Pay off Student Loans or Buy an Investment Property

2 Replies

Hello All,

I currently have student loans of $7,611 and have that sitting in a savings account. Should I just pay off the student loan when deferment ends in September, or should I use that money to invest in real estate and make monthly payments on the student loan until I have enough saved up again to pay it off. I expect I can save up the amount of the student loan in about 6 -8 months. My down payment on a property is most likely going to be anywhere from $8,000 to $20,000. I Plan on house hacking the property and living for free or close to free.

What are all of your thoughts.   

@Thomas Schieffer Depends on your risk tolerance.

Let's just think hypothetically -- Say you bought the house hack now. What if a hefty unexpected expense of came up? You would likely need to spend extra cash out of your reserves, borrow money from family/friends, pull a line of credit/put it onto a credit card. Would you be okay dealing with that stressor? 

If I were in your situation I would come up with an extensive list of pros & cons to (1) paying off student loans now and buying a house hack later (2) house hacking now and paying off loans later. if the pros significantly outweigh the cons in either scenario, go with that one.

Hope that helps! 

ALSO IMPORTANT: I would chat with a lender if you haven't already. Your student loans MAY impact your ability to qualify for a loan. I would do this first, then create the pros/cons list

Its not really a high enough amount to matter. If you are seriously ready to invest in a house then I suggest making payments and holding the cash. If you have the cash to "do both" in 6-8 months, then pay off the loan at that point. That way you get flexibility and the best of both worlds. I cant imagine the interest over 6-8 months will be high enough to make any large difference.