Centreville, AL · Member since 2016 · 8 posts · 9 votes
Hey, guys!
So I was wondering if any of you follow Dave Ramsey and what you think about his advice on buying real estate? For those of you who don't know, Dave Ramsey suggests a zero debt, 100% down policy for practically everything. He advises not to buy a rental property until you can completely afford it in cash.
I was wondering, how feasible is this? Is it a good strategy? If you have done this before, what are the pros and cons and would you suggest doing things this way?
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
I followed Dave's debt snowball plan and baby steps to get out of consumer debt ($87k), but don't pay all cash for rentals.
Dave was burned by callable real estate mortgage notes back in the 80's. The long-term fixed products we use today wouldn't have been able to bk him like those did.
I use intelligent leverage for RE and try to stay at or below 80% to avoid PMI. I am accelerating commercial mortgages because they are higher risk (adjustable and callable), but for long-term, fixed residential mortgages with strong down payments I would and do use those @Cody Brown.
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
I do not disagree with him on most things. People just take on too much debt. I believe cash for cars, I believe in 25% of income towards mortgage(i say 30 year not 15 year). I do not believe credit cards are the devil, I do believe the "point" system is scammy. I do it mainly for consumer protection and keeping myself empty when traveling. I believe in more than 6 months savings for emergency funds, and I believe in vanilla cookie cutter growth in equities(growth based intl and domes funds).
For real estate, ideally I could go all cash on some properties & just be stuck with minimal month to month demand but significantly less reserves. But my goal is appreciation and at decent scale, it's probably smarter to leverage and hold cash. I probably would have to do fewer properties over time, and less quality. That defeats both scale and appreciation goals. Cash flow goals would be killer, cash on cash would be trash. I just don't walk around with cash on cash metrics on my shirt, or cash flow goals on my dinner plate. I look at my bank account and net worth. Appreciation, scale assuming cash flow is still present is probably best suited.
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Bad advice, he is targeting those people who are financially irresponsible and do not know how to handle debt. You will never become wealthy if you pay all your properties off cash.
So I was wondering if any of you follow Dave Ramsey and what you think about his advice on buying real estate? For those of you who don't know, Dave Ramsey suggests a zero debt, 100% down policy for practically everything. He advises not to buy a rental property until you can completely afford it in cash.
I was wondering, how feasible is this? Is it a good strategy? If you have done this before, what are the pros and cons and would you suggest doing things this way?
Thanks!
I think everyone should think for themselves and use the information they gather to triangulate the best outcome for self