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Updated about 1 year ago,

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3
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1
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Student Loans or Buy my next property?

Gabriel Martinez
Posted

Hi all. I am a 26-year-old in the Tampa Bay area. I am unmarried, very frugal (only spend on investing, necessities/essentials, and travel), and I recently bought a house worth approx $320,000 at a 5% interest rate (with $5k in equity already) - I used an FHA loan as I plan to live there for a year, refinance into conventional, and then move on to my next investment.

For my next investment, I am unsure of which is wisest considering the following: I currently owe $85k on student loans, my salary is $85k/year (not including EOY bonus), I have approximately $52k invested (stocks, index funds and CD's), no credit card debt, and no car debt. I am thinking of either investing in a 2bd/2ba apartment/condo near tampa/st.pete's downtown and then renting the current property I reside in (in the suburbs), or investing in a townhouse/apartment in Gainesville Florida - which is a college town, and then renting it out to students at a premium. I've done the math and both seem like they are realistic investments to continue scaling and growing my portfolio.

I am concerned that with the amount I owe in student loans, I won't be able to finance my next property due to my debt-to-income ratio unless I pay a buttload off my SL debt during 2024. Should I focus on paying off my SL debt fast or on piling up cash to invest in one of the two options I provided instead? By rule of thumb paying off your debt is always the best choice, however, at an interest rate of 3.76%-5.05% for my SL's it seems like with the above rental options I can outpace that SL interest with rental properties' cash flow and pay off my SL's after having deferred them for a year.

I am also unsure if for my next investment, I should be financing via conventional 20% or through DSCR, any insights on the latter? I want to avoid putting large bulks of cash down as much as possible, but that will be tough considering how resilient Florida real estate has been lately.

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