Pay off student loans or invest ?

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Pay off student loans or invest ?

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

Hey guys ! I have about $34000 of private student loans left to pay off at an interest rate of 3.55% that’s approx 675 per month. I’ve also managed to save 40k up until now, I earn about $5200 per month net. With a credit score of 801. Should I use this saved up 40k (which includes my emergency fund) to put 3.5% down on a fourplex in order to house hack it? Or should I just pay off my debt. What would you do in my position? I live in NYC looking for fouplexes in nyc or connecticut.

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Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
5y

The Biden administration is trying to see if they can legally wipe out up to $50K of student debt.  Personally, I am not in favor of this activity, but if the government is actively giving away the money, you would be wise to wait and see if it benefits you.

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  • Ashton Karp
    Real Estate Agent · Bonney Lake, WA · Member since 2020 · 42 posts · 27 votes
    5y

    @Gervon Thompson leverage debt to hedge the impending inflation

    0Reply
  • Michael Swan
    Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    5y

    I would think upstate New York a bit you could find some nice 2br 1ba Condos for about $100,000-$125,000 that rent for at least $1,000-$1,100.00 and with HOA fees under $200.00 a condo. That's where I got my start and told my story of how I did it in San Diego of all places in 2011-2012. No Joke. It was on Podcast 238 where I told my story!! If I can do it, anyone can. @Gervon Thompson or anyone else that want to contact me I always love to talk to BP people about how I did it and they can do it too!!

    If you change the way you look at things, the things you look at can change right before your eyes and you can be financially free, just like me!!!!!!  I retire from teaching this summer too!!!  My RE investing the last 10 years has allowed me to retire 10 yrs early at 55 yrs old!!  Some of you are a lot younger.  I did not invest in my first little rental condo until I was 45 yrs old!!!

    What a feeling to be financially free!! You can do it!!!

    Swanny

    0Reply
  • Ulrich Zinsou
    Elizabeth, NJ · Member since 2021 · 1 post · 0 votes
    5y

    @Jaron Walling

    Great start... but when is market going to cool down...?

    0Reply
  • Vernon Mitchell
    Member since 2021 · 3 posts · 0 votes
    5y

    I would invest in property. If you have anything left over after closing, use a portion to pay on the loan. Then, hopefully if you cash flow well, take a portion, in addition to your normal monthly payments, and continue paying on the loans. You get the best of both worlds without having to save all over again for a house. But N.Y prices are a beast! Maybe consider investing in a cheaper market?

    0Reply
  • Account Closed
    Handyman · MN · Member since 2020 · 92 posts · 46 votes
    5y

    We sold a house and used the profit to pay off the student loans. Some days I regret it, but that extra cash each month pays off in opportunities in the long run. Don't wait around for what the government might do. They will always get their money, and the banks will always come out on top. 

    0Reply
  • Thomas Filak
    Member since 2020 · 24 posts · 17 votes
    5y

    @Gervon Thompson Biden might wipe it off. Wait and see. You might be lucky and without debt soon

    0Reply
  • Jaquetta T Ragland
    Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes
    5y

    @Gervon Thompson have you found any deals yet? Personally I like the idea of getting rid of the debt but it will delay you getting started In REI.

    0Reply
  • Bonnie Griffin KaakePro Member
    Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
    5y

    @Gervon Thompson I was referring to accelerated depreciation, not "forced depreciation". When an investor purchases a property, their CPA or tax professional usually puts the property on what is referred to as "straightline" depreciation. That means the purchase price minus land is divided by either 27.5 years or 39 years and each year you get to take that much in depreciation as a "paper loss" each year. Under the latest tax regulations, by doing a cost segregation study and leveraging the tax benefits with accelerated depreciation, you can reduce your federal and state taxes owed and sometime eliminate them completely. As an example, if you were to purchase a $1 million property, by leveraging these tax benefits, there would be about $60k to $100k that you would not have to pay in taxes the year you do a cost segregation study. Or, you could use as little as 20% of that and roll the balance forward to reduce/eliminate taxes the following year(s).  

    [email protected]303-475-4459
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  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Jacob Lapp thank you sir! Will def check out the podcast.

    0Reply
  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Alexander Szikla

    Yes, makes sense. Thank you

    0Reply
  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Cody L. Thank you for your input.

    0Reply
  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Carlos Gonzalez

    Hey Carlos thanks for your input will def consider doing as you stated.

    0Reply
  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Bonnie Griffin Kaake

    Hey Bonnie! Thank you for your rather insightful input didn’t actually see it this way before.

    1Reply
  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Steve Vaughan

    Lol wish I had them falling in my lap,thank you for your very sound advice.

    0Reply
  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Simmi Minhas

    Thank you for your input!

    0Reply
  • Gervon Thompson
    OP
    Brooklyn, NY · Member since 2016 · 66 posts · 69 votes
    5y

    @Aaron Wisc

    Hey Aaron thanks for your input, duly noted!

    0Reply
  • Grant Vincent
    Real Estate Broker · Member since 2017 · 90 posts · 30 votes
    5y

    @Gervon Thompson

    For once, both could be reasonable options. Typically, I’d say knock out that debt. In normal times, the math can tempt you to keep kicking the can down the road a little more on the student loan because the numbers work and...well, math is perfect...but people and life are not perfect and things happen. In times like these, peace and freedom are invaluable. Then again, times like these have delivered very compelling opportunities and such low interest rates. Getting in now makes a lot of sense on paper, especially if you’re going to live in the property. The math may show enough interest savings (today’s rate vs future rate) alone to make you pull the trigger. Decide who you are as an investor and what your goals and risk tolerance look like and keep (all) your decisions in line with that.

    0Reply
  • Andrea D.
    Accountant · Saint Petersburg, FL · Member since 2020 · 16 posts · 19 votes
    5y

    @Gervon Thompson

    I also am looking to househack, I have no debt, a job in public acct and a 820+ credit score; however all lenders I’ve talked to are requiring 15% down on anything multifamily. Even to live in as primary residence, since Freddy/Fanny Regulations have tightened up I’ve been told.

    I’ve heard so many people say it’s possible, but I haven’t been able to find it myself....Have you been approved for 3.5%, and how is the lender calculating the other rents in comparison to your dti? Will you message me with their info if you have been approved?

    Maybe ny is different than in fl.... I thought the challenge would be getting an accepted offer with a loan that’s highly financed, however I can’t seem to find the right instrument and am not super familiar with the lending industry. I’ve only done conventional 20% down in the past....

    0Reply
  • Ivonne Pinedo
    Realtor · Miramar, FL · Member since 2020 · 56 posts · 18 votes
    5y

    @Gervon Thompson It depends on your goals. We started with the goal of buying back our time as soon as possible and decided to buy real estate and in another investment vehicle that pays us monthly to use our money. A year later we are looking for the 4th one. I have student loans and have been deferred because I work for the state and in 2 more years they will be forgiven. All thanks to our decision to invest first. My husband already retired from his w2 and I could already do the same but need to overcome my own mental block. Consider the end goal before you even start.

    0Reply
  • Raymond J. RodriguesBusiness Member
    Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
    5y

    @Andrea D., if your concern is down payment on a multifamily for a primary residence. I suggest you house hack going FHA, I help my clients in Florida do it all the time.

    [email protected]619-456-8311
    Helm Mortgage Corp.5126 Reviews
    WebsiteView Page
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  • Rick Brand
    Flipper/Rehabber · Los Angeles Long Beach Orange County, CA · Member since 2019 · 11 posts · 1 vote
    5y

    @Gervon Thompson. Invested you get a higher interest then the interest on the loan

    0Reply
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