Should I wait to invest?

Question

I want to start real estate investing, but I have $62k in student loan debt on $85k income. Looks like I don't qualify for FHA or conventional because of DTI. Should I wait to invest or look for other options to find a muti family unit?

Joshua A Kloos · Answer

@Jermaine Perry

I purchased my first duplex last year with 35K student debt, hadn't graduated yet, was making $16/hr as a maintenance guy (around 33K/year). I used an FHA loan and lived in the bottom and rented out the top portion.

When I went to a lender, I was paying over $1000/month in rent. They factored in my rent savings as well as the projected income the rented out unit would produce and I was pre-approved for up to $220,000.

Check around with different lenders! They should approve you for something - especially if you plan to FHA and live in the property.

Derrick E. · Answer

I would continue to live cheap and pay off as much student debt as possible over the next year or so. Spend this same time researching and studying up on REI while paying down debt. You could invest now, but you will be much better off if you are able to pay down some of that debt over next year or so.

Travis Watts · Answer

@Jermaine Perry Good question. Personally, I still had some debt on the books when I started investing in real estate. The answer requires a lot of number crunching, but in my situation, it was pretty simple. I could either pay off my debt and "make" or "save" 4% or I could invest it into a deal and make a 20% return (at the time) and then use the 20% profit to pay off my debt. Ultimately, I paid my debt off faster using the second approach. Best of luck!

Omar Khan · Answer

@Jermaine Perry Just go on the Dave Ramsey diet. It's painful but you will get rid of your debt quickly. I don't necessarily buy into his "no debt ever" policy but I do believe that for the average person his tough love mentality is the way to go.

Theo Hicks · Answer

@Jermaine Perry you can acquire multifamily properties by positioning yourself from the capital raising side and I definitely recommend to review a “Best Ever Apartment Syndication Book” to see more ways in how you can purchase properties by going into partnerships with other active investors.

Jermaine Perry · Answer

Appreciate all the value advice!

Michael Vu · Answer

Start budgeting, reduce your biggest expenses (house & car), educate yourself on real estate in your free time, rapidly pay down your debts, and then get into real estate. There is always the urge to get started right away, but sometimes you need to get your life in order first. Remember, it is a marathon, not a sprint!

Josh Oaten · Answer

@Jermaine Perry

I would say get educated on what you want to do. Find someone doing what you want to do and assist/provide value to them to continue learning.

James Kojo · Answer

@Jermaine Perry

Even if you don't "Take the plunge" now and invest in REI, you should be "sharpening the saw." What I mean by that is, start educating yourself, and deepen your knowledge about how you might go about it, as well as start building out your network in potential market. You are young, so you will almost certainly have a fantastic entry point sometime in your lifetime, if not multiple.

Hope that helps!

James Kojo

Jermaine Perry · Answer

I appreciate all the advice. However, some of the options may not work as I have a wife and 2 daughters. I'm definitely researching and planning to start another business to attack the student loan debt.

Should I wait to invest?

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