Paying off debt OR saving for 2nd property (Colorado)

[Natalie Keller]

Looking for a fresh perspective on our situation.

We own one house (single family home) that we just refinanced and converted into a rental. We are expecting around $400 cash flow each month from it.

In the meantime, we moved in with our friends in order to pay off our remaining debt:

Student loans: 30K (at around 6% interest)

Car loan: 7,500 (at 5.5%, will be paid off in April 2022)

2nd Car loan: 9,000 (at 3.45%, will be paid off June 2024)

Total: 46,500

Current DTI with all these loans is 30%. After we pay off the loans, the only thing we will have is our primary mortgage, which will put us at 17% DTI.

We would like to try and keep our first property as rental, while buying the 2nd one as our primary.

We are projected to be done with all that debt by November 2021 (in 9 more months)

At that point, we can start saving aggressively for a 2nd house (try to get 10% down + use quite from our first home to get to 20% in order to avoid PMI)

Given our financial situation,

- should we commit to paying off the student loans?

- Should we start saving for the second down payment instead?

- What options are we not seeing?

Are their other ways to avoid PMI (outside of putting 20% down)?

We can stay with our friends for 18 months max and at that point in time I would really want to get my dream house (in our area it would be around $500K, which means we would need 100K down if we wanted to avoid PMI).

Again, looking for some new perspectives, blind spots, or any other knowledge/information/ideas we just don’t have at this time.