We have a dilemma we are trying to solve for a shy friend "Sally". Sally wants to build her net worth but she owes about $30K in student loans. Sally has $30K in equity in her residence. She inherited 2 rental properties with $30K mortgages on each.
She is thinking of using the equity to pay off the $30K student loans. I'm not sure what to tell her.
I'm figuring she could split the $30K equity between the 2 mortgages and let her tenants ($600 rent each) continue to pay off the remaining balance of $15K each. Also, I thought she could use the $30K as down payment on other investment houses.
She is thinking of paying off one house or paying off her student loans.
Any thoughts veteran investors?
I'd pay off the student loans. Bad debt vs good debt. Mortgages on cash flowing properties are good debt, student loan debt is bad debt.