Mortgage on top of student loans straight out of college

10 Replies

Good evening, everyone.  My name is Dan Bottiglieri, I'm currently a sophomore in college majoring in finance and accounting, but of course my main goal is to invest in real estate full time eventually.  I plan on getting my start by househacking a condo/house in my market then refinancing after a year and make it a fulltime investment property.  

My question is, would you be comfortable graduating college with about 75k in debt and immediately taking on a 150k or more mortgage? In best case scenario that sounds great, my tenants will be paying down my house for me and I'll be building my asset column fresh out of college but I'm not sure how I feel being 200k+ in debt at such a young age, if something goes bad in the property I could be screwing myself.  

It honestly depends on your income and if someone will lend you the money.  You may need to work at your job for a while to qualify for a mortgage.  Lots of people have student loans and mortgages to pay at the same time.

I wouldn't be comfortable with just the 75K in student loan debt, never mind the additional mortgage. I'm not sure how it would even be possible to get a mortgage from a bank with that level of debt, no real work history to speak of, and little to no down payment. Thus, you'd have to somehow find private money to fund your venture which would come at a ridiculous interest rate to compensate the lender for the risk you're bringing to the table with your inexperience and/or lack of collateral. This would leave your own savings and whatever you could get from family and friends as your initial seed money for your investment. I don't even know how you price in the risk associated with destroying all those relationships if things go south. In my opinion, the best move to make would be to do everything you can to lesson that 75K right now. Once you graduate, get a sense for the job market, and figure out the impact on your checkbook of whatever debt you have left, you'll be in a good place to figure out how real estate fits into the overall picture. In the meantime, keep learning everything you can about real estate, so when your finally in a place to invest you'll be an area expert that know's a good deal when you see it.  

Hey Dan!

 I'll say this: I've heard a whole lot of investors say "I wish I would have gotten started in real estate investing when I was younger." I commend you for being here already, and I have a different perspective than what's been said so far.

Yes, it's scary you'll be graduating with student loans. But your degrees in finance and accounting will probably lead to a well paying job, and that'll help you get a loan. Make sure you run all of the numbers (and with those degrees I have no doubt you will!), but if house hacking helps you SAVE money every month over renting, then not only are you building equity at an extremely young age, but you'll be able to use the savings to help you pay down those student loans faster, if you so choose.

Seems like a smart move to me!

It all depends on your DTI (debt to income ratio) ie your current debts and income. Lenders will look at your DTI, employment history, credit score, etc to determine what price house you can qualify for. So talk to multiple lenders, they may have some tips as well to help with getting pre approved more quickly or for a higher amount.

House hacking will reduce or eliminate your housing expenses + tenants/ roommates pay for the mortgage. So theoretically it only helps your debt payment situation as long as the numbers are good on the house.

Either way I recommend renting at least short term in the area you work to determine if you like it there and get familiar with the neighborhoods, then start to look for the house. Definitely plan out and live frugally to reduce that school debt!

Congrats on starting young.  It really depends on your end goals.  Does your end goal in 10 years call for a lot of units and high leverage or low leverage and fewer units?

Originally posted by @Dan Bottiglieri :

Good evening, everyone.  My name is Dan Bottiglieri, I'm currently a sophomore in college majoring in finance and accounting, but of course my main goal is to invest in real estate full time eventually.  I plan on getting my start by househacking a condo/house in my market then refinancing after a year and make it a fulltime investment property.  

My question is, would you be comfortable graduating college with about 75k in debt and immediately taking on a 150k or more mortgage? In best case scenario that sounds great, my tenants will be paying down my house for me and I'll be building my asset column fresh out of college but I'm not sure how I feel being 200k+ in debt at such a young age, if something goes bad in the property I could be screwing myself.  

I did it. I lived for free for 3 years. It worked out beautifully, and I would 100% recommend it to any and all college graduates.

 

I'm not a big fan of debt - especially college debt - but mortgages are the smartest debt out there. And at the risk of sounding like I'm telling you to pull a Cortez and burn the ships, the best time to have a bunch of debt is when you don't have any assets to lose if it goes south. That doesn't mean you should screw anyone over, but heavy debt becomes less smart the more assets you have for the securer to take. 

To do this establish your credit now with a student cc and you will get a credit history. Dont buy anything you wouldn't buy anyway,  pay it in full each month.  When you graduate lenders will likely want two years of job history. However you may be able to do it with less with good credit.  If you plan to stay in NJ they used to have a first time buyers program you may be able to use that to get your first place. As for the loans, I am assuming you are sticking to a major that will get you a decent paying job on the other end. Otherwise don't take on loans. In the meantime don't rack up student debt you don't have to by finding cheaper living situations and graduating on time.  It's doable if you plan for your end goal now. It all depends on your debt to income when you look for a mortgage and the job history the lender is looking for. 

Hey @Dan Bottiglieri

Congrats to you for your ambition! I work with a bunch of young aspiring real estate investors just like you (in a free online group), and I am willing to help you out with some advice or even chat on the phone if you wish. But first I recommend you read this article I wrote for Bigger Pockets titled How to Invest in Real Estate Before Turning 21. Once you've read it, let me know your thoughts and if you have any questions. I am a high school teacher in Colorado and I am always looking to help young people get started in real estate investing or help in any way I can. Let me know if you want to chat sometime. https://www.biggerpockets.com/...