Pay off student loans or start investing in real estate??

2 Replies

Should I pay less $$$ towards paying off my student loans and put more into getting a deal ASAP? OR should I focus on eliminating as much debt as possible, leaving me with less opportunity for cash for investing??

I just turned 25 yesterday, I’m happily married with no kids, and my wife and I make fairly decent money together. I’ve been extremely interested in working to find my first deal, but I’m caught between a rock and a hard place right now.

Between the two of us, we have about 80K in student loans left to pay off. We are wanting to live small and decided to live on my salary and pay it off within 2-3 years with hers.

Now that I'm pretty hooked on REI and I see the major potential, I want to start now and grow my wealth through rental property investing and BRRRRing.

I see far more potential to make more $$$ through rest estate, so I want to start now, but I also know that means less towards debt. What advice do you guys have for people that want to invest in real estate while also having the responsibility of paying off student loans?

Originally posted by @Nik Stophel :

1- Continue to pay your student loans as you normally do.

2- Invest in real estate through a Legal Entity using Business Credit to fund your initial down payment and using a Non-QM (Non-Qualified Mortgage) loan product.

3-This way you it keeps your personal credit and liability separate from your business credit and liability. Also your personal debt ratio is NOT calculated as part of the approval process under Non-QM guidelines, just the asset's ability to generate net income or appraise at projected ARV. So your student loan debt has no bearing on your ability to get the real estate investor loan.

Hope this helps.  PM if you have questions!

Assuming the interest rate on your loans is low, I would make normal payments toward the loans and invest the rest. You have to be intentional though and make sure that the investment you're buying will actually earn more than the interest you are paying on your loans. For the purpose of analysis, paying off any kind of debt carries with it a "gaurenteed" return in the amount of the interest on the debt (because compounding works both ways). So when you are analyzing your deals, you have to ensure that the return you are going to recieve on any given deal beats that of the "gaurenteed" return you would receive by making extra loan payments, or else you are essentially losing money.