Payoff Student loans with Flip Proceeds or reinvest profit?

[Luke Hoffmann]

Hey Everyone

I'm about done with my first flip property that I will be all in at $54k, ARV is 95-100k. I have 19 buy and hold units currently and my original plan for this flip was to BRRRR it and buy another flip or Multi-family. I've been thinking lately that maybe I should pause my real estate investing for a few months an roll all the profits from this flip directly against my student loans which would free up about $1000/mo personally. I know I'll have to pay capital gains on the profits vs doing a 1031 exchange into more property.

What would you do?  My interest rates on the student loans are varying from 4-8% interest on about $55k remaining balance.

[Dave Foster]

@Luke Hoffmann, I get where you're coming from.  This property was intended to be a hold property but you're thinking that it may not be the best plan.  So you've left the 1031 door open.  I live in the world of doing 1031s but twere it me I'd get rid of that debt.  Student loan debt is stacked against the consumer in numerous ways.  It's not dischargeable so if you ever have a doomsday scenario that student debt won't go away.  It's a drag on your credit and your dti.  The interest rates are almost as high as unsecured debt.  So much so that I'll bet if you ran a scenario and compared cost of incurring full tax on your sale vs savings from pay off of debt that you're almost a wash.

The only counter point would be that our government has such a rich history of rewarding bad behavior when done by large groups of voting constituents that it would be a crying shame for you to be responsible and pay off your debt only to have the govt institute a large scale forgiveness policy.    I'd still go the pay off route on this one.