Classic debate: Pay down student loans or begin RE investment?

[Steve Walko]

Hi everyone,

I'm wondering whether my fiancé and I should begin to pay our debt down ASAP or begin investing in RE. I know there are intelligent arguments on both sides of this issue and that it depends on the details of our situation.

So here is our situation:

We both are therapists in private practice with incomes approximately between 60 and 70k per year at this point. I am 36 she is 29.

Between us, we have 120k in student debt. She has about 80, I have about 40. Interest rates are 6.5% for her and 6.8% for me.

While we do have a wedding coming up with some more expenses on that front, if you set that aside, we have the ability together to save probably 2k total on top of minimum payments of $800 minimum payments a month on the student loans, which means we can put approx 2800 towards student loans a month.

I feel pretty sure that using an FHA loan to buy a multifamily unit (most likely a duplex given what is around us) is a smart play. We currently pay 1450 in rent with everything included. If we could live for free in the unit and have the tenant pay off the mortgage, then we could add that 1450 to our monthly savings that we could put towards the debt. For simplicity, we'll call that $4200/month. Accounting for some unexpected expenses, we could probably pay off our debt in 3 years that way. OR we could get very aggressive in real estate.

What do you all think?! 

PS: I should add that we live in a smallish college town where a lot of people rent. 

[Michael Swan]

Hi @Steve Walko,

You are not going to like my answer. Each of you get a part time job on the side and attack that debt faster. Don't invest in IRA or 401K and attack this debt and make it gone in the next 12-15 months. Get rid of car payments and live like NO ONE now so you can live like NO ONE ELSE later. Brown bag your lunch, streamline everything. Stop going out to eat more that one or two times a week too. The most we ever made W2 earnings for my family was $80,000 before taxes.

You are both so young.  Fast forward to 52 like I am now and you could have 122 front doors and $160,000 cash flow and rising every year.  If a lowly paid teacher can do this, anyone can.

"If you change the way you look at things, the things you look at change right before your eyes."

Swanny