Realtor · Grand Rapids, MI · Member since 2017 · 30 posts · 15 votes
I am 23, just graduated from business school, I worked and played baseball so I only have about $8,000 in student debt. I am currently working a job making around 40K a year and am renting a place with some roommates.
I am eager to get started but am hesitating because I kind of want to be debt free going into my first investment. I have no assets besides my car that is paid off. I have a 645 credit score so I guess I'm just wondering if I should wait or just go for it.
I don't know if it makes sense to incur more debt or work on being debt free and try to establish a better credit score.
I am looking at the East Lansing (MSU) and Lansing market because that is where I currently work and live.
Investor · Wichita, KS · Member since 2017 · 584 posts · 813 votes
8y
Go for it but find a good deal. Student loan debt is the easiest debt to manage. You have all kinds of options. Don't put off your future in real estate. If your return is 20% in real estate who cares about 6% in student loan interest. I'll do that all day and on Sunday.
Grand Rapids, MI · Member since 2015 · 12 posts · 2 votes
8y
Jack,
It is hard to make such decisions based on the comments on an online forum, this one included. Everyone has their own opinions and mostly have reasons to support them. But it does not mean that they are correct 100% of the time or they are correct in your particular situation.
I remember being on online forums for stock investing for the first time and was looking for how to get started. It was the same, actually it was worse because i think BiggerPockets has one of the best forums. Everyone kept saying stack your emergency funds, pay your debts, do all the other stuff and come back here next year and still get the same advice.
I think you have two very good options. If you pay your student loan, you will be debt free and would not have to worry about a nonperforming debt anymore. But if you chose to invest that in real estate instead, you will start on real estate game early and will start your journey towards long term wealth building. None of these are bad options. In a grand scheme of your lifetime, $8000 or a year of (non) investment is not a big deal. I am assuming you will be able to save at least 8000 in a year with your 40000 income. Do what your gut feeling tells you to do and you will be fine either way.
Just because you are in this forum instead of car-shopping or finding other ways of lifestyle inflations, means that you in better situation than average people. Good luck!
West Hartford, CT · Member since 2017 · 38 posts · 11 votes
8y
I would like to play off Jack’s original post. I am a 26 year old who still has about 20k in student debt, I have paid off almost 35k in my 5 years since graduating. I make 70k (before taxes -about 45k after taxes and other benefits). My goal is to buy a multi family home this year, live in it and rent out the other 1 or 2 units. I have saved about 10k and can get a loan for 3.5 down. Does anyone have any advice on how I can get started with a large amount of debt, not much cash and good credit (low 700s)? I am nervous that I will spend my cash on the home purchase and not have enough to cover myself if anything happens. Ideally I would like the other renters to cover the mortgage so I can live for a minimal amount and continue to save or even make money on the property
Property Manager · CT · Member since 2014 · 687 posts · 329 votes
8y
@Nicole Grenier the loan formula simply uses your debt to income ratio to determine what amount you qualify for. I would speak with a mortgage broker to find out how much the bank will allow you to borrow.
Many times the bank will not make the loan if you don't have sufficient reserves, 3-6 months of mortgage payments in the bank.
However in Hartford CT that reserve may not need to be as high depending on your purchase price.
Partnering is always an option, you could borrow from family and give them a part of the deal, or any investor for that matter.
I hope you have started analyzing deals and seeing what numbers work for you. Once you have a deal that works the money will show up!
Knoxville, TN · Member since 2018 · 14 posts · 5 votes
8y
this thread is helpful as I'm in a similar position.
@Jack Ropp thanks for the original post! I'm grateful you posted your conclusion to save $25K and not rush to pay off your student loans. I graduate in 6 months and currently have $20K in debt
@Lillie Hernandez I've been debating taking out an additional $10K student loan and use over $8K for RE investing. Thanks for sharing!