So I am a sophomore at the University of Maine for Computer and Electrical Engineering and currently have no Student Loans as I have and will be able to pay the amount of the loan to my parents and thus not need them. Cause I have been saving all of the money I make and save when others are spending to a certain extent. So I was hearing people just being able to take money out to use for rent and ect. So could I take out a Government Student Loan, and use that to pay for a flip, and pay it off in full before the interest doesn't get too bad. Does any one have experience with this and know how to do it.
NO. This is illegal.
You could take the money you are saving and use that for a flip and use the loans like they were intended. You'll be able to write off the interest from the student loan and the house if you claim it as your primary residence. Don't play games with the Fed's money. It will catch up with you, but you can totally leverage it by using it for its original purpose and free up some other money.
@Tim McClary Nice to see someone else from the Bangor area on hear even thou I am 15 minutes up the road, was driving around looking at multifamily last weekend in Bangor, and liked some areas better than others, but also don't like the amount of vacancies
If you are spending 4%-6% on student loan interest but making 10%-20% on an investment you're in the black. If you get the right kind of loan then the interest doesn't start until 6 months after graduation. So make the money you have work. Debt isn't a bad thing if you use it right. I'm in Orono often managing some properties up there. Maybe we can chat sometime about your options.
Bangor is very economically sensitive. During really good times, Bangor does well, ok. During downturns, it gets hit hard and recovers slow. So make sure you factor in a strong vacancy rate.
FYI, I grew up in Maine, 90% of my family lives there still. I am very well aware of what "bad times" in Maine look like.
With student loans you typically never actually have the money. I mean they don't give you a check for $15000 then you pay the school. They promise the money, you give the school the loan information, then they pay the school directly.
What you can do is get a loan for school and convince your parents to give you the money for the house. Learn your stuff, show them the numbers, play it conservative, and give them a percentage of profit on top.
A good chunk of the cost of school is housing so you can make a compelling case.
Why would anyone choose to have massive student loan debt that is difficult - if not impossible - to discharge if all hell breaks loose and you need to declare bankruptcy? A short term means to an end, maybe, but I'd be refinancing properties and pulling out equity hand over fist to get the student loans paid off. At least then, worst case, if you crash and burn you can wipe the slate clean with a bankruptcy and start over.
I'm certainly not advocating or encouraging bankruptcy but if the SHTF in your life why not be aligned to keep the damage as minimal as possible?