First Rental Property

[Kevin Uzelac]

I recently graduated college and have am eager to get started in real estate. I would like to focus primarily on rental properties for a long term steady ROI. Unfortunately I have 55k in student loans with 5.7% interest at the moment. I made a plan to pay them off within 4 years but I will leave me little room to save for my first property. Should I pay off my loans before investing or pay less towards loans and save for my first property?

[James Galla]

It depends on your financial circumstances. Starting younger with properties allows them to snowball and allow a greater accretion to wealth. You ought to do minimum payments, grab an FHA loan with first-time homebuyer grants, and grab a quadruplex. Then, do some rehab work, and rent the units out. You'll immediately gain property management experience, rehab experience, acquisition experience, and experience in assessing the quality of assets.

That sure sounds better than stuffing money under the pillow to pay off debt first. Congratulations on graduating college, by the way. Your biggest goal right now should be getting a decent W-2 job (assuming you don't have one yet, but if you do, congratulations again) to justify both your college debt and additional debts to secure real estate.