Investing in real estate or paying for chiropractic school?

Question

My husband and I have a somewhat unique decision to make in the future.  Come the spring time, we will have roughly $180,000 to invest in real estate.  This will be our first opportunity to get in the real estate game so we are gathering as much wisdom and advice as possible before making any decisions.  We are listening to the BiggerPockets podcast and I am currently working through real estate books recommended through the podcast.  Our end goal is to get into self storage, however, we want to start with some small multi-family properties.

On top of considering real estate investing, my husband is going back to school to be a chiropractor and will be done in 5 years while having accumulated roughly $175,000 in school loans. We have spoken with many chiropractors who mostly say "graduate with as little debt as possible". I'm incredibly interested to get real estate professionals opinions on whether to spend the $180,000 we will soon have on getting through school, therefore graduating debt free, OR invest in multiple properties just before he goes to chiropractic school.

Any advice would be very much appreciated!

Regards,

Rachelle Pollock

Scott Meyers · Answer

@Rachelle Pollock - @Michael Wagner said it best:  if Self Storage is where you want to go, go there and bypass the multi family.  "A long time ago in a galaxy ..."  (whatever) I, too, was a multi family guy and the results on my health, pocketbook, and family were horrible.  I was a millionaire on paper who couldn't buy groceries.

Go ahead and make the jump to self storage and cut out the frustration of toilets, tenants, and trash.  Your quality of life will thank you.  There are plenty of folks here on BP to help give you the nuts and bolts of the learning curve:  you've already heard from a few of us.

Keep us posted and let's get you moving towards self storage!

Brent Paul · Answer

It's a tough decision you and your spouse should go over each decision.  Will you be able to put away any extra money during that 5 years he's in school?  My dad always said do what you love not what pays the bills.  50+ years as an auto mechanic and hated every single day of it.  If he truly wants to go to school I say let him go and pursue his passion.

You could always split some of the money and put some into a home with the rest going to school.  Especially if you can put some money away while he goes to school.  After he graduates I'm sure he will make pretty good money too.  Having 90k in loans would be a lot better than 180k and the interest rates are generally pretty low for most of them.  With a portfolio you could pay off the loan with cash flow over time.

There is no wrong decision.  It is your life and something you two need to discuss together.

Eric Robert · Answer

I have a similar story - I have degrees from private universities and accumulated $450K in student loans. I delayed payments with the purpose of investing my cash in real estate. Over the years, appreciation and cash flow were able to pay off all student loans. In saying that, I would not use your hard earned cash on chiropractor school but instead, find an asset that would pay for your schooling. Best of Luck!

Daniel Lioz · Answer

Why can't you do both if it just about money...time wise might be a little hard...school and RE, but money wise you can do both.  Use 150k to buy real estate, take student loan to pay for college, real estate pays for college loan and reduces mortgage.  When done with college in 3 or so years you have cash flow, free education, equity in RE and two careers....chiropractic and RE investor?

Kris Bennett · Answer

@Scott Meyers said it well. :) Good luck!

Rachelle Pollock · Answer

Chris-

Thank you for the advice! Small multi family is not completely out of the question!  Would you say if we purchase real estate that cash flows instead of paying for school, should we wait until after graduating?

Rachelle

Rachelle Pollock · Answer

Michael-

I completely agree that a majority of college education is pursued based on what we’re told to do, rather than free thinking.  I took the same step by step, ”tell me what to do and I’ll do it” approach to post HS and experienced exactly what you did, only just a bachelors.  My husband is going back to school after being out for 7 years.  He truly believes it’s a passion of his and I’m trusting that he is calculating his true desire to help people and will speak up at any point if it becomes apparent that it’s not something he wants to do.  He also has three family members who were chiropractors.  I am currently a CA in a chiropractic office learning the in’s and outs of what an office really looks like so that’s super beneficial for both of us.  So as far as soul searching goes, thats really all I can say about that.  Combined with trusting the Lord.

Splitting the money has also been discussed.  We believe we don’t want to do anything with the money while he’s IN school. We are thinking we want to let our financial advisor handle it (maintaining liquidity), and once he graduates, pay off school, invest in REI, or split it between the two.  Main reason in handing it over to our financial advisor for that bit of time is because we will be in St. Louis while in school, planning to be back in Springfield.  Granted, plans could always change.  We just don’t want to be absentee landlords right off the bat on top of being in school.

The one thing I know for sure is that we have options and I’m so thankful for that! Thank you so much for your time and energy in your replies.  My husband and I are already talking.  Thank you for the free resources as well!

Rachelle

Chris Salerno · Answer

Rachelle, Congrats on the early success. In my opinion, I would purchase real estate that cash flows.

If you really want to go to school, Make sure the property cash flows as much to pay for the student loans.

This is what I would recommend. I love Multi-Family over any other asset or debt. Just make sure it cash flows.

Michael Wagner · Answer

Hi Rachelle,

I was fortunate enough to come out of school with very little debt.  Somewhere in the neighborhood of $30K...which is still sitting there on a a 30 year amortization at 2% interest;)! And I did buy my first investment property within 6 months or so of graduating. Granted it was a small one!

For me, the bigger consideration is the time, not the money.  Though the money is certainly important, its only real power is to "buy" you more free time. With that, walking down a path for 6 years (my decision to do the school thing) "in hopes" that I liked doing what I signed up for was a big risk to take.  I will say I enjoyed treating patients but the whole rat race/cog in the wheel thing really rubbed me wrong.  Truth be told, I only went to college to get a good job because "they" said that's what you're supposed to do. I don't have regrets per se as I believe all things happen for a reason but it was most definitely an inefficient decade of my life;)

So there's two things here, "Is your husband doing the Chiropractor thing because its a passion of his and he is WANTS to invest 5 years into his education because he KNOWS he will LOVE  it.....or is it a "should" do because it seems practical? This isn't a "which is better, REI investing of Chiropractic Practice?", either choice is perfectly right as long as you guys have done the soul searching to drill down to the true motivations. My line of questioning here is instead meant to make sure there's no "fear disguised as practicality" underneath the Schooling decision.

Assuming the schooling is the right choice for you guys, does it have to be an all or none decision?  Can you take out some loans to pay for half and pay half cash for school?  I don't know enough about your whole situation but my guess is that you'll have a LOT easier time getting student loan debt right now than you will getting a mortgage to buy your first investment property (assuming there won't be much w2 income to qualify you for a loan while your husband is in school). And of course there are plenty of ways to invest without taking out loans (or paying for cash for that matter). I see a viable compromise where you allocate X amount to first year of school and X amount to first investment...then decide where the rest of the liquid funds go based on how things play out over time.

Just some things to think about!  And because you asked, I'll shoot you a message with some links to a bunch of free storage content that I post online.

Investing in real estate or paying for chiropractic school?

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