Using Real Estate to get out of debt

Investor Mindset
2yFollow

Using Real Estate to get out of debt

Lee Roden-Reynolds
Member since 2023 · 1 post · 0 votes

Hi everyone, I'm new to the biggerpockets website but have followed the podcast for several years. I just got engaged to my fiancé, who graduated college in May and has a considerable amount of debt. How would you use real estate to help pay off student debt? Everytime I try to explain my methods to her, she doesn't understand at all what I'm talking about. Thanks!

0Reply
22 views

Most Popular Reply

Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Lee Roden-Reynolds:

Hi everyone, I'm new to the biggerpockets website but have followed the podcast for several years. I just got engaged to my fiancé, who graduated college in May and has a considerable amount of debt. How would you use real estate to help pay off student debt? Everytime I try to explain my methods to her, she doesn't understand at all what I'm talking about. Thanks!

I would not use real estate to get out of debt. real estate will put you in more debt. Best way to work your way out of debt is to live frugally and get a W2 and put as much toward debt as possible. If your debt is student loans at 6-8% interest your best bet is to pay them down/off as fast as possible as most investments will achieve a similar result but that is gross (before taxes) not net. 
7e investments53 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

7 Replies

Jump to latestLatest
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Lee Roden-Reynolds:

    Hi everyone, I'm new to the biggerpockets website but have followed the podcast for several years. I just got engaged to my fiancé, who graduated college in May and has a considerable amount of debt. How would you use real estate to help pay off student debt? Everytime I try to explain my methods to her, she doesn't understand at all what I'm talking about. Thanks!

    I would not use real estate to get out of debt. real estate will put you in more debt. Best way to work your way out of debt is to live frugally and get a W2 and put as much toward debt as possible. If your debt is student loans at 6-8% interest your best bet is to pay them down/off as fast as possible as most investments will achieve a similar result but that is gross (before taxes) not net. 
    7e investments53 Reviews
    WebsiteView Page
    2Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Lee Roden-Reynolds:

    Hi everyone, I'm new to the biggerpockets website but have followed the podcast for several years. I just got engaged to my fiancé, who graduated college in May and has a considerable amount of debt. How would you use real estate to help pay off student debt? Everytime I try to explain my methods to her, she doesn't understand at all what I'm talking about. Thanks!


     Do not buy real estate if you have bad debts. Instead focus on building a profitable business and work towards having no debt. Get into sales or a high income industry. That should be the main priority. 

    Then you can start dabbling into buying rentals or flips. You need to have liquidity. 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    1Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    2y

    As others said real estate or any other shiny thing will not be your ticket out. You need to attack the debt and get rid of it. Focus on improving your income and reducing expenses. If you have an interest in real estate try and see if there's something to get into to help accelerate paying it off. 

    0Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    When you find yourself in a hole, stop digging. 

    I've been there too...it sucks to be patient, pay down debt, and wait, but it is the right and prudent move. Slow and steady still wins the race.

    Instead of investing in real estate, I'd suggest starting a business on the side in real estate. Something like co-hosting STRs, real estate photography or video (including drone), something in the trades if you have those skills, part time agent, etc. It gets you in that world and gives you what you need - more income without taking on debt.

    1Reply
  • Alan AsriantsBusiness Member
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    2y

    You can use the cash flow from RE to pay down your other debts. But you are effectively putting yourself into more debt

    There is good debt, and bad debt

    Student loans are IMO bad debt - yes you get a degree that gives you a good paying job, but it costs you money every month to hold that debt

    Real Estate debt if used properly can be good debt. If your rental income exceeds your mortgage debt than you have left over money at the end of the month (cash flow), you are in more debt but your RE debt is being covered and you have something left in your pocket

    [email protected]267-767-0111
    Alan Asriants - New Century Real Estate 590 Reviews
    View Page
    0Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    2y

    @Lee Roden-Reynolds Pay down the debt first. Now that I own rentals my debt cycles with winter fuel and sometimes remodels being put on a credit card.

    I second a good side hustle and have spent some money utilizing a real estate photographer which is one way to get going and making good money with only about $700 worth of equipment. Obviously you can buy a more expensive camera but a $500 camera and a decent tripod will get you going.

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    2y
    Quote from @Lee Roden-Reynolds:

    Hi everyone, I'm new to the biggerpockets website but have followed the podcast for several years. I just got engaged to my fiancé, who graduated college in May and has a considerable amount of debt. How would you use real estate to help pay off student debt? Everytime I try to explain my methods to her, she doesn't understand at all what I'm talking about. Thanks!


    I take the stance opposite to the above posters.  The fact that your fiancé has substantial debt should not stop YOU from investing in real estate IF

    1. You have the knowledge, capital and or experience to have a good chance at success

    2. You are comfortable with the risk associated with leveraged investments. 

    The most obvious answer is that either the cash flow or capital gains upon resale can be used to pay down debt.  So, if you purchase a property with a positive cash flow of say $3,000 per month, that’s $3,000 per month that can pay down the student loans.  If you purchase a property for $100,000 with say $20,000 down; and 3 years later sell said property for $140,000 while the mortgage has been paid down from $80k to $70k, that’s a cash out of $70k, or a $50k gain that can be used to pay down debt.

    Of course the easiest answer is to marry someone with no debt instead. 

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free