All Forum Posts by: Steve Walko

@Caleb Heimsoth

Round the debt up to 7% and say the RE ROI is 10-15% as many argue is feasible. I'm guessing you think that the higher ROI is not enough to justify the risk? Not even when you factor in leveraging?

FWIW, my goals are to help me save for retirement and if I'm well on my way to that, perhaps provide supplemental income.

@Thomas S.

Fair point of course. One argument in favor of paying off the debt. However, with adequate planning (i.e., factoring in a conservative cushion for repairs and vacancies), you'll generally be good, no? And again, it comes back to the ROI.

Also, in my house hacking plan, I would create a cushion and have the added benefit that if the duplex is vacant, it's just like I'm paying rent again (it won't be much more). So worst case scenario there is I'm not bringing any more money in to invest or pay down the debt. That's just for the first property. Then of course, it gets more tricky. But with conservative planning, seems like it should be good under generally expectable circumstances.

@Grant Rothenburger

The real question is what to do after the initial duplex?! Debt pay down or more investment. Decisions, decisions.

@Michael Swan

Sounds like you are crushing it and have an amazing work ethic. Great for you man!

I've been working really hard to get even to the point I'm at. My first job out of grad school, I made 37k a year and had to have a second job for half the year or so. One year, I was working 75 hours a week, and my day job was counseling in a high school - not exactly a carefree job. That was just what I need to do to have enough money to have a little bit of a cushion. Now I have had a private practice for almost 2 years. For 9 months, I was working at the high school full time while I built the practice on the side. So I have definitely hustled. It'd be hard to do too much more than now. Regardless though, my fiancé and I have the chance if we are really tight with our money to either crush the debt or start a great real estate investment portfolio. We shall see which way we go! But the initial house hack is a definite step.

@Rachel H.

Thanks for the feedback. Yeah, like I said, we live in a smallish college town. Renters would range from college students, to single professionals just starting out, to small families starting off. Just got to do a good job tenant screening.

@Brian Schmelzlen

Thanks for the reply. That really seems to be the crux of it. The logical/math side of me combined with my willingness to take risk says go for the RE, but I do have a conservative side that gets nervous that I will mess up somehow, even though I'm pretty thorough and diligent when I set my mind to something.

@Michael Swan

Well, to be honest, there is no way we are getting a second job. First of all, we are mental health therapists. We make a good hourly rate. If we really wanted, we could just take on more clients. But the quality of work would suffer and the chance of burnout would be high. I think our best bet is to just push it as far as we reasonably can without getting fried. 

Fair point which I have thought. We are going to get pre-approved tomorrow, so will know more then. However, I suspect we will qualify, and if so, I still think it comes down to a comparison of the ROI of the two scenarios which seems to favor RE investment, but with more risk.

@Michael Swan

Quite an aggressive plan! No problem. I am open to all ideas. To those who argue that if you are getting a better ROI in RE, you should do that instead of repay the debt, what do you say? What are the benefits of your approach?