It’s like losing weight. You didn’t gain that weight/debt in a months time most likely, so it will take time to get back to even. Be diligent.

After that, I look towards house hacking a 2-4 plex with an fha loan. I'm ok with some debt (student loans, cheaper used car if need be, and mortgage of course). But it cannot be high interest debt, and you cannot spend any unnecessary money until credit cards are 100% paid off and you have that 3.5% down payment for house hack.

Vacations? Dinners out? Drinks with friends? Ditch those thoughts if you’re serious about this. You’ve had the fun already, It’s time to get serious now.

Do some wholesale deals to build capital and pay down debt, or buy properties, rehab em, rent em, then refinance. Pull the cash out of the home and pay down some of your debt with the proceeds and let your tenant pay your debt back for you.

First thing to do is evaluate where you are spending your money and see how much you are earning.  As others said real estate is not a way to get out of debt.  Student loans are one thing, but credit card debt is another.  Start paying down the credit card and high interest debt.  Once that is paid off, keep putting the same amount of money aside for a down payment on a rental.  Buying a duplex and living in half is a great way to start as you require a lower down payment.

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