Pay off student debt or dive into my first rental?

Question

Hi! I am graduating in a few months from graduate school and as you can probably guess, I am graduating with a lot of student loan debt. My husband and I are very eager to dive into real estate investing ASAP, but we are contemplating whether or not to pay down a bigger chunk of my debt with my salary first OR pay the required payment only and use the rest of my salary to buy our first rental. Thank you so much in advance for any and all advice! I can also provide specific numbers such as my future salary and exact student loan debt if needed for more context.

Matt Stricklen · Answer

Consider that multiple income streams ( eg jobs+ rental income) are going to help you payoff that debt faster than a job alone.

you also want to think about your DTI - debt to income ratio. As you get deeper into your REI, lenders are going to be looking at that with each property you acquire.

so the best answer is to find the balance for debt paydowns and increased income.

Jody Sperling · Answer

My wife and I were in a similar situation when I finished graduate school in 2013. I wish for all the world I would have made the choice to invest in real estate instead of paying off my school loans.

We did buy a house for ourselves, and that has turned into our first rental now, but if I'd focused my savings/paycheck on buying real estate, the cash flow and equity would have more than paid off my $87,000 student debt and increased my wealth. I'm 100% for buying real estate investments.

Once you have your first investment property, look into velocity banking and you might be able to take care of debt repayment at the same time you invest without changing anything about the way you live. I'm a fan of WiseGuysInTies for more info on velocity banking.

It's a long video with some foundational basics of money, but every minute is worth the time, and you can speed the playback to 2x if that helps. Best of luck to you, whatever your choice is.