Soon to graduate student looking for starting advice

[Ryan Rogoszewski]

Hey guys, been following for a while and reading/listening to the podcasts when I can, but a recent job fair really got me thinking a little harder about what to do with the rest of my life.

I'm a pharmacy student and in May will be able to work as a pharmacist in the real world. I think I'll be able to find a job that I'm happy with, and I will also like the salary that comes with it, but want to invest in real estate as a side job. I am 24, single, have no kids, and no real financial burdens besides student loans that I will have to repay.

Advice I'm looking for:

1) Loan repayment: everybody in school with me and my parents keep saying that I should work as much as possible when I get out of school and get my student loans paid off as quickly as possible. However, I'd really like to pay them off as slowly as possible and start using my income to put down on a duplex or multi-unit house that I can live in and rent out the other units. Does anybody have any recommendations on this?

2) It's always been a dream of mine to have a condo in FL on the water to retire on. However, it seems that the more I look into it I see more negatives than positives about owning a condo. I wouldn't really care if it didn't generate a lot of income, just that it would at least pay for itself through rentals and not be too much of a burden on my everyday life because currently I live in MI. Is this possible?

[Michael B.]

I won't speak for Curt but here are my thoughts:

Investing is a very long term proposition. It involves generating a surplus over living expenses and investing it wisely. Most people don't get rich on real estate because they found a great deal and grabbed it. Good investors are grinders. They find a few things the do well and keep with it for decades. Always looking, always thinking, always ready to move if the deal's right.

You think you know now is the best time to invest, any you MAY be right. Interest rates ARE down. However things don't always work as we hope. Interest rates were down in 2006 but most people who bought in the 2006/2007 time frame were wishing they didn't by 2009. Surviving downturns means building a good financial base and using that position to react when bad things happen. And real estate has a way of bringing unexpected problems to owners. If you don't have reserves to survive the unexpected then you will eventually lose big.

The best piece of financial advice I ever got was this: Don't get into a business where you're picking up nickels in front of a steamroller. The idea is that sometimes making small profits are easy if you're taking big risks to make those profits. Steamrollers are slow, and getting out of its way is easy. Anybody can do it. But there may come a time when the exact set of circumstances come along that you're unprepared for and you find yourself under the steamroller. And one trip under the steamroller can wipe out many years worth of found nickels.

In other words, always be thinking how to minimize the risk of investing, as well as the rest of your life. And one way to minimize financial risk is to get rid of debt that hinders your ability to react to events, both good and bad.

So I've given a long-winded to say this -- consumer debt impedes your ability to react when bad things happen to your investments. They make it hard to build sufficient reserves and they make it hard to borrow funds when you need them. Student debt is particularly bad since if things go REALLY bad they survive a trip through bankruptcy. So spend some time getting ready to invest before taking too much risk. It may save you a trip under the steamroller.