Author Topic: Payoff debt or Invest!!  (Read 1041 times)


  • 5 O'Clock Shadow
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  • Posts: 1
Payoff debt or Invest!!
« on: August 22, 2019, 11:29:41 AM »
Hey everyone -

I'd love to get some feedback and thoughts on next steps and where to go from here. 
I've been working on real estate investments for the past 10 years.  Buy & Hold and recently got into fix and flip.

Purchased home in 2016 and rehabbed.  Moved in for 2 yrs and recently sold. 
I purchased another home in 2018 and paid cash (by borrowing from friends and family).  I have paid them back (from house above) and own the home free and clear.
I've spent the last 9 months rehabbed the home and have accumulated about 60K in debt. House is worth about 370K. 

While I'd like to pay off the remaining debt, I'm thinking of pulling a HELC on primary residence to purchase a multi-family building.  By investing, $100k for a downpayment and $50k in repairs, I can purchase a building and cash flow about $1500 - $2000 per month (if bought correctly). 

There's guys like DR who suggest that we should payoff all debt first before investing in wealth.  I think there is more that one way to financial independence. 

Any feedback or thoughts would be appreicated!!


  • Walrus Stache
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  • Posts: 5574
  • Location: Mississippi
Re: Payoff debt or Invest!!
« Reply #1 on: August 22, 2019, 11:52:55 AM »
Investing first is usually preferred. Lots of variables though. What are your interest rates? Do you have access to a 401k (or equivalent)? Employer matching? HSA? etc.

Take a look at the Investment Order post.


  • Stubble
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  • Posts: 114
Re: Payoff debt or Invest!!
« Reply #2 on: August 22, 2019, 01:04:32 PM »
Maybe consider a plan like this:


  • Bristles
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  • Posts: 305
Re: Payoff debt or Invest!!
« Reply #3 on: August 23, 2019, 10:48:52 PM »
I'm sure you may be familiar with this but wouldn't you calculate your cash on cash return by taking your worst case cash flow for the year $18,000 ($1,500 x 12 months) and divide by $150,000 (total investment) which is a 12% return.

So essentially if your interest rate on your HELOC has under a 10% interest rate you're using positive leverage to create a higher expectation by borrowing that cash.  Goes without saying the higher the cash on cash return and lower the interest rate, the better.

DR's advice is targeted at an average consumer, you can grow wealth faster by using debt in your favor.
« Last Edit: August 23, 2019, 10:51:30 PM by mastrr »


Wow, a phone plan for fifteen bucks!