[USER]

Looking for advice: so unlike many folks, realisticly we are not aiming towards Early Retirement; however, we are still hoping to try and secure our future.

We are in our late 40-s, having 4 kids, immigrated 10 years ago. We were able to buy a very basic house. For now we still have to pay 120 k (mortgage).

In addition, we owe 62 k student loans – interest free. Our savings including emergency funds just about same 60 k. We can barely save 500$ every month and we usually invest in HYSA or Vanguard.

Now the actual question: our friends and family are actively encouraging us to buy an investment property.

I am not sure as the prices in our area basically didn’t change for the last years.

Would you risk your emergency fund to invest in the down payment for another property? Or would you use it to eliminate our student loans?

Thank you for taking time and reading it!

[Scott]

Absolutely not. Rental properties require surplus cash to be successful.

Using your emergency fund is asking for trouble.

[Aaron]

Buying an investment property with your emergency fund defeats the purpose, and the fact that your friends are pushing you towards it rather than it being something you are interested in reinforces it not being a good decision.

But, 60k is a lot for an emergency fund. Do you really need that much?

Maybe reevaluate anf invest a portion of it in a broad stock market ETF.

Definitely don’t pay off the student loan early if there’s no interest on it.

That’s just giving away money.

[Christina]

This is not the market to buy an investment property. I’d look at why they are pushing so hard.

If you want to pay the minimums on the student loans and mortgage while you wait for a housing downturn, because you WANT to be a landlord, that’s fine, but don’t let other people push you toward it for their own insecurities.

[Bassel]

You’ll need emergency fund when you have the investment property to bd safe. If you have 0% loan, never prepay.

Factoring in inflation, you’re making money on it every month.

[Jeffrey]

An emergency fund is just that. Depleting that leaves you vulnerable to catastrophe when you least expect it.

Simply leave it alone and begin saving up a down payment fund for an investment property.

[Amy]

Little late start on RE IMO and I’m a firm believer in needing to have the knowledge of RE investing before taking the plunge. I studied the market for 18 months before my first purchase.

I bought 5 townhomes and a commercial building in my early 40’s. $1.5 mil in equity, without the $700k equity in my primary.

Owned both for 7-9 years. We do all of the repairs, maintenance, cleaning, leasing and managing of all properties.

If we paid a property manager or hired out due to lack of knowledge, our cash flow wouldn’t be as lucrative.

Also, deals are not abundant now and interest rates are higher. I stopped buying 4 years ago.

I personally would dollar cost average into the total market/s&p 500 50/50 with $30k and put the other $30k into a HYSA for emergencies.

[Christopher]

I would use the $500 towards investing in a Total Stock Market Index Fund within a Roth IRA. Do you have a 401k with any matching available?

Real estate investing is more complicated and risky than index funds, in my opinion.

[Author]

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