So Dave Ramsey says.....

Member since 2022 · 241 posts · 62 votes

So Dave Ramsey says that when he interviewed 10,000 millioniares close to none used debt or leverage to get there.

So how many of you out there have used leverage, maybe conservatively, to increase you net worth and cash flow with real estate? Or did you pay cash like Dave?

I feel like its not so bad to have a ton of debt if say you had a good pile of reserves for when you need it. What do you think?

Additionally are 7% mortgages worth it?

3 Reply

359 views

Most Popular Reply

Greg ScottPro Member

Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes

Dave must have screened out anyone who had debt before he interviewed them because I don't believe his experience could logically be extrapolated to society at large.

23 Reply

See this reply in the discussion

79 Replies

Jump to latestLatest

Sort by

Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
2y
Dave must have screened out anyone who had debt before he interviewed them because I don't believe his experience could logically be extrapolated to society at large.
23 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Greg Scott:

Dave must have screened out anyone who had debt before he interviewed them because I don't believe his experience could logically be extrapolated to society at large.
That's what I figure....he always says that everyone who did real estate when he went bankrupt also went bankrupt but I assume there are tons of people on biggerpockets who have leveraged for decades and been just fine?
1 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
@Sam Booth
He must have interviewed politicians and trust fund kids.
7e investments53 Reviews
Website View Page
13 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Chris Seveney:

@Sam Booth
He must have interviewed politicians and trust fund kids.
Hard to believe no one used debt. Especially with the sub 4 percent rates last 20 years!
1 Reply
Chris John
Member since 2020 · 671 posts · 937 votes
2y
Haha. I owe like 30x my annual salary.
4 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
2y
Quote from @Sam Booth:

So Dave Ramsey says that when he interviewed 10,000 millioniares close to none used debt or leverage to get there.
So how many of you out there have used leverage, maybe conservatively, to increase you net worth and cash flow with real estate? Or did you pay cash like Dave?
I feel like its not so bad to have a ton of debt if say you had a good pile of reserves for when you need it. What do you think?

Additionally are 7% mortgages worth it?

I started off paying all cash because I was shell shocked once from losing a bunch of money before. Eventually I came around to leverage. If I had been more willing to use leverage at the beginning I'd be a whole lot richer right now.
If I was immortal then all cash would be a slow but steady, simple way to go. Since I'm not, leverage was just another tool to speed things up.
Podcast Guest on Show #243
Skyline Properties
View Page
7 Reply
Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
2y
The typical path to a million in net worth is to go to college, save money (frugal with expenses), buy a house, and invest in tax deferred accounts. It's not a complicated process (but it's not for everyone).
15 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Chris John:

Haha. I owe like 30x my annual salary.

This makes me feel better! How about those 7 or 8% interest rates? Does that make you wish you could pay the higher interest off quicker? I found out an extra payment goes alot further on high interest rate.
0 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @JD Martin:

Quote from @Sam Booth:

So Dave Ramsey says that when he interviewed 10,000 millioniares close to none used debt or leverage to get there.
So how many of you out there have used leverage, maybe conservatively, to increase you net worth and cash flow with real estate? Or did you pay cash like Dave?
I feel like its not so bad to have a ton of debt if say you had a good pile of reserves for when you need it. What do you think?

Additionally are 7% mortgages worth it?

I started off paying all cash because I was shell shocked once from losing a bunch of money before. Eventually I came around to leverage. If I had been more willing to use leverage at the beginning I'd be a whole lot richer right now.
If I was immortal then all cash would be a slow but steady, simple way to go. Since I'm not, leverage was just another tool to speed things up.
Understandable! How about the higher interest rates now, does that make you put a larger down payment or anything?
0 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Mike Dymski:

The typical path to a million in net worth is to go to college, save money (frugal with expenses), buy a house, and invest in tax deferred accounts. It's not a complicated process (but it's not for everyone).

And real estate is kinda a nice tax deferred account if you will because of depreciation so sorta of the best of a few worlds!

0 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
2y
Not many on BP will have gotten there with no debt.
But, conversely, many who are or have been retired choose to pay all debt off.
There’s an approach to get you going, and an approach to feel confident in early retirement.
Many investors who dont know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave.
Those who do know what “enough” is will find their journeys much faster because they levered the accumulation years.
Podcast Guest on Show #223
14 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Scott Trench:

Not many on BP will have gotten there with no debt.
But, conversely, many who are or have been retired choose to pay all debt off.
There’s an approach to get you going, and an approach to feel confident in early retirement.
Many investors who dont know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave.
Those who do know what “enough” is will find their journeys much faster because they levered the accumulation years.
Appreciate the reply and also love listening to Biggerpockets Scott! Good to know when your enough is.

On a second note, can do a podcast about the 18 year real estate cycle? It's interesting and maybe coming up!
0 Reply
Michael S.
Huntsville, AL · Member since 2018 · 577 posts · 864 votes
2y
How can I sum up my view point on this topic succinctly and definitively?
How about this... I don't care what Dave Ramsey says.
2 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Michael S.:

How can I sum up my view point on this topic succinctly and definitively?
How about this... I don't care what Dave Ramsey says.
Haha sounds like something DR would say
1 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
2y
Quote from @Sam Booth:

Quote from @Scott Trench:

Not many on BP will have gotten there with no debt.
But, conversely, many who are or have been retired choose to pay all debt off.
There’s an approach to get you going, and an approach to feel confident in early retirement.
Many investors who dont know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave.
Those who do know what “enough” is will find their journeys much faster because they levered the accumulation years.
Appreciate the reply and also love listening to Biggerpockets Scott! Good to know when your enough is.

On a second note, can do a podcast about the 18 year real estate cycle? It's interesting and maybe coming up!

Thanks, Sam - I don't know if I fully subscribe to the 18 year real estate cycle, but a huge market crash is already in full swing in various CRE asset classes, including multifamily. I wonder if we will see a similar crash in Single Family - I'm skeptical for a number of reasons, prime among them the relatively stable debt and huge percentage of homes owned free and clear.
Podcast Guest on Show #223
2 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Scott Trench:

Quote from @Sam Booth:

Quote from @Scott Trench:

Not many on BP will have gotten there with no debt.
But, conversely, many who are or have been retired choose to pay all debt off.
There’s an approach to get you going, and an approach to feel confident in early retirement.
Many investors who dont know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave.
Those who do know what “enough” is will find their journeys much faster because they levered the accumulation years.
Appreciate the reply and also love listening to Biggerpockets Scott! Good to know when your enough is.

On a second note, can do a podcast about the 18 year real estate cycle? It's interesting and maybe coming up!

Thanks, Sam - I don't know if I fully subscribe to the 18 year real estate cycle, but a huge market crash is already in full swing in various CRE asset classes, including multifamily. I wonder if we will see a similar crash in Single Family - I'm skeptical for a number of reasons, prime among them the relatively stable debt and huge percentage of homes owned free and clear.
Scott, I totally hear you. Hard to see a crash in single family but The only way I see it happens would be if interest rates kept going up (say fed can't get inflation under control) and insurance or other related things go up causing the prices in single family to come down. Seems unlikely but the 18 year cycle seems to be somewhat of a thing
0 Reply
Chris John
Member since 2020 · 671 posts · 937 votes
2y
Quote from @Sam Booth:
This makes me feel better! How about those 7 or 8% interest rates? Does that make you wish you could pay the higher interest off quicker? I found out an extra payment goes alot further on high interest rate.

It's all at 3-4%. I borrowed until the banks stopped me when rates were low.

I think @Scott Trench brings up a great point when he says "Many investors who don't know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave", but I plan on borrowing until the grave if the numbers make sense for my children and grandchildren.
3 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Chris John:

Quote from @Sam Booth:
This makes me feel better! How about those 7 or 8% interest rates? Does that make you wish you could pay the higher interest off quicker? I found out an extra payment goes alot further on high interest rate.

It's all at 3-4%. I borrowed until the banks stopped me when rates were low.

I think @Scott Trench brings up a great point when he says "Many investors who don't know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave", but I plan on borrowing until the grave if the numbers make sense for my children and grandchildren.
Right on, yeah 3 or 4 is alot easier then 8! Good stuff!
1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y
Quote from @Chris John:

Haha. I owe like 30x my annual salary.

For me I owe about 75 times my 2022 taxable income (2023 taxable income has not yet been determine, but I expect it to not be significantly higher than 2022 - San Diego receive tax extension due to flooding).

Many Americans have zero financial literacy and are irresponsible with debt. Dave Ramsey’s preachings are appropriate for these people.

His preachings are limiting for those that are building generational wealth.

I also find it hypocritical that anyone that has declared bankruptcy to get debt forgiven (screwing those that he owed money) is giving others financial advice..

6 Reply
Sam Booth
OP
Member since 2022 · 241 posts · 62 votes
2y
Quote from @Dan H.:

Quote from @Chris John:

Haha. I owe like 30x my annual salary.

For me I owe about 75 times my 2022 taxable income (2023 taxable income has not yet been determine, but I expect it to not be significantly higher than 2022 - San Diego receive tax extension due to flooding).

Many Americans have zero financial literacy and are irresponsible with debt. Dave Ramsey’s preachings are appropriate for these people.

His preachings are limiting for those that are building generational wealth.

I also find it hypocritical that anyone that has declared bankruptcy to get debt forgiven (screwing those that he owed money) is giving others financial advice..

Thanks for your input, on a second note do you feel like you got to pay higher interest rates off quick on mortgages or just let the tenants pay them off over time?
0 Reply
Alan AsriantsBusiness Member
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
2y
Quote from @Scott Trench:

Not many on BP will have gotten there with no debt.
But, conversely, many who are or have been retired choose to pay all debt off.
There’s an approach to get you going, and an approach to feel confident in early retirement.
Many investors who dont know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave.
Those who do know what “enough” is will find their journeys much faster because they levered the accumulation years.

Well said. As humans we are all greedy. When you make a million, you want to make 2. At some point you don't need more than what you already have, and paying off debt is a great way to remove those invisible chains and give you more control.
Getting to the million without debt can take a lot of time. Debt allows you to increase the velocity of your money.
Knowing when to stop taking risking positions is an important skill. When people make a lot, they also tend to risk a lot.
for the average person, 1 home every year for 10 years is a doable and strategy that can get you there - slow and steady but faster than the average person.
[email protected]267-767-0111
Alan Asriants - New Century Real Estate 590 Reviews
View Page
5 Reply
Ray Hage
Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
2y
Being scared of debt is like being scared of a hammer. With debt or a hammer...you can build something with it or you can break something. Just use the debt wisely and you'll be fine. 7% is high but if you get the right property that still makes money (or that you enjoy living in), you can always refinance.
Always have some cash reserves. One thing you can guarantee is there will be some kind of emergency in your life. Money solves that problem.
Dave Ramsey says some things that make sense, but it is rare.
7 Reply
Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
2y
Debt is a powerful tool like a big chainsaw. Very useful if you have a forest to cut down, but can be dangerous to those who don't know what they are doing. Working with a hand saw is a lot safer..
I am financing 3 larger deals at 7.45% now with a 20 year amortization and a 3,2,1 pre-payment penalty, which is important, because we are going to pay down the principal a little faster and probably will refinance in a couple of years, depending on what rates we see.
You have to look at interest rates in the context of inflation, rents and home price appreciation. At currently 3.4% inflation (if you believe it) the real cost of money after inflation is about 4%. Milwaukee prices are steadily going up 7%-8% each year, rents about 5% (2nd hottest market after Miami, FL!!) and it does not look like this is about to change.
A few years ago all these numbers were lower, so in my book not that much of a difference.

5 Reply
Corey ConklinPro Member
Investor · Member since 2021 · 129 posts · 209 votes
2y
Most of you understand that leverage is a great way to build wealth, faster. I've used it as well as almost everyone on BP.
But, owning a property free of debt gives a lot of control back to the investor.
I've learned that I'd rather grow at a slower rate and not be at the mercy of lenders and insurance companies that will gouge you every chance they get.
I don't know how someone can say they are "financially free" when they are overleveraged. Just because you are making 10k/month in cash flow today doesn't mean you will next year if you are too dependent on other lenders/people financing your deals. It's almost as if Dave Ramsey did that in the 80's and it all came crashing down on him and now he's letting people learn from his mistakes...
I'm not saying Dave is the all knowing financial guru. But neither are the people selling you that you can get rich quick using other people's money i.e. (insert real estate sales person here)
6 Reply
Account Closed
Accountant · San Diego, CA · Member since 2019 · 1k+ posts · 552 votes
2y
Quote from @Sam Booth:

So Dave Ramsey says that when he interviewed 10,000 millioniares close to none used debt or leverage to get there.
So how many of you out there have used leverage, maybe conservatively, to increase you net worth and cash flow with real estate? Or did you pay cash like Dave?
I feel like its not so bad to have a ton of debt if say you had a good pile of reserves for when you need it. What do you think?

Additionally are 7% mortgages worth it?

Dave Ramsey (who got rich teaching others how to get rich) interviewing millionaires and deriving a conclusion from that I think is a logical fallacy. Think about your goals, what YOU personally want to achieve, and make a plan that gives you the best odds for that to succeed.
3 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.