I hate student loans. Yes, I appreciated the opportunity to attend one of the greatest schools in the world (UW) and learn from the best. I’m one of those college grads who got an awesome degree in a field I don’t work in….

In hindsight, maybe I’d say I didn’t need the degree to do what I’m doing or that I should have gone to technical school. Nah, I don’t think so.

But I do think all of us with unending student debt could take matters into our own hands – don’t wait for universal forgiveness of your student debt – and instead lump-sum pay them off this year or next using real estate.

How could you do that in real estate?

It has a few names. Fix and Flip. Renovate a home. Buy something in really bad shape, turn it into something awesome, and sell it to a ready-to-go buyer who just wants something turn-key and financeable.

Imagine with me for a minute:

You live in Grays Harbor and you see the market is nuts. Sellers are getting more money for their homes than ever before. Even the FIXERS are selling for ridiculous amounts of money – at least compared to our recent memory of the years 2010-2015.

But don’t let that stop you. The market moves together, so as turn-key property prices go up, so do fixer prices. You can – and should – still find a deal out there. And you really only need one or two, let me show you:

Let’s say you buy into the idea that you could buy cheap, fix, and sell high.

You find a home that you think – all fixed up – would sell for 200,000. A nice 3-4 bedroom, 1600+ square feet out of the flood zone.

When you’re searching for a house to buy, keep in mind the 70% ARV rule of thumb. THE 30% RULE IS RELATED TO EXPECTED PROFITS OF A FLIP. YOU SHOULD ONLY IMPROVE A PROPERTY, IN TERMS OF FUNDS INVESTED, TO 70% AFTER-REPAIR VALUE, which we have established is 200,000.

Doing so leaves 30% for closing costs to sell and profits. With this rule, you’ll net about 20% of the sale price as true profits (less taxes).

Let’s go back to those student loans. Let’s say you owe $40000. That’s the average for a student graduating with a BA. Definitely could be lots more if you got a Master’s or beyond.

Take that 200,000 house you just finished renovating. You bought it for 80 and put 60 into it for a total of 140,000. You sell it for 200,000. After closing costs, you’ve got 183,000 or so. You pay yourself back for what you put into it – 140,000 – and you just pocketed 43,000 (pre-taxes).

Not too shabby! You could – in theory, with a well-oiled process – finish that project in 3-4 months. 6 months at the most. For a first-time flipper doing the work his or herself, maybe a year.

Take the 43,000, pay off your 40k in student loans and take yourself or family on vacation. Rinse and repeat with all undesired long-term debt.

When we flipped a home in Montesano, WA, we purchased for $55,000 and sold for $152,500. We ended up just under 70% after-repair value. We made some money, saved a run-down building, and helped provide great housing for someone in need. Win-win-win. You could too.

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