In a recent YouTube video, real estate investor Marketing expert Joshua Baldovino advised graduates: student loan debt“Don’t pay off your student loans.”
I’m a real estate agent: Don’t rent an apartment if you have any of the following 10 problems
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When you save or receive a large amount of money, your first instinct may be to use it to pay off your student loans. However, since student loan debt typically has low interest rates and you may be able to defer payments based on your salary, this may not be the wisest investment.
When Baldovino married, he and his wife had a total of $80,000 in student loan debt from graduate degrees. To save money, Baldovino and his wife lived with his parents for three years, and through frugal living and no rent or mortgage payments, they managed to save him $100,000.
“But we couldn’t pay off our student loans,” he told viewers. “Instead, we bought a rental property.”
As a result, each rental property generated a positive cash flow of $400. “Instead of you taking that $100,000 and putting it toward student loans, the tenant in the rental property is paying off the mortgage, paying off the student loan, and the value of the home is increasing,” he explained. .
Factors working in Baldovino’s favor
First, let’s take a closer look at the many things that made Baldovino’s plan a success. It is premised on the recognition that only some people are in this situation. Baldovino and his wife:
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To save money, you probably had the option of living with your parents rent-free.
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I had a job that paid me enough to save money at a high rate.
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I bought investment homes and built equity in a market where real estate values were rising.
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They were able to quickly rent the house and generate cash flow.
Many factors are working in Baldovino’s favor to make that possible. That’s not to say that couples haven’t made sacrifices and saved, but not all couples are able or want to live with their parents to secure a better financial future. And even if they keep their monthly expenses low, only a small percentage of couples earn enough to steadily increase their savings after college.
Can I pay off my student loans with real estate investing?
Questions remain. If you save, inherit, or otherwise receive a large amount of cash, we asked Dr. Mark Poole, founder of Should you use it toward your student loan debt? SmarterPropertyInvestment.comwhat did he think about this wealth creation strategy?
First, Poole said, you need to be able to “earn enough to cover the minimum student loan repayments and have extra income that you can save towards a rental property.”
“You’ll need a lot of money, so you should be able to save a relatively large amount every month,” he admitted.
He noted that before a property can be rented out, it will require at least a 25% down payment, closing costs and possibly additional funds to repair or renovate the property.
“We recommend a minimum amount of $40,000 to purchase a $100,000 property and stretch that amount to match the purchase price of your chosen transaction,” Poole said.
How to start investing
If you can secure this much money, you don’t want to start investing in real estate without any knowledge or guidance. “Improve your knowledge base while saving money,” Poole advised. “Grow your knowledge through blogs, books, podcasts, and other sources.”
He also added that you need to network with real estate investors and real estate agents in the area where you want to buy property. Befriending other real estate professionals can give you the advice you need early in your career and give you an advantage in finding valuable investment properties.
“The best deals never make it to the open market,” Poole said. “The best deals come from willing sellers who may accept discounts in exchange for a quick and safe sale.”
These deals can be made through word of mouth, “money drives” (visiting the area you want to buy and looking for homes that are vacant or in poor condition), handing out flyers, and investing in direct mail campaigns. can be found.
What you need to know before investing in real estate
Investing in real estate to pay off student loan debt can be difficult for some people, even if they have the starting capital and a good credit rating that allows them to finance real estate at low interest rates. yeah.
However, if you don’t have the aptitude for taking risks, it’s best to avoid it, advises Poole. After all, there is no guarantee that your investment will do as well as his Baldovino investment. “All investments accept some level of risk in order to achieve greater returns than keeping cash in a savings account,” Poole said.
Finally, you must be willing to invest time to learn and grow your investment business. “It’s not completely passive income,” Poole said. “It takes time to find a property, manage a project, and get it ready to rent. However, recurring income can be relatively passive once earned.”
He emphasized that while REI is not a get-rich-quick scheme, it can be a route to slow and steady wealth if you are passionate about the process.
“There’s a lot to learn, and things are going to go wrong. What you need is … the resilience to keep going no matter what,” he said. “The real money in real estate investing is the long-term wealth that comes from real estate capital appreciation, which traditionally outpaces inflation.”
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