Buy Invesment Property if Credit Improves or Savings rise?

[Ibrahim Yamini]

As a newbie investor, I have a few main priorities; lower my DTI, gain as much knowledge as I can and aquire my first investment property that cash flows well.

Currently, my debt is roughly $130K.  $70K of it is my wife’s student loans.  I spoke to my realtor and he suggested that the first investment property not have her name on it because of this.

Anyway, my plan was to aquire a $200K to $250K move in ready house in Arizona, hopefully by late 2021, or early 2022. When I took a look at our finances, I discovered that we pay over $2500 a month in loans and credit card bills alone. Before we do any sort of investing, my priority is to take care of a few of the high interest credit cards first. There are three loans that are a thorn in my side. One is $9.2K at 22% APR, the other is $13K at 5% APR until June (will rise to 25% after) and we have a conventional loan $11K at 12% APR.

I am currently deployed overseas, so I got a small increase in pay which will allow me to pay off the $9.K credit card by April and I’ve been making my 18 and 19yo nephews pay a small amount of rent each month which has given us a boost in paying off our credit cards. I just gave the first card $2K and my credit shot up 34 points to 690.  If I work Instacart, making an additional $500 a month, I can have the other two paid off by January of ‘22.

After the three are paid off, my credit should skyrocket.  However, I would still owe $28K if we ignore my wife’s student loans.

We could save $24K in one year by early 2023 or have all non student loan debt paid off, but not both.

Also, starting in June, I’ll only have 2 years left in the military so my income will be significantly reduced after I retire wherein lies my dilemma.  I may have to re-enlist, but I would like to avoid that if possible.

Should I focus on paying down the rest of that debt, or should I switch gears to saving up for a down payment on the investment property once the first three loans are paid off?

- Ibrahim