What Is The Right Way To Buy Rental Property?

[@TheRamseyShow]

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[@NicholasBall130]

Back in 2007, during my time working in real estate, I witnessed people purchasing newly built homes from builders with the plan to sell them before the closing of escrow to another buyer for a profit. The crash hit hard and fast, and I vividly recall many of these units ending up foreclosed upon, with the builder's plastic still covering the carpets.

[@StacieBMui]

Most people find it difficult to handle a fall since they are used to bull markets, but if you know where to look and how to maneuver, you can make a size-able profit. Depending on how you intend to enter and exit, yes.

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[@Hannahbenowitz]

Keep in mind that during the 80’s people were encouraged to save due to the interest rates. Right now there’s very little incentive to save because those who are saving are watching those who are reckless taking it in. I’ve been trying to save for a home and it’s been discouraging to watch prices continue to not budge because there’s people willing to get into a mortgage where they’re paying 40% of their income. It’s insane.

[@FinnBraylon]

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[@HildaBennet]

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[@JosephineKenney]

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[@GregActonCPA]

Yea, only keeping rental properties that you can pay cash for is insane! I have 3 rental properties and I have debt on all of them! They all cash flow really well. There is a smart way to do it. Don't over leverage, but use leverage. My 3 rental properties will help me pay off my debt so much faster than if I tried to pay off my house before investing.

[@danielmccraw6866]

Your a wise man .. I listen to Dave and learn alot from him, but I'm still a savvy investor too

[@bhp000]

I know. Chandler David Smith’s channel is about that. Makes some of us confused. Lol

[@GregActonCPA]

@@bhp000 Chandler has been able to use leverage to invest in so many properties. I don't have as many as him but I'm similar to Chandler as far as leverage goes.

[@bhp000]

@@GregActonCPA Yes! I found another one of his videos. He broke it down exactly how I’ve been learning from all of these dang on books. So I’m not going to let Dave get in my head. Also learning about how to get more property after the 4th home. Portfolio lending. Thanks for the response man! I subscribed to your channel an hour ago. So I will be taking notes from you too 👑

[@GregActonCPA]

@Rich Scali I'm sure it's possible to invest if in real estate if you don't see the property often. It all depends on the amount of risk you are willing to bare. Not checking on your property often comes with risks, you just need to decide if you are willing to take those risks.

[@HLB512]

I feel like Dave's philosophy is you have to have a high paying job and save. Pay for everything in cash and invest in mutual funds. That's it.

[@jeromenolabel]

Well yeah increase your income how is that a bad thing 🤷🏾‍♂️

[@ONLY1KUDWE]

Or...lower your expenses.

[@wzeng02]

Haha - good summary. Dave advice is so outdated. His advise is great maybe 30-40 years ago. Nowadays, interest rate is zero. Why invest in real estate if you can’t leverage.

[@awakentotruthmichaelsmith4698]

You nailed it, the fact that so many listen to such simplistic and cookie cutter advice shoes the extreme lack of financial education people have

[@frozentundra7446]

@@wzeng02 "Interest rate is zero"? Where? Mars? Get real, buddy?! "Why invest in real estate if you can't leverage"? How about asking the people in Forebearance about leverage? Lastly, by using math, you cannot get Floreclosed on a property that is paid in full.

[@bradenkelly3279]

This is unreal to me. There is good debt and bad debt. If the rental payments are more than the mortgage you are winning.

[@jonforhan9196]

If the tenants decide to move out or stop paying then he will still have to pay the mortgage and could go into debt because of that but yeah if it was me I’d send it and rent it out

[@coltonbradley9293]

He also believed that then went millions in debt.

[@j.johnson7891]

Nope. Wait until you're 85 and and have enough cash to pay in full. The Tortoise method by Dave

[@coltonbradley9293]

@@j.johnson7891 doesnt have to be that slow.

[@coltonbradley9293]

What happens if you dont have someone in ur property. You still have to pay the bank. Also Dave did the exact thing and his bank got bought by a different one and he was forced to pay his debts withen 90 days and went bankrupt.

[@SteveRam]

I bought 2 houses cash so far this year 2020, and looking for a 3rd right now. But I’ll be the first to say there’s nothing wrong with buying rentals with financing as long as you do it correctly. There’s so many people that don’t do it correctly or don’t know how to do it correctly is when there are problems.

[@hurt1704]

Steve Ram what's the correct way to do it? Curious to hear more. I recently inherited a home, small mortgage on it so I'm going to double down, pay it off and buy another once it's payed for. Do you go by the 1% rule when buying rental property or what do you go by?

[@MrsThollo]

Can you elaborate more on doing it "correctly"? I have some ideas in mind for how I'd like to do it but I totally understand why Dave says to use cash for investment properties.

[@Liljohnaye]

What do u mean by doing correctly

[@NeededGR13F]

Books exist guys. Thousands of books exist.

[@ShaunSurgener]

yea i mean whichever way someone feels comfortable with. You will definitely build more wealth over time with leverage and OPM but if you want to be ultra conservative pay as much as you can in cash. At the end of the day rental properties are better than no rental properties (unless you just make a terrible purchase haha). Leverage is how i've obtained all my rentals and property flips

[@dorianmiele268]

I think you forgot to mention that if they kept their current home and rented it out, they would most likely have tenants pay off their mortgage every month and still have some cash flow left over. Debt isn’t scary if you can leverage it. The misuse and misunderstanding of debt is what hurts people 👀

[@Billybillybillyrocking]

But there is no guarantee at all they can leverage it. That is the difference.

[@RCJH2022]

@@Billybillybillyrocking NAH.. You want to leverage that thing. The real difference is what he touched on **You want to chose the house the house should not choose you** THAT is the difference.

[@nolanmendoza43]

Yeah, this is horrible advise IMO

[@No_One1_Special]

The problem, though, is if you're gonna use financial leverage, the unleveraged return must be LESS than the cost of borrowing. This is because overall cap rates are basically a weighted average between the equity and debt components. So, being able to leverage becomes much harder when mortgage rates are high. To use an example, if the cost of borrowing was, say 4.5% (early 2022 rates) at 75% loan to value, and the unleveraged return was, say, 9% overall cap rate, then the equity cap rate would be 18.2%. Personally, I would take 18.2% over 9% any day.

[@stevemyopinion423]

covid happen and they dont pay rent for 2 years and you cant kick them out.

[@brucehicks5817]

Glad I came to the comment section and see so many people disagreeing. I thought this advice was misguided.

[@chosen1slay59]

Very misguided, he could’ve paid the mortgage for his next house based off his profit on the rental

[@vnansen]

agree

[@curiouslass4280]

I do have to say that there is so much peace in knowing you have nothing to owe a bank. When things get bad and you outright own everything..there is complete peace knowing the banks can’t come after you.

[@michaelsmith9595]

You never truly own real estate. You just rent it from the government.

[@zachrat9083]

@@michaelsmith9595 That is why you need to invest in boobytraps for your yard in case the ATF decide to put you in a self defense situation 😎👌

[@tremaynetyler947]

Uhh... I'm totally confused...... Since when do savvy investors say you can only buy an investment property with cash???? My friend has a mortgage on 10 properties and makes 17% on each property after mortgage payments.

[@PHuongman416]

I've notice daves advice sucks a lot of the time beside paying debt lol

[@clapzy2943]

@@PHuongman416 it seems to be working for him

[@xaldath4265]

@@clapzy2943 Dave didn't make his fortune investing in mutual funds, he made his fortune selling advice to people who don't know how or aren't confident enough to make their own personal financial decisions. The investing advice isn't "wrong"; it's slow, steady, and not optimized by the numbers, which is leaps and bounds ahead of ignoring personal financial budgets and goal setting.

[@clapzy2943]

@@xaldath4265 his advice is good for the average person living a normal life but yeah I agree his investing is the turtle strategy. But still don't want to over leverage

[@xaldath4265]

I agree, his advice is a step up for the average person because the average person has very little idea how to properly manage money with the long term in mind. For people who already have a solid foundation, it's very possible his advice actually slows down and limits their potential.

[@anthonykence9954]

Buying rental property in cash is rare use the banks money to do it.And become wealthy dave is not realistic , he is in his own world. Let tenents pay off mortgage. There is nothing wrong with loans to buy real property.

[@jeanlenor1858]

First rule new real estate investors should follow is Do not take your real estate wealth building advice from Dave Ramsey!!! Neglect the first rule, your dream can be crushed by his bad advices.

[@ZachPaddock]

While both ways have their benefits, when you let the tenants pay your mortgage you're playing with more risk. When you own the property outright it's not nearly as big of a deal if your tenant stops paying or another catastrophe happens. Youre also chipping away your profit by paying interest and PMI if you have it. Personally, I like to pay cash on my investments, but if people like to go the debt route I recommend only paying off one at a time. (Use the full profit of the other properties to pay off the next rental sooner)

[@jeanlenor1858]

@@ZachPaddock Do you know something called "leverage"? Leverage is the reason why you shouldn't pay cash.

[@reggieoverton121]

If having house rentals is a business then it should work just like any other business. You should be able to rely on your tenants to pay the mortgage. However you should not look at the business to be cash flow positive until the mortgage is paid off. Thank me later!

[@ZachPaddock]

@@jeanlenor1858 yeah I'm aware of leveraging. But as I said, leveraging debt is accepting more risk. It could pay off to leverage, but it could also hurt you and your family, and essentially makes you an employee of the bank until it's paid off. Dave's way, which is focused around the ideas presented in the Bible, is about mitigating risk and stress and allowing you and your family to be free. Being debt free is not over-rated. It's awesome; so this is why I use the cash method.

[@Eyore82]

I bought my (next door) rental house, with cash. I didn't (and still don't) want to be a landlord. I only bought it to control who my neighbors are.

[@ShaunSurgener]

haha well that's definitely a legit reason!!! being a landlord is definitely tough. I was a landlord for 20 properties that I owned and its a lot of work especially since it was low income.

[@calidawl]

😂

[@user-cv3gd2wr5q]

Eeyore wait, but people in the comments said you can’t buy a house for cash...hmmm.

[@Eyore82]

@@user-cv3gd2wr5q Yeah i saw that.. Funny thing is, I specifically remember writing the check, and cringing when I saw all the zeros disappear from my bank account.

[@11jcarter]

I hope you did that genuinely because we were denied a lot of homes because of that action. All my parents were trying to do was escape from West Baltimore and give their children an opportunity to survive and not be shot at or targeted. They wanted to live in a Jewish neighborhood and had the money and they bought the homes to keep us from living there. Yes we are black and we didn’t want trouble, just freedom and it turned out well between me and my brother we have 4 degrees and thriving in our careers so all we wanted was a chance at wealth.

[@hotandsour100]

Dave's view of not wanting to use leverage to buy property is silly, IMO. The power of leverage is incredible and a big reason why real estate is an attractive investment option

[@tonypeters3320]

Exactly!

[@ryanthepianoman27]

whats your net worth and whats Daves? your probably isnt even a 10th or even a hundredth of his...

[@Mustafakhan-qg6nv]

I mean it really depends on what you want to do. I would rather have 10 paid off rental properties than 20 leveraged rental properties because it’s give you peace of mind.

[@hotandsour100]

@@Mustafakhan-qg6nv ya, that's stupid

[@Mustafakhan-qg6nv]

@@hotandsour100having paid off rental properties is not stupid? Im assuming that’s what you meant but please correct me if I’m mistaken.

[@chrisstevens3567]

By this logic. I won’t be making any investments in real estate until I’m about 45...leverage increases returns I thought.

[@blakerich5804]

Don’t forget that house prices rise too. So that 250k house today will be 500k by the time you even have 250k to have bought the house cash lol

[@GamerUprise]

You do not get wealthy by buying real-estate in cash! One of the HUGE attractions in real-estate is the power of leverage.

[@HamiltonRb]

Exactly With interest rates this low, and vacancy rates so high, it makes far more sense to leverage the property responsibly. You can write off the interest paid on the loan, and most younger people would never have the cash to buy in larger cities, and their salaries are not rising at the same rate that homes are appreciating.

[@ShaunSurgener]

yes absolutely!! leverage is how you build wealth. I always look at it as Dave teaches financial security. How to find the most secure way of building money.. which is great for many as most struggle with handling money. But for those wanting to achieve wealth leverage is the only way

[@jayc4715]

You can

[@thomasminenno1709]

How are people supposed to save 200k, 300k, 400k to buy a house in all cash???? I would have to save for a minimum 5 years... meanwhile I could’ve bought a house, put down 3.5%, gotten rid of the PMI, seen appreciation and cash flowed all within those 5 years I would’ve waited to buy in cash. I say leverage money to a point where your comfortable then start paying them down.

[@oo7cs]

In California you need 200k for a fking down payment

[@GhostruckerX]

Well 20% for the down payment is the way to go so you don't have to pay mortgage insurance. It eats away your monthly cash flow.

[@Sebastienleblanc7]

You can safe 300k in 5 years? Kudos to you!

[@sheapublishing]

who the heck has cash to buy investment properties? I usually do a downpayment of at least 30 to 40%

[@ShaunSurgener]

i don't even do 30-40... 20-30 is always great. Yea it takes forever to save up to buy a house in cash. Of course I understand dave's teaching people a way to where it's literally impossible to fail.

[@ShaunSurgener]

@NoNonsensePC yea he's definitely teaching a way that is basically fail proof. You definitely want to make sure that you have a good amount behind you as well.. Ive purchased over 20 rental properties and at some point the cashflow kind of supports everything.. having just one or two is tough because usually you aren't making much money off them. Takes quite a few to get that cashflow up. Hope you crush it and let me know how i can help in your journey

[@sheapublishing]

@NoNonsensePC I have been doing this for a long time and 30% is the standard for investment loans.. I don't worry about an AC doing down brother

[@kowzter]

The majority don’t have the cash for it and will finance , the minority who do have the cash for it understand that buying a house in cash is ridiculous when you could put 20 percent down and take the other 80 percent and either invest it in the market or go grab 4 more rentals just like the first one. Neither the uneducated or the educated are buying rentals in cash , just the people half way in half way out of financial literacy would do this.

[@KostasLazanas]

I just financed a house at 4.5% with 20% down. If you don’t have cash use someone else’s.

[@astrosntexans]

and now its illegal to evict people that dont pay...hmm wonder what could possibly go wrong..

[@KostasLazanas]

Jesse Stephenson background checks credit scores and income statements. 😉😉

[@Mcdowells]

@@KostasLazanas bingo it's just that easy.

[@thetraveler1182]

@@Mcdowells Exactly! You have to have a vetting process.

[@amadoacosta4594]

@@astrosntexans wouldn’t that mean people can just live of “free”

[@orangesun3030]

I saved up enough to buy my first income producing property with cash. Thanks Dave.

[@alberts2208]

I started 30 years ago and took on debt to buy real estate. Did not overleverage but put about 20% down and sometimes less. It worked out fine and now they are unencumbered. Ive got several. So I'm not sure how Dave did it paying all cash.

[@vnansen]

Just to trap ammutures and make them believe that he looks geniune and hopeful he might get a lead from the same person.

[@armandoduran1798]

dude is putting his fears on everyone he talks to....smh

[@maxthefrenchie-productions]

I leveraged my first home in 2019 to rent it out and put a down on my second home. Best decision I ever made. Yes we need to be smart about it and give ourselves some cushion if things get bad. Nothing wrong with leveraging your home and than to rent it out.

[@ChrisParrishOutdoors]

Dave gave this man terrible advice. I could name off the top of my head a dozen real estate millionaires that would agree.

[@vasaguy7624]

Dave acts like he got rich by making $50,000 a year and saving it. Dave got rich because of his multi million dollar business. Good debt is a thing.

[@hotandsour100]

@@vasaguy7624 yup

[@j.johnson7891]

All these finance moguls tell you maybe only 10% about what they actually know. The rest is just fluff to keep you chasing them

[@Salute2TheTroops]

He is wrong and lost the understanding of leverage

[@ONLY1KUDWE]

@@vasaguy7624 And you're acting like his business just boomed overnight.

[@FakeAre]

bro stated the most obvious facts i don't know why i watched this video

[@Marlen-CruzCommercial_2023]

Or get a renter to pay that mortgage while the house value increases year to year and in a couple of years sell and cash out.

[@alineuwiragiye7704]

Dave i have 40,000 of dollar in student loans and make 35, 000 a year. i regret the day i sign those paper. but i will not loss hope that i can pay that off. i just wish i found you sooner.

[@Jfresh55]

aline uwiragiye not to be mean but your grammar is very bad for having a degree. That's even more worrisome.

[@alineuwiragiye7704]

@@Jfresh55 look grammar that not mean that you are smart but it just mean that I know how to make good decision. i come to the USA at the age of 16 and I am from Rwanda . no one in my family have every been to college. my degrees is Information technology. i code that what i know. I am the first person to speak and write in English. when i was in college i translate everything in french and then translate it all back in english. by the way i am only 22 year old. i have all my life to learn and speak english. go to an other country and let me know what you can do with you life.

[@marie-everaymond1805]

aline uwiragiye je déteste les gens qui jugent. Tu pourrais lui demander combien de langue il parle!! Ignore les imbeciles bravo pour ce que tu as accomplis. Tu es jeune. Tu as plein de temps devant toi ❤️

[@lady56725]

Josh H you’re so dumb and forever be.

[@lady56725]

aline uwiragiye you don’t have to give this idiot @Josh H a single explanation because only an uneducated person will write something like that.

[@murph1329]

My wife started in rentals now she's been selling real estate for 8 years. She manages the properties we rent out, we will have a mortgage on those rentals. We make roughly $400 a month on each property we rent out, 15-year fixed. Our primary is also a 15-year fixed. We aren't getting rich off the rentals but we make a little on the side and it's free equity. Having a mortgage on the house you rent can be done but it has to be done in a smart way and it helps if the person managing it is in the business. My retirement goes into the market, her's goes into real estate.

[@Powertourg]

Sounds like you're not doing something right. Either that or you need to sell them and buy commercial property that will make you rich

[@ryangoodale4454]

Dumb. Debt on a rental property is “good” debt. You use leverage to increase your return on investment. Dave is wrong

[@nextinvest8346]

Very true

[@MrInfrared90s]

Leverage what? More debt?

[@Tkenny35]

@@MrInfrared90s explanation of good debt and how I am currently using Leverage: I build a house and it cost me 100k. I pay for it all in cash. In order for me to double my money I have to sell it for 200k. The market says houses sell for around 140k in the area. How leverage gets involved: I get a loan for 80k and put 20k down. In order for me to double my money I have to sell it for 140k. I made the same 40k profit but instead of putting 100k all in I just put 20k in. leverage. Plus, I can build 5 houses if I had a loan. volume. Leverage. Plus I have more liquid cash instead of parking all my money in 1 house for 100k. Its all about personality and what you feel comfortable doing. Dave likes minimal risk and no debt so He pays all cash which is fine. I like to use as little as money as possible so I can have more money in the bank to do other things.

[@GregActonCPA]

Amen to that! I have 3 rental properties and they all have debt on them, but the cash flow is strong enough that I am paying off my debt so much faster than if I was trying to buy properties by cash only.

[@oya1277]

I have a rental property, that I've had for 12 years, I owe 100 k on it , I have $110 k cash and 50k in retirement should I payoff the rental property or buy another property in full

[@KrystalToddCPA]

If they are able to sell it and purchase another property they can do a “1031 exchange” which defers ALL taxes from the sale of the property. If he gets a bigger multifamily he can still fit his family in it and then have a tenant paying their mortgage.

[@mannythompson8800]

They don't need to exchange it since they have been living in it. No depreciation recapture or capital gains tax due on sale to my knowledge...

[@KrystalToddCPA]

@@mannythompson8800 Yes they won't have to exchange but depending on how large the gain is would determine if they have to pay taxes or not. With the 1031 there is no dollar limit on the tax exemption. Real estate offers so many ways to avoid taxes it's really awesome!

[@mannythompson8800]

@@KrystalToddCPA you're right! I looked into it after I posted to ur comment (I should've double checked before I posted in the 1st place lol). & real estate is where it's at!!!

[@KrystalToddCPA]

@@mannythompson8800 LOL! Yes it's such a great money making tool!

[@ethangamer3173]

Your so smart !!!

[@SILLYHLLBLLY]

I feel like dave needs to do a current version of purchasing a rental property. 2024 edition. Houses are no longer eighty thousand for a three bedroom. People cannot afford to save cash for houses that are so expensive to avoid debt. The understanding is there, However it's Unrealistic

[@karlos475]

I just want to ask, how many people can actually buy a first rental property with cash?!

[@RecruitingJunkie]

None

[@jensbiederstaedt8022]

Yeah, Dave lives on a different planet already. I have 2 rentals, and we do the "almost Ramsey approach". 1.Have a big down payment, 2. pay them off with lump sums quickly, 3 buy more. You know if I make 100 mio a year, 50 mio taxes don bother me, (that's probably not true) but I can live of a 100 mio. if I make 60k per year, 20k taxes are a burden.

[@youtubescroller350]

Can you afford the monthly if nobody pays rent? If the answer is yes then do it

[@thoryan3057]

I love this advice. That's exactly what I plan to do if I ever buy a bigger home in the future. Knowing how stressful moving is and how sensitive the closing process is, simultantenous buying and selling is not realistic, especially for someone like me with how stressed I'll get. So my plan is to just hold onto my current property if I buy a new one. The great thing about needing to qualify for a mortgage is that it will FORCE you to be able to afford both properties without already receiving rent (mainly if you're currently living in your home as a primary residence). You won't be in the ideal financial situation but you will be able to get by assuming you do qualify for the mortgage while having that extra property.

[@sarabernard1979]

I hope this guy didn't listen to Dave. You're asking: Can I afford to keep this asset (my rental property)? When you should be asking: Can I afford to splurge on this expense (a second home)?

[@SD-gy4eu]

I own 3 homes all with less than 10% down in all of them. However 2 are multi family’s that make me $6,000 a month after my mortgage and taxes are paid. I imagine David wouldn’t like that strategy, but I get to keep cash, I make $6,000 a month. And I can keep buying

[@nerad1994]

What state?

[@sergiovaldovinos8417]

More info please. U r getting good return on investment.

[@GhostruckerX]

@S D For less then 20% down wouldn't you have to pay mortgage insurance too? Wouldn't that bite into the cash flow?

[@AllenTmacDaniel-u3g]

So glad I found your channel, your videos are always so helpful.

[@kaganatkins3296]

Don’t listen to boomers, they had an entire different market way way back then, and his recent investing will be based on money he built back then. I agree with his choose your rental property though, and don’t just turn your 1st house into rental by default. Paying cash is not possible, he may as well say first become a millionaire then invest.

[@Presidentialrun2028]

If the only bill you have is a mortgage then i think getting a rental property with debt is ok. keep your debt to zero and along with the renter paying the mortgage you also pay on the mortgage, because you have no other debt, then its fine.

[@eltasman7135]

What I was thinking too rent the property let them pay the monthly rent while I pay the principal balance of the mortgage

[@georgewagner7787]

But factor in major repairs

[@eugeneabreut5208]

I don’t really agree with this. Keep the property and forget about the mortgage because that’s what tenets are for! With a duplex if you 2 renting and one leaves then the solo renter can at least pay most the mortgage and when there 2 renters they are literally paying for everything maintenance,taxes, mortgage.

[@jasonjosephlee]

Leveraging debt is a great strategy if you know what you're doing. I have leveraged a lot of debt and own over 100 units in California. The way properties appreciate in CA, my portfolio will only get bigger with time. I recommend people to start with a duplex and trade up as fast as they can, adding value as they get more properties.

[@henrywashington5038]

I not sure if Dave advice is for middle to low class consumers. Debt isn’t always bad if you can leverage it

[@michaelwagner5453]

Work, save, pay in cash. Let the banker get a job like the rest of us! Peace of mind owning it ALL outright. Thank GOD.

[@WhatTheBrickTV]

Wrong. Leverage a 30 year loan on a duplex or larger and use the equity to finance another rental and so on and so fourth. Dave been eatin too many rice and beans.

[@kevinursuchadisease]

The way he approaches debt is crazy. Not all debt is the same. There’s always more risk associated with leveraging investments. But the ROI on a property purchased in cash is crazy low.

[@levedia]

Kiyosaki has it right. Lol

[@sumobowler3790]

@@kevinursuchadisease not all debt is the same but all debt is bad, just varying degrees of bad. if the ROI on a paid for property is crazy low, how did (still does by the way) Dave make so much money from paid for real estate?

[@kevinursuchadisease]

@@sumobowler3790 "bad" is not the same thing as "risky". if i take out a 0% interest loan on something that is a very small percentage of my income and i have the cash to pay it off whenever I need to, then that is technically riskier than paying cash for it. However, my money is earning say 5% on another investment while I am paying on a 0% loan. I am earning more money by taking on that very small amount of risk. I wouldn't consider that "bad." Dave made most of his money in real estate after the 2008 financial crisis by buying real estate extremely cheap. Also, paying cash for real estate is easily viable for people like Dave who are worth 10's if not 100's of millions. You can make a lot of money on paid-for real estate (especially when you have as much money as Dave and can buy dozens of properties with cash), but it is not nearly as profitable as leveraging your investments. Less risky, sure. But safer investments are rarely (if ever) more profitable.

[@ilikethatboulder.thatisani5496]

Lol you do know that the usual mortgage for apartment bulidings is 20 years or less right? Bank doesn't wanna see no 30 year loan.

[@gary-gilbert]

What's the best way to manage rental property repairs. Dealing with appliance break downs, plumbing problems etc. If your are not a Handy person yourself?

[@Traps_Trades]

I love Dave Ramsey! He helped motivate me with 2 things! 1. To start my journey becoming debt free and paying off $26,000 in student loan debt. 2. Starting my own KZbin channel covering my investing journey as a long term investor! Thanks Dave!

[@XAmericanRenegadeX]

I like second opinions 🤣 this guy is living proof that not all financial advisors give good advice lol.

[@eduardocod8924]

Facts

[@Brudovo3434]

It happened to Dave so it will happen to everyone, this is his logic? Unreal

[@MoD3RnHD]

"Buy them in cash" *Nobody ever buys a house

[@sierraocon3980]

Modern no one ever gets foreclosed on and ruins their lives

[@codythrive5154]

Modern lol yeah this is bad advice.

[@MoD3RnHD]

@@sierraocon3980 if you get foreclosed on you are an idiot

[@sierraocon3980]

Modern lots of idiots out there

[@bobsmith2943]

We used cash only - worked out great.

[@escherita]

Good wisdom and answers a lot of questions that have been plaguing me lately.

[@whatta7793]

5-20% Down on a 30 Year Term.

[@ShaunSurgener]

heck yes!! the more you can borrow the better.. just got to make sure that you can back up a decent amount of payments in case something goes down. But leverage has allowed me to purchase 20 rentals

[@whatta7793]

@@ShaunSurgener hopefully I can manage to follow in your foot steps soon.

[@ShaunSurgener]

Whatta Vlog you will man!! It was just crazy sacrifice for me in the beginning- eating dirt and saving money and learning in the process

[@whatta7793]

@@sierraocon3980 yeah, because in 20 years, ideally, that $2000/month mortgage payment isn't going to be as much due to inflation, and rent income will be through the roof, due to inflation.

[@user-cv3gd2wr5q]

lol good luck...enjoy. Much love from me to you.

[@baindon719]

Cash may be the safest way but it is not the only way people invest in property and become successful at it

[@wheatfieldproductions1564]

I live in Toronto, houses here are unreachable. Everything is over the million. I can only buy a house for investment, thinking to buy one in Florida but not cash. I think the same rule does not apply for everybody, because if I dont have the money to buy a property giving 100 % of the price, I think is a good idea to finance a house and rent it. I don't see other way around.

[@WideAwakeHuman]

He says he was stupid and lost it all... The type of loans he was taking out were the stupid part, not the idea of using financing. Don't take out loans that can be called in at the drop of a hat and you'll be fine.

[@bobsmith2943]

We used cash only and it worked great. No debt - 22 units.

[@bobsmith2943]

@CJ Goole We had nothing to start. We started a small business and used proceeds to purchase affordable houses that needed some work. One at a time for cash. We net 9K a month and have for 5 years and been saving it for another 10 doors when the time is right. We've been working corporate jobs as well and now about to slow down a bit and semi-retire and concentrate on buying the next 10 units over the next few years as well as do some consulting work for people we want to work with instead of "have to" work with.

[@pwells10]

I've only regretted selling property

[@sebastianosorio3447]

I’m 21 and I just bought my first 3 family home, the house is cash flowing about 1,500 per month while the tenants pay for my mortgage. As a 21 yr old this don’t make sense and I don’t think I would change my mind. Let’s see where I am in 10 years

[@kenroylarmond7736]

I would only advise people to pay the property they're going to live in, in cash. Rentals should be bought with 30 year mortgages.

[@brianrinz5586]

You'll miss out on buying any house for most people who arent millionaires if you save all that cash. You are spending more by saving all that cash at the end of the day. I like Dave's 15 year fixed advice much better.

[@Billybillybillyrocking]

This is for a rental property. Very different terms and idea he is talking about. Very different. 15 yr fixed mortgage is different than a rental property bro lol

[@brianrinz5586]

@@Billybillybillyrocking cool bro lol

[@georgewagner7787]

15 year fixed has the best interest rate for rental property too

[@ashastings92]

I wish Dave would explain why he is okay with people taking out a loan for their home, but he's not okay with people taking out a home for a rental home. If you can comfortably cash flow a rental property after putting 20% down, then why wouldn't you. He insists on 20% down payment for your home, so why not for a rental property. A loan is a loan, a debt is a debt. Why does it matter if you live in it or not?

[@azil0324]

Exactly, I put 20% down on a rental property. Had to look at properties 140 mi away, but still worth it. Payment is $606/mo (including ins and taxes) and rents for $1250/mo. I apply the profit to the principle and will pay it off in less than 5 yrs compared to the 30 yr term. Just in time for oldest kid to start college.

[@bobsmith2943]

It's absolutely amazing to use cash to buy rental property. The leverage it creates is peaceful. We don't have to rent to people we don't want to rent to. We can comfortably make repairs and don't have to constantly raise rents to keep up. We can also afford to do things for our tenants/customers. We have always bought all our tenants a full Thanksgiving meal each year, and we send a week free pass to the local amusement park each summer and spring break. We've also offered to send any child listed on the lease to free Karate classes. We hope to someday offer scholarships to our tenants children to the local community college. Using cash changes everything. Just our experience.

[@sumobowler3790]

he has explained before. i will try to summarize. he is ok with a mortgage for a primary residence under certain conditions. no other debt, at least 20% down to avoid PMI, monthly mortgage payment that is no more than 1/4 of your take monthly home pay, and at most a 15 year mortgage FIXED RATE, and plan to pay it off ASAP. paying cash for a home is impractical for most people. that is why, although he doesn't recommend getting a mortgage, he understands a mortgage with the conditions i mentioned above, is not awful debt, like all other debt is. also, it is dangerous to be homeless. it is inconvenient to not have a car, but not life threatening. another reason is real estate generally goes up in value, cars etc... generally do down in value. so why not a mortgage for a rental? because it is an unnecessary risk which can put your other assets in danger. when you have a mortgage and no tenants the mortgage still has to be paid. when you have a mortgage and no tenants you are more likely to rent to "any warm body" than a good reliable trustworthy tenant. you asked "if you can comfortably cash flow a rental property..." even before the pandemic you knew it is impossible to predict a comfortable cash flow through the length of a mortgage. in fact, i bet you knew it is almost impossible to always have paying tenants through the length of a mortgage. and as i mentioned, the mortgage still has to be paid. there is a reason, several reasons actually, Dave teaches Financial Peace, and not merely personal finance

[@duneme]

I don’t have enough years in my life to buy them for cash (and I ain’t that old!) I do agree with putting at least 25% Down (which Banks Require for Rentals!) But, let your Renter make part of those Rental Mortgage Payments for you! Be sure to buy when the market is down or at least lower! KNOW IF YOU ARE A RENTER!!! Not everyone likes it as they get into it! It’s ok if you don’t but, sell at the right time! Be very careful how you exit! Don’t over leverage yourself! Pay all you bring in plus a little! Until your paid off you don’t get to blow any of this money! Yes, I’m weird ! I like to Rent! There are actually very few of us out there!

[@brewdog8568]

15% for income from a bank 👀

[@kowzter]

This is a bad call on daves part , you already have a tenant up stairs and you can get another tenant down stairs when you move out. Probably not hard for that to become a profitable rental for you even with the debt on it. You also don’t want to go through the process of selling that home because you will have to lose money on a real estate agent. If you have terrible credit already and the interest rate is bad on this then of course sell it if I cant make money but broadly saying not to keep it at all because of debt on it is ridiculous.

[@moneyisfreedom4635]

Buying property at market value gives a smaller return then lots of REITs i noticed. But on the other hand investing in REITs you dont need to worry about calls that something broke, missing payments, property damage, looking for new renters and stuff so im more into investing into different REITs. A good diversity at no hassle and have a similar return in dividends...

[@ONLY1KUDWE]

I love how many people know what Dave's advice is or will be, but still come here to listen, knowing they will disagree with his approach. You honestly have to be a fool not to think owning your stuff outright is the better alternative.

[@shawnhilliard]

If you're investing in real estate, owning a property outright has the benefit of costing you zero interest. However, the equity you have in your home is dead money that could be used to finance additional properties that generate a higher cash flow than the interest you'd pay on the mortgage(s).

[@B-DINO]

It's unrealistic to the vast majority

[@Papasquatch73]

Pretty sure he doesn’t understand The difference between an asset and liability. The house I own free and clear and live in is not an asset. It does not produce cash flow. I do believe keep down personal debt. But having good asset debt that cash flows is wise.

[@AngelFlores-xj5rj]

I feel like Ramsey sets these impossible ass ways to do things

[@armandoweckmann5699]

My situation is different. I paid off my mortgage in 2020. My parents own property out of the country and live there and here in the states hybrid. I am not married. Therefore, I can rent out my home for $2,000 monthly while living at my parents' place since their living arrangements are to live hybrid. So far, it's working out for me. I don't mind living with them a few months out of the year. If i was married, yeah, no. Lol. Hopefully, this arrangement will help me save cash for my first rental. So far, i have $80,000 and have $320,000 left to save with these current prices. I plan to buy similar real estate in good neighborhoods. I refuse to buy property in lower end neighborhoods! Paying cash is NOT easy. 😮

[@dragonball-dragonatoraa8395]

How do we buy it cash thats the question

[@markweston3345]

With interest rates so low right now the banks are basically giving away free money. I don’t see the issue with borrowing money to buy real estate at the moment. Personally I’d prefer to have my money in the deposit on a rental property then in cash in the bank.

[@paulleonardo4906]

Its impossible to save cash faster than properties appreciate in some markets. The earlier you get into an investment the better.

[@JossinJax]

I dunno…if you can get good cash flow on good property in a good market with equity building projects surrounding it, cash or not, assuming normal depreciation, the prop will pay for itself.

[@markweston3345]

I just did a calculation. Dave Ramsey is 59 years old. He was in his 20s from the years 1981 to 1991. Interest rates in this decade ranged from 18% to 10%. That’s why he went broke.

[@nnekaoa9234]

He over leveraged himself with flex loans

[@Powertourg]

Exactly! Thank you! Plus, he would take out 30-Day loans. WHO DOES THAT?! No wonder he has PTSD

[@xaldath4265]

Exactly. Ramsey knows he messed up, but it wasn't because he had debt...it was because he had *too much* debt. If he had 3m in value with 1.5m in debt, we'd probably have a very different storyline and no "Total Money Makeover". This man leaned on one extreme, got burned, and started claiming the only logical way is to go to the other extreme. O.o

[@srabes8742]

Dave, you always help me to practice patience. Thank you.

[@ShaunSurgener]

patience is definitely the name of the game. wealth building takes time-- that compound interest. Once you get the ball rolling it catapults. Took me quite a few years to get started in real estate but now i have rental properties, have flipped properties, etc.. lets crush this year

[@JoshAllen702]

I love Dave's advice on basic money mgmt and debt reduction. But his ideology is just one of many. You can't let him scare you off from using debt, ESPECIALLY when it comes to real estate. Consumer debt, yes not good, but selling a cash flowing rental property because it has a mortgage is just silly. I'm a real estate investor and I meet and talk with investors & developers light-years ahead of me and 95% of them all used OPM (other ppl money) to build their portfolios. Banks, hard money lenders, etc. It's not scary if you take the time to LEARN. Go watch some bigger pockets podcasts and just go read their forums. You'll find tons of info and learn a whole lot and meet a lot of ppl that'll love to teach you and answer questions.

[@ShaunSurgener]

exactly! I always tell people is the king of the first step: money management (getting out of debt and personal money management).. but then there's step 2) increasing income 3) investing. Investing to build wealth requires leverage. That's how you get ahead. Borrow at 3% and get 10%+ in return. If you can do that.. sign me up for millions in loans!

[@Thegoodlife4me]

Shaun Surgener I like what your saying. I am about to close on my first rental property and I am stoked ! Your ideology supports mines and I don’t hear it enough because most of my circle dont get it and are fearful. I am not. I’ve calculated the numbers and it makes perfect sense!

[@bobsmith2943]

It doesn't require debt. It absolutely doesn't.

[@JoshAllen702]

@@bobsmith2943 of course it doesn't. I never said that it did. I know investors who only want to own their rentals free and clear and they buy their properties with cash. But that's not most ppl, very few in fact. And the ones I know that buy with cash, they started by using debt (hard money) to fix and flip. Once they got to a point they had a large enough cash position, that's when they started operating free and clear. But I don't know anyone who came in the game with a large enough cash position to not use debt.

[@B-DINO]

​@@bobsmith2943 for any regular person making an average wage then it almost certainly requires debt starting off...after that initial debt (if you managed your money properly) then it no longer requires debt. In the beginning for the large majority of people it absolutely requires debt though. Debt doesn't necessarily have to equate to risk though.

[@samwaldfogel2246]

Nah, nothing wrong with having rental properties with a loan on them. We all cant just run out and buy shit with cash Dave. All his advice is for people that have a bunch of money, like him. Easier said than done when you already loaded! Get real.

[@TalibAlAminDhakir]

"...invest thy treasure with greatest caution that it be not lost. Usurious rates of return are deceitful sirens that sing but to lure the unwary upon the rocks of loss and remorse." -Arkad

[@mikehoskins2590]

Hi Dave, I agree with your philosophy 100%. I have a home in Washington which they are responsible for everything and I only visit twice a year since I live in Thailand. I also have a rental in Thailand which the renters are more of a pain. Does it make sense to use an agency. Retired and wondering about just selling it and putting it into s&p 500

[@cpowerdesign]

The way I see it is most people that want to get into real estate aren't able to according to Dave if they aren't already financially stable. Makes sense, you'll just stay broke and the rich will get richer...

[@burbankcalifornia7178]

Are you looking for a place to spend a holiday with your family or spouse, then Burbank hotel is the best place to be, with comfortable atmosphere and security.

[@Dantai]

Where are you buying properties in cash, like saving 200-300k or more is hard, and property prices are nuts now,.

[@fintech4220]

Invest in real estate with 100% cash? Better off in stock market then. Biggest gains in real estate are due to leverage

[@sumobowler3790]

biggest losses in real estate are due to leverage

[@tampaed]

Long time listener to Dave and I apply his principles to some parts of my financial life. In this instance, If I would have listened to him I would have lost out on some of my best investment properties that have appreciated well over $1 million dollars.

[@joseromero81]

So cash for real estate investing? That's pretty extreme? Most folks get loans (mortgages)

[@astrosntexans]

in some markets you can buy a home in a blue collar neighborhood for 35-50k and it will rent for 750 to 900 a month..its not impossible to save up 35k.

[@damiendewitt6947]

Where are these markets at?

[@pseudonymshqipe854]

@@damiendewitt6947 Not in NJ lol

[@rma7921]

Don't become a landlord by default??? That's a golden egg that landed in your lap?! I'm not sure he's looking out for this guy's wealth🤔

[@nasar2338]

He's talking from his experience and how debt was nightmare for him on his 20s. Well that's y u start small and mistakes is small to pay off. There's good and bad debt and all depends on your experience and how you manage

[@sunkneee]

Worst advice possible. He's telling you to just sell off your main asset, thus will no longer have any passive income. Then, he says to only buy if you pay All of it in cash. 95% don't have the means to buy a 500k-700k house in cash, that's insane to assume that.

[@choreomaniac]

Then buy a 150k property with cash. Then in a housing downturn you won’t lose everything.

[@lIlIllll1]

@@choreomaniac Still 95% of people cant afford a $150k house in cash LOL. You must have not struggled good for you!

[@choreomaniac]

@@lIlIllll1 you must not have experienced economic stress. It’s 100 times harder to endure a recession, job loss or medical issue if you are half a million in debt on an underwater property rather than owning to o it right. Also, there are vacancy issues and some people find they are not cut out to be landlords. Better to figure that out in a 100k property than a 700k one.

[@dropoutandretireearly1781]

BUT DAVE !!!!! What if you can payoff the rental house like any other debt that you payoff ? Once I made up my mind to kill the mortgages I killed 5 mortgages on 5 houses in 8 short years. Thanks for the teachings over the years though.

[@xfhnhhgjbvcfg]

I have my house payed off and torn about taking out a mortgage for a rental property, I'm afraid but think I could pay off the rental fairly quickly without even renting it

[@alanswanson5642]

This is the one thing i disagree with dave on. As long as the roi is good enough it is okay to mortgage rental property. They build wealth by using other people's income rather tha your own. I have 5 rental properties two are paid off but the other three have mortgages. They make money and build equity.

[@ebaybasuki]

Ramsey's da man. Keeping people off usury.

[@CaseyBurnsInvesting]

Cash is lower return but almost zero risk.

[@ShaunSurgener]

Real estate will change your life... i've purchased 20 rentals and it's helped me create a streamline of passive income so that I don't have to work nearly as much if I don't want.. or i know it'll just be a great retirement paycheck every month. Let's crush it everyone let me know if I can help along your journey

[@Charlie589]

There is a difference between good debt and bad debt. The good debt is that you owe money on the rental property, but you are renting it out making cash flow every month. The bad debt is that you own a car and you owe money on it. It is not making you any cash flow because you are not renting the car out. Dave gave him a bad advice. His friends even gave him a better advice than he did. Even Robert Kiyosaki even talks about good debt and bad debt, why people stay poor and the rich get richer. I am just saying.

[@SandraNelson-r6o]

Very good video! I have USDT in my OKX wallet and I have my recovery phrase. [pride]-[pole]-[obtain]-[together]-[second]-[when]-[future]-[mask]-[review]-[nature]-[potato]-[bulb] How do I transfer them to Binance?

[@leopoldoramos4095]

Terrible advice!! Every REAL real estate investor would never pay cash for an investment property for the most part. Poor guy i hope he didnt follow his advice

[@ms.coffeetime7788]

This was a good video- thank you for sharing. Do you think it’s possible to property manage out of state ?

[@leesmith8810]

Dave, you can get your house paid off by using the rental income. It’s a little slower??? It’s a lot slower. Basically you are likely to never get a rental and the return is better than mutual funds.

[@GustavoMoradel]

I get Dave's point but it's not the way millionaires do things. It's all good if you can do cash but in a world with constant changing inflations like we have now it is not smart to do cash.

[@JJ-pf7qo]

im in my 30s and thinking about buying rental but this is powerful message. I have $50k now and thought about using it as downpayment. I guess I will wait until I get 100k.

[@jakejohnson7714]

Dave is 100% true buy cash on rentals !

[@RebeenAmin1980]

I like the cash approach. It is almost safer and more cash flow and it is urs not the freaking bank. I own my house paid in cash and I have been saving soooooo much bcs i never had a mortgage. I can but a lot of things but I’m ok. Debt free is incredible. God bless all

[@Powertourg]

You are horribly wrong. Leveraging a property always yields a far greater return cash on cash. If you buy right, there's very little risk

[@jayc4715]

@@Powertourg youre wrong...good luck with debt on multiple rental properties with eviction bans in place

[@Powertourg]

@@jayc4715 How am I wrong? Also, the eviction bans are temporary and in some states only

[@jayc4715]

@@Powertourg wrong by saying theres very little risk..theres much less almost zero risk on paid off properties vs leveraged ones...say you have 5 properties all on credit.and 3stop paying for 6 months because of an eviction ban...you better have the cash to pay those mortgages.and eviction bans are nationwide...not only in a few states

[@GR-uc1gq]

@@Powertourg Only thing I'd get worried about is a tenant stop paying and trashed my rental and I still gotta make payments without incoming rent. But paying cash takes so long to start up. The snowball effect of cash rentals is good tho.