Whether or not to pay off student loans...

[Cody Brinkman]

Hello BP,

I'm not brand new to Bigger Pockets, but have yet to ask for input from anybody so I figured I'd jump into the community and see varying opinions about deployment of capital.

I just closed on my 2nd Duplex last Tuesday and I'm torn about paying off the remainder of my student loan (roughly 28,000 @ 7 percent, monthly debt service being 475) or moving forward with either another duplex or a 4 plex in the Lincoln area.

I had a discussion with my banker today and he said with my current debt to income I should have no problem qualifying for another investment property, but looking down the road he told me that my debt to income ratio will eventually disqualify me for conventional financing. I have enough to pull the trigger on both another property and student loan debt elimination but that would leave my reserves lower then I like to keep them.

Any input from the community would be greatly appreciated.

Regards,

Cody Brinkman

[Will Porter]

Well the "textbook" answer is to compare rates of return. If you get a better "return" by paying down your debt (7%) than you would get from investing (say, 1% in a money market account), then you should pay down the debt. And vice-versa.

So how are your Cash-on-Cash returns at your properties?