Pay Down Debt OR Invest in Real Estate?

[Eugene Rabinovich]

Hi everyone,

I plan on investing in real estate I am conflicted...

Currently I owe $31,000 in student loans, I can't remember my interest rate but it's under 6%. I also owe $10,400 on my car and I have a $700 left on my credit card. 

If I were to focus on paying down my debt then I would be able to put an extra $662 (plus my minimum payment) towards my debt payment per month. If I were to focus on my car then I would have it paid off in under 12 months and if I were to focus on my student loans then I would be able to pay it off in about 3-4 years.

So my question is Do I pay off most of my debt or do I focus on using my money for a property?

by the way, I live in an apartment and I plan on buying a fix and flip or something which I can rent out after a year or two as my first deal.

[Michael Plante]

I wouldn’t pay off a 6% loan just to turn around, jump through hoops, pay points and origination fees to get a loan to invest in real estate 

[Steve Vaughan]

Originally posted by @Eugene Rabinovich:

Hi everyone,

I plan on investing in real estate I am conflicted...

Currently I owe $31,000 in student loans, I can't remember my interest rate but it's under 6%. I also owe $10,400 on my car and I have a $700 left on my credit card. 

If I were to focus on paying down my debt then I would be able to put an extra $662 (plus my minimum payment) towards my debt payment per month. If I were to focus on my car then I would have it paid off in under 12 months and if I were to focus on my student loans then I would be able to pay it off in about 3-4 years.

So my question is Do I pay off most of my debt or do I focus on using my money for a property?

by the way, I live in an apartment and I plan on buying a fix and flip or something which I can rent out after a year or two as my first deal.

I would definitely pay off the $700 cc and the car.  There's a mindset shift that happens and we begin making daily decisions that move us closer to our goal. 

This is also an excellent time to sell a car.  If not super attached to your car, I'd consider moving down and accelerating your investment plan.

Student loans, while nobody likes or wants them hanging around,  have small tax benefits and are counted less against you when you are ready to get a mortgage.  Keep us posted! 

[Eugene Rabinovich]

@Steve Vaughan yeah, agreed. i am not too worried about my student loans since they are federal and they provide some tax benefits. As for my car, I have been going back and forth with my wife about it. I honestly love my car and my car payment is pretty low. Yes, its a great time to sell but its also a bad time to buy. I 1998 Honda Civic is selling for around $4000 in my area and thats not including maintenance and repair so in the long run its probably best to keep my car.