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Updated about 8 years ago on . Most recent reply

User Stats

111
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38
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Ryan Johnston
  • Flipper/Rehabber
  • Tampa, FL
38
Votes |
111
Posts

Critique My Plan! - yet another student loan discussion

Ryan Johnston
  • Flipper/Rehabber
  • Tampa, FL
Posted

Hey everyone! 

Without boring you with numbers and a long story I'll just jump into things. 

I just graduated college and started working a salary job at a large general contractor in Chicago. I accumulated quite a bit of college debt the last 5 years and I need to get rid of that. I'd like you guys to critique my plan, throw some ideas, share your opinions/feelings.

So I have $78,000 in loans sitting at 6.7%. Still in grace period till January 2018.

I make about $60,000 (~$40k after tax) at this job I just started and I get some bonuses throughout the year.

I have about $3,000 saved up.

Currently living at my parents with a monthly expense of around $905/mo (oh the joy of living at home), but soon I'll be living closer to my work because my long commute. Then my monthly living expense will be about $1,600/mo until I start paying off loans which will put me up at $2,200/mo.

Now my plan is to save up around $10,000 which will give me some leeway into my first investment. I am very good with construction and very connected in the contractor world. I plan on getting funding (no idea how yet. I'll take any ideas from you guys) to flip my first property. So subsequently that will be $10k down with around $70k financed to flip a $50-$60 property (numbers allowing). Then the plan is to profit from this, and do the same exact thing. Take 10k from the last transaction to fund another flip. I estimate that I'll have around $5-$10k (hopefully a conservative estimate) of profit which I will use to pay off my loans quickly. Then after I get my stupid loans paid off I'll be able to flip for capital to fund my buy and hold strategy and my full time flipping career.

I hope this is clear enough for you guys to comment on. If it isn't please ask some questions. I'm looking for a plan clarification here. If you see any problems that I need to consider please let me know. It seems clear to me but that could be because I made it.

Thank you for reading this far and I'll take your considerations to heart.

Ryan

Most Popular Reply

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10,036
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16,182
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JD Martin
  • Rock Star Extraordinaire
  • Northeast, TN
16,182
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10,036
Posts
JD Martin
  • Rock Star Extraordinaire
  • Northeast, TN
ModeratorReplied

OK. Congrats on graduating college and getting a job! The first step to becoming a real estate mogul.

If you expect to make $5-10k per flip, you would probably be better served putting those accumulated dollars to retiring that student debt. You may be in grace period but unless they are federally subsidized loans, they are accumulating interest. Even with some tax advantage you're going to make a pretty good guaranteed return getting rid of those loans pronto, rather than gambling on $5-10k per flip. The people I know that flip expect to make $20k+ and personally I won't do one for less than $25k clear - too much work and tax hit for such a low amount of money. Your $10k of profit is going to be taxed right around 25%+ for your bracket (I don't know what Chicago's tax rates are), and that is a lot of "ifs" for such a small profit.

So my advice: punch the money towards the debt like a madman. Forget about flipping. The markets are already hot and prices are high. Stay at home (if you can), suffer the commute, pay the debt down in 2 years, and then go to town. 

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Skyline Properties

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