This is a great question, and one that can be debated on both sides for xxx hundreds of reply's.
On one side if you have debt; is it hurting your chance and ability to get financing if using conventional terms? Is the debt so great that if an unforeseen event occurs can you carry the loss forward or will you loose it all at the first ripple on the water?
Good debt or bad debt (rich dad poor dad)
If you invest in real estate before paying off debt will you have a healthy reserve fund? Will it stress you and your relationship and life to the max?
The other side, if you leverage (not over leverage) that same capital and buy a piece of real estate at smart numbers and have a reserve, you allocate a portion of profits after all expenses and replacement reserves to paying off that debt systematically while buying additonal properties atleast when the debt is paid off you are not starting at square , and have grown your net worth.
Re-investing can be rewarding and fun, it can also be scary at times if you over leverage and jump in just to jump in. However, if you understand your risk threshold and do the risk vs benefit and see that the benefit far outweighs the risk then you may have your answer. The other applies as well with risk side.
At the end if the day you need to understand where your risk threshold is, some in this group have a very high risk threshold and make some investments that others may not. Those people tend to see large gains quicker but also open themselves to lose it just as quick.
I am more conservative when it comes to risk, leverage borrowing options, have reserves for property, buy when there is a motivated seller pass on deals that look good but do not fit investing profile. I took the path of buying real-estate conservatively and on a schedule x per year, and am incrementally growing that acquisition schedule with my end goal in mind to have 35 single family homes and a few multi family. Do I still have debit I am paying off systematically? Yes; Will I always have some debit? Yes, however most of it will be good debit that I can then use a portion of to pay off my bad debit and the things that are considered liabilities and make life fun : ) I could get to that goal quicker if I leveraged more and risked more, however I may also be in a hot seat right now like some folks are. Instead we are watching our investments grow and still collecting rent.
Hope this helps, there are some really great posts and a huge library of information on here, have fun, and operate within your risk threshold. : )
Respectfully,
Lucas
