What do you suggest I do?

What do you suggest I do?

Brooklyn, NY · Member since 2016 · 66 posts · 69 votes

Here's my story, so I happen to be on of those naive millennials who continuously took out student loans without even considering the burden it would cost to repay them upon graduation. I've amassed about $91k in student loans and I've managed to land a job that pays around $95k gross (about $60k net). Like most college students that enter the working world, I've now realized that I do not want to continue in my current job for the next 5-10 years and beyond. I'm not too fund of W-2 jobs and want start investing, do you suggest I get second job to pay off my loans or, look into BRRRR investing or short term rentals as a source of side hustle for additional income that could subsequently lead to amassing good source of passive income and wealth (after garnering relevant knowledge on how to do this of course). I welcome any constructive criticism, and yes I'm an idiot for taking out so much student loans. Thank you!

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Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
6y

@Gervon Thompson, hi and welcome to BP!

You've accomplished step 1, realizing there's a huge problem and that it's your responsibility to fix it vs. waiting for a benevolent Govt to fix it for you.  Bravo!

I think the idea to work is excellent! Here's the thing: BRRRR involves a lot of work too, but unlike a W-2 job there is no guarantee of making money. Many first time BRRRRs end up COSTING you money vs. making it. Just like your college degree / education cost you money, the "education" of doing your first BRRRR could come from overpaying, underestimating rehab costs, overestimating ARV, delays from weather, unforeseen problems, etc.

To put it another way: it's not guaranteed income, especially as prices are rising and it's getting harder to find BRRRRs that actually make numbers work.

Btw, another commonly misunderstood fact about BRRRR: most investors aren't using that to generate cash flow or profit today. They're using it to expand their portfolio that they plan to hold into for 5+ years. It's a long term play. The one's who are creating cash income today are flippers. Different strategy. The point of BRRRR is to keep putting money to work over and over. You don't use it to live on or pay off debts.

The bad news is you have a lot of debt.  The good news is you have a good income and potential to boost it.  Are you single?  If yes, I recommend cutting your lifestyle to the bare bones.  Live off $30K and throw $30K per year at your debt.  It will be gone in 3 years, and you will be primed to begin investing!  If you want to go faster, double down and work 12-16 hours per day.  If you go crazy, you could be done with that debt in 12-18 months.  If you're married, of course your spouse will have to be on board with this "scorched earth / work like crazy" lifestyle.  But anything is tolerable for a short season.  If you're on the same page, you can do it!  

I hope this helps.

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  • Harlem, NY · Member since 2015 · 27 posts · 10 votes
    6y

    @Nicole (Dunlap) Pendergrass thank you for the insight! I'm also looking to move out of Harlem to possible house hack in the Bronx (specifically the Melrose area).

  • Rental Property Investor · Bronx, NY · Member since 2011 · 193 posts · 322 votes
    6y

    @Akwasi Degraft

    No problem! Feel free to message me with any questions but I also have a post detailing the whole experience when I first bought - u can prob find it through my profile (maybe I should do a followup post with updated experience lol).

  • Harlem, NY · Member since 2015 · 27 posts · 10 votes
    6y

    @Nicole (Dunlap) Pendergrass awesome & thank you. I'll be sure to read through & I think you should lol.

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @EMarie Windham I apologize for the timing of my response, but my experience with wholesaling stemmed from buying a wholesaling course from a self proclaimed real estate “guru” that kind of burned me. But thank you for your words of encouragement, I’m just working to improve my debt to income ratio, so that I may get some better loan offers.

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Dylan Vargas Hi! I really appreciate your advice I’m actually trying to analyze deals in and around the NYC area. There are a few interesting neighbors on the connecticut-NY border but I’m also thinking about that commute to work because I’d really like to keep my job. Anyways thanks again!

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Randall Weatherall thanks Randall! I’m trying to pay off the loans with the highest interest rate first, and I’m also trying to improve my debt to income ratio so that I look better on paper when applying for mortgage loans. Was actually looking to invest in and around the nyc area, so I won’t have to change jobs and take a pay cut, but with the NYC area being so expensive I wanted to increase my income hence the second job. Thank you for responding!

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Joel W. Hi Joel ! I know St.Johns must have racked up some debt as well, hope you’re doing well on your debt repayment and financial journey. Thanks for the advice I’ll look at Newark hopefully it’s within a 1 hour drive from my workplace, if I do find a suitable house hack. Thank you for responding!

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Charles Xia thanks for the helpful suggestion Charles!

    - Gervon

  • Investor · Atlanta, GA · Member since 2020 · 3 posts · 0 votes
    6y

    @Gervon Thompson Yes, St Johns was expensive in 2001 but not as much as it is now and I had a few grants that thankfully covered my costs. Not sure where you’re job is located but Newark is a 30 mins train ride to midtown. The property there is affordable and really could allow you to house hack while building equity in a QOZ as opposed to paying ridiculous rent in the city. We are at the teetering at the peak of the housing cycle so be smart with your choices if you choose to buy. Just remember on your debt repayment journey, that 10% of what your earn is yours to keep (The Richest Man in Babylon - a must read) no matter what you owe. Put that away and be opportunistic while still paying your creditors.

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Joel W. Got it! Duly noted, I’ll add that to my list of books to read, thanks again!

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Abel Curiel Hi Abel! Thank you so much for responding! My girl and I just started our savings process in order to find a suitable house-hack, we are kind of reluctant to look outside of NYC so your message does make us feel a little better. If we do have the required amount for an house-hack I can see how running the numbers and making sure the property would be a good investment would be a problem, I’ve also heard that NYC tenant laws do not favor the land lord, what is your take on these issues? Thanks again,

    - Gervon

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Ahmed Saad Hi Ahmed, thank you so much for your kind words! Yes, I like the idea of a side hustle but I’ve never thought about actually volunteering to gain knowledge, it does sound quite interesting, I’ll definitely give it some thought ! Thanks again!

    - Gervon

  • Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    6y

    @Nicole (Dunlap) Pendergrass Hi Nicole ! Thank you so much for offering your 2 cents with regards to my post. I actually like the idea of investing now and not throwing all my money at the loans after giving it some thought. I just want to pay off some of it so my income to debt ratio doesn’t deter some possible lenders. I just started my second W2 and I hate it, and I’m exhausted, I barely have time to even respond to helpful posts like this on BiggerPockets, I think I might just stop and use the extra time to acquire knowledge on how to successfully house hack in the nyc area. Thanks again !

    -Gervon

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