Investor · Los Angeles, CA · Member since 2016 · 65 posts · 9 votes
i have several rental properties that have appreciated significantly over the years in Philadelphia. I purchased these prior to graduate school and my wife's architecture degree. I can't decide what the best strategy is to continue investing. Student loan debt is no joke especially when they're considered in ones debt to income ratio making it difficult to refinance, obtain a HELOC, and obtain a mortgage. It's also significant overhead that carries interest. I could eliminate all student loan debt by selling all my houses with a little left over to buy an investment property in a class B or C city. Any advice or feedback would be greatly appreciated.
Flipper/Rehabber · South Jordan, UT · Member since 2016 · 142 posts · 37 votes
10y
Great Question.
I personally face this question all the time. Pre 2008 I was all about leverage, my quick answer back then would be buy another asset that will most likely cover the payment on your student loan. Post 2008 I'm constantly scratching my head and thinking which direction do I head. I recently saved up enough money to buy a new car with cash. Instead of buying the car with cash I bought a $45K rental that nets me about $750 a month, which covers the car payment. At the end of 5 years my car will be paid off and I'll still have the asset and I'll be able to put the monthly cash in my pocket or buy another shiny object. Along with this comes my dependency on the tenants performing and hassles of being a landlord. This adds to my plate of responsibility, but it also keeps me on track for financial freedom (more passive income than expenses). Some days I think sell it all and cut the chains of debt, free my mind from the responsibility but then I won't have any passive income. I think this is a personal choice you'll need to make and it will depend on your appetite for debt and responsibility and what your long term goals are. My guess is that if you can find another good asset you should do the math and see how long that asset will take to help pay your student loan down versus just using the cash to pay it off. Another question to ask yourself - Does the asset pay you a better return than the expense of the interest your paying on the student loan. Sorry I don't have a more definitive answer. Hope this helps.
Investor · Los Angeles, CA · Member since 2016 · 65 posts · 9 votes
10y
Chris,
Thanks! I think you're right. It's definitely a personal choice and if I can leverage my assets for additional cash flow that pays my monthly loan payments I'm golden. It's one of those decisions that's so tough knowing that if I sell I'm relinquishing cash flow and equity. I guess it really comes down to the math.