[ADVICE] Rookie Real Estate Investing with HIGH Student Loan Debt

[Emeka Anene]

Hi Investor Friends,

My name is Emeka and I'm thrilled to set course on my real estate journey come 2021. The goal is to house hack SMF home, ideally a triplex, located in the NJ area. Some geographic context - Previously lived and worked in NYC for 6 years up until August when I moved back in with my mom in York, PA. I'm interested in the NJ area purley because of proximity to the city if/when offices open up. I'm looking at Newark,NJ but I'm open to other areas that have a manageable commute via car and public transport into midtown manhattan.

So above is my startup house hack plan but I want to have a 5 year plan to keep me on track. My issue is this: As I am projecting some lofty goals in my 5 year plan, I’m having trouble figuring out how my Student Debt pay down fits into it. I have about 30k in federal loan debt that are currently in forbearance with interest rates around 3% - 4%. Since they're federal, I'm not too concerned about them. BUT my private Student loan debt amounts to 121k and I recently refinanced them to 3.98%, paying $895/month. I have no consumer debt.

Student Loans

• $30k Federal, 3-4% interest, currently in forbearance
• $121k Private, 3.98% interest, 15 year term, $895/month min

Current Income: Full Time

1. Gross 80k, Net 49k after taxes and deductions (401k)
2. Monthly Net Take Home - $4083, Less Fixed (incl Stdnt Ln pmt)/Variable Expenses - $2576
3. Saving Rate for REI - $2476/month (60%/net) -- $100/month Brokerage Acct
4. Savings to Date: 7k, Credit Score: 748
5. Projected Savings Feb 2021: Roug;y 30k +/- a couple thousand

Current Income: Part Time work (October 2020 - Feb 2021)

• I expect to make 3720 by end of Feb - all going towards my REI fund

By May of 2021, I plan to House hack a Triplex via FHA to get my feet wet and familiarize myself with REI/ the property buying process through direct ACTION. But come, 2022 I want to fully implement my high level "Ideal" 5 year plan:

GOAL: 400k Passive Income Annually by 5th Year via SMFH Rental Properties

Note: Looking to invest primarily in PA markets to start (open to others to hit this goal too)

[Year 2022] - NOI 80k Annually

1. NOI Monthly - $6,666 (min)
2. Acquire 9 Triplexes (27 units)/year -- roughly 3 units/month
3. Cash flowing $250 a unit/month min.
4. ROUGHLY $81k for Year 1

[Year 2023]  - Essentially, repeat the same acquisition process until 2026

I’m currently working on my rental property requirements to ensure the math is possible. And while these are just very broad, high level projected numbers that will take levels of creative financing I’m learning and have yet to discover, I’m kind of lost on how exactly my student loan comes to play in all this. I’d like to keep my W2 job (with incremental annual raises) until it makes sense for me to quit, so I’ll be in my NJ house hack. The NJ area is generally a high cost market, so while I would like to implement my initial 5 year plan in NJ, I think it makes more sense to pursue it in PA where markets are more affordable (?)

But ultimately, I don’t want to carry my student Loan debt through the 15 year term and I also don’t want my income to debt ratio to be impacted because of it. That said, I set the goal to be student loan free by 30 - I am 24 now. I’m just lost on how to strategically pay them down quickly within this 5 year plan and would love some advice on the best way to go about doing so.

Thanks so much in advance for any advice or constructive criticism on my plan in general. It’s still a work in progress but I certainly don’t want “analysis paralysis” to take hold either.