Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
Hello all Biggerpockets investors, I have been educating myself in real estate investment and would love to start putting in some actions. I'm finishing up my bachelor's in accounting and going for an one-year master degree starting in August this year. I'm in Miami FL right now but will be moving to Columbus Ohio in August for graduate school. I thought why not to buy a property in Columbus to do house hack instead of renting an apartment from someone else. One thing that concerns me the most about this is that I don't have a whole lot of capital right now but I still can take out student loans to fund my first deal. I would love to get y'alls input on this. Is it a good idea to take out student loans to fund my first house hack?
Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
5y
@Daniel Chih
Better to be patient and do it correctly and be an investor for a long time, than to be impatient and have your first deal be a killer that ends your journey before it really gets momentum.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
5y
Student loans are paid out per semester or quarter and usually paid directly to the college. If you use the student loan proceeds how will you pay for college?
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Caroline Gerardo Upon confirmation with financial aid, I can take out additional loans besides tuition to fund my living expenses. On top of that, I have a full ride scholarship too so tuition cost isn't a worry for now.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
5y
You will be a full time student with no income? How is your FiCO score? If no income you need 20% down. Average price single family near Ohio State $300000 or if you can commute farther there are houses for $170000 Twenty percent of 300000 is $60000 needed. Monthly payment around $1500 with taxes and insurance. Two roommates might cover the monthly. It's too cold to live in a garage in the winter in Columbus.
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Caroline Gerardo I will be getting around 2k per month from the school as scholarship payment. My wife and I both have a credit score of 730. I also have a job accepted post school. 20% down is impossible for now since I don't have much saved up. I was hoping to do a FHA loan with a 3.5% down. I guess I'll just have to talk to a lender to get if it's possible. That's a good point tho. Living in a garage would be way too cold...
Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
5y
@Daniel Chih
Basically you would be financing 100% of the deal. Even though student loans have decent interest rates, it is really tough to make the numbers work when you are borrowing 100% unless it is for a short term flip, or BRRRR where you can refinance quickly.
Figure the costs into your numbers and see if it works. I guess it’s possible, but would be a bit more risk than I would prefer to take on.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
5y
I'm a lender. Two thousand a month "income" x 43 % gives you $860 to work with for total bills. You need actual employment to do a FHA loan. Will your wife have a job? She needs to be working in same type of work now in Florida and when you move to Columbus.
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Account Closed Yes I agree 100% financing will bump my monthly mortgage payment much higher and in return would be more risky. I could wait until I start my full time job to start investing but I'm getting so impatient in getting into real estate.
Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
5y
@Daniel Chih
Better to be patient and do it correctly and be an investor for a long time, than to be impatient and have your first deal be a killer that ends your journey before it really gets momentum.
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Caroline Gerardo Thank you again for your input! She will be in school as well so no income from her. I guess that's almost to impossible to do 3.5% down for a house based on our income then.
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Account Closed Wise words! I agree with you. Thank you for your input. I was hoping to do house hack while being in school but I guess it's too risky!
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
5y
Daniel wonderful things come in time. You maybe won't stay in Ohio and right now the market is high on upswing with little inventory. When you finish your graduate program you will find the perfect deal. For now, keep nose in the books and be great! All my best to your dreams!
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Caroline Gerardo I have been reading books, listening to podcast and learning about RE investing for a couple months now so I thought perhaps I should get started now. But I think you're right. Wonderful things do come in time and I just have to be patient about it. Thanks again for helping out a rookie like me!
Real Estate Agent · Jackson Hole, WY · Member since 2019 · 27 posts · 39 votes
5y
Daniel, maybe raise some capital now by tokenizing your future earnings. The whole blockchain world has revolutionized the way college students can fund themselves in college (housing or otherwise) by selling a portion of their future income for cash now. Check out companies like StudentCoin for this. Good luck! Love your creativity! Reach out anytime. -Sam
Rental Property Investor · Washington, D.C. · Member since 2021 · 65 posts · 31 votes
5y
@Daniel Chih, I’d run those numbers really carefully given the high interest rates of student loans. Also, make sure to read the book Set for Life by BP Publishing. A grad degree can really get in the way of early financial freedom.
Investor · Cleveland Heights, OH · Member since 2017 · 128 posts · 73 votes
5y
I help people rebuild credit and build credit as a way of paying foward. The problem with at least fedral student loans is if things go really south and you go bankrupt, that is a debt you cannot erase as the government wants to get its money back. There are a whole lot of different ways to fund a deal. Seller finacing. Partnering with someone. The list goes on. Also I don't know what happens if they find out you have been using funds for something it was not designed for. I like that you are thinking out of the box, but I would keep on pushing your creativity to other ways of making a deal happen.
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Frederick P wallberg I’m just trying to think outside the box. Using student loans to fund my first house hacking could mean reducing my monthly living expense while building equity. It’s called leverage. I do admit that’s a lot of leverage and risk and perhaps it’s a little more than the level I feel comfortable with. Anyways, I do not think it’s a horrible idea if it’s a good deal and numbers work out.
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Frederick P wallberg Most of the investors take out loans to fund their investment properties too. It’s just that I’m using loans for the down payment as well.
Wholesaler · Miami FL · Member since 2020 · 16 posts · 6 votes
5y
@Ben Riechmann Thank you for your input! I do need to assume the worst case scenario if things go south. I’ll also try my best to keep pushing to be creative as well!
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
5y
NO NO NO! Student loans are permanent and non dischargeable. They are also subsidized and backed by taxpayers so its fraud to use it for investing in real estate (or stocks or bitcoin or anything). Plus if you need student loans you have no income, no reserves and no experience. A disaster waiting to happen. Focus on your studies, get a good income going and then think about investing.
Real Estate Broker · Pueblo, CO · Member since 2013 · 366 posts · 303 votes
5y
Maybe Biden will forgive your student loans and you'll have the ultimate real estate house hack triple back flip accomplished too. Come on every post I see from beginners is coming from a place of desperation and impatience.
You guys are watching too many youtube videos. Patience! You have a full ride and income dude! Getting through school with no student loans is one of the best things you can possibly do financially at your stage. Your next step is to maximize your income. You're doing great! Stop with the distractions tell yourself and these goonies with these ideas "NO" a lot more often!
Investor · Biddeford, ME · Member since 2020 · 29 posts · 6 votes
5y
I can understand the itch to get started, but you'd want to do it in the right way, with reserves, etc., so that you can actually be ready to invest in RE.
Student loans are paid out to your school directly; even if you ask an excess amount and the school pays you out, you're paying an astronomical interest rate on that money much greater than the 2-3% we are seeing in real estate right now, which is going to make a huge dent in your pockets even if your idea was to be successful. However, lenders require proof of funds, and unfortunately, your bank statement and financial records will show where the excess money (downpayment) came from, and you'd not be granted a loan to buy a property since you can't use borrowed funds for a downpayment, closing, etc.
Now, you still have some options: When I was in college, I had an apartment and rented out the parking spaces to make an extra $50-100/month. If you have parking spaces, storage, etc., that you can rent out to professionals or other students, that is a great way to make some cash and get your feet wet with managing and RE. Additionally, you can rent out an apartment and charge higher rent to students or roommates to make cash that way. Of course, you won't have loan paydown, tax benefits, etc., but it's a neat way to try to get your feet wet and learn the mechanics of RE. It's also very possible in many college cities.
Good Luck - happy to connect with you to talk more @iamsyedzafar on all socials.