To start buying real estate investments or pay down my own house?

[Shaun Dillon]

I live in columbus Ohio. I was saving and studying to invest in real estate to become financially free in 2015-2016. I was living way below my means to save for my first rental... then my girlfriend found out she was pregnant and my 65k saved for a rental went into a down payment for our own home. I still want to invest in real estate but my question is when. I owe 230 on a 315 house and I’ve been spending extra cash to pay down the house (4% interest rate). Should I save and buy a rental or pay down the mortgage? I make 120k a year and can save around 25k a year toward either my own mortgage or first rental. Thanks!

[Ed W.]

Shaun, I'm a Worthington guy, lead a meetup in Dublin and have helped many newbies.  Without knowing what amount of time you have available as well as more personal information about your circumstance, no one can give you a definitive answer but I will give you a general answer that will hopefully help but with the understanding that you could have circumstances that make the following useless or harmful to you.

In general, low interest rate debt should not be paid off if doing so uses funds that can be used to create/generate income and/or equity that exceeds the funds being used to pay down the mortgage.  I would suggest to you that those dollars are better spent on real estate investment education (beware, however, that much of it is almost worthless and greatly overpriced) and on marketing and on purchasing real estate.  I strongly urge you to get a good mentor as well.

So, I would suggest that you save those dollars while you explore real estate and determine if it is right for you.  If you approach it cautiously and with good assistance your chance of financial gain should be high and the likelihood of losses should be very low.