Pay off credit cards or buy a 3 family in July?

[Ricardo S.]

Hey BP!,

Since graduating I found myself anxious to get into real estate asap! I keep reading all these success stores and I feel I am ready but the only thing holding me back is thinking should I get out of debt first or buy a property?

Here are my finances;

Age 23. 

Career: Electrical Engineer (straight out of school) July 2015

Salary :42k + OT= ~45K 

Debts:  Chase credit card $4500 (15% interest), Citi credit card $4600(14% interest). 

Total $9,100. Monthly payment $250~

Expenses: (personal) -$100/monthly + credit cards = $350/monthly

I live with my mom and I pay some bills and "rent" in order to stay there. = $850/monthly

Total Expenses= $1200/monthly

Total Monthly income before tax: $3500

Property location: Newark NJ 

3-4 unit multifamily

Price range 50k-90k 

Loan Program FHA 203k

Rehab budget: price+ rehab= $150K (Max amount)

Estimated taxes $6500 

Estimated insurance $1200

Estimated ARV: 200k (conservative)

Estimated Rents for the neighborhood I want to invest:

1BM= $700

2BR=$1000

3BM=$1300

Downpayment: 3.5%

Credit score : 670 

After 1 year I will refinance to a conventional loan.

Even with the debt that I have. My debt to income ratio is still low enough to be approved for a FHA loan. The bills and money I pay to my mom will go away once I move out. If a property contract is accepted I will ask for a 6% seller concession for closing costs ( I will increase accepted offer price to offset the 6% concession so the seller will agree)

What are your thoughts?