Is Dave Ramsey correct? Anyone still around after 10 years?

Buying & Selling Real Estate
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Is Dave Ramsey correct? Anyone still around after 10 years?

Wade Kulesa
Member since 2020 · 22 posts · 82 votes

I've been on the Dave Ramsey bandwagon for the last several years. His advice definitely worked to get us out of debt and allow us to save a pile of cash. But as I look to get more into real estate investing, there's basically 2 schools of thought; use debt and finance everything or pay cash. While I feel I'd be fairly comfortable financing (assuming the numbers work), one thing from Ramsey is still ringing in my head. He says there are no real estate investors that borrow money to do so that are still around 10 years after they begin their journey. My plan is to do this for at least the next 10 years, so the main question is this: is dave ramsey correct? How many investors on here would disagree with his assumption and if so, why? Open to all views. Thanks in advance for your input.

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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y

That's a completely untrue statement. I know plenty of investors that have been in this business several decades, and the vast majority use debt. I've been investing since 2005 and always use a mortgage. The ability to obtain very attractive financing is one of the main benefits of real estate investing. If you are leveraged to the hilt and have no cash reserves, that's another story.

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  • Zac P.
    Rental Property Investor · Lexington, KY · Member since 2012 · 115 posts · 64 votes
    6y

    I won't rag on Ramsey, because it's great advice for many people. But the truth is, he's very wrong on this and most are using debt and if done right, it's the best way for many. I'm just about 10 years in. I'm stronger than ever now, only because I've used debt. As long as these are smart purchases, the cashflow and equity allow me to pay off debt faster. So the more debt I take on, the faster I can pay it off. There's no way I'd be in this position today if I paid everything in cash.

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  • Manuel Rodriguez
    San Antonio, TX · Member since 2016 · 24 posts · 10 votes
    6y

    @Wade Kulesa

    Same as Grant Cardone claiming college is worthless, but buy Cardone University instead.

    1Reply
  • Shane H.
    Investor · Wichita, KS · Member since 2015 · 769 posts · 279 votes
    6y
    Originally posted by @Manuel Rodriguez:

    @Wade Kulesa

    Same as Grant Cardone claiming college is worthless, but buy Cardone University instead.


    I like Grant's energy but don't agree with everything he says - he comes off as a braggart and I just dont like people like that - would never hang out with them.

    Anyways I do partially agree with his stance on college - I went - and spent my money - my wife got her BSN -- but in a lot of cases it is worthless - especially now - In the age of the internet, social media and if you have an ability to teach yourself and network you do not need to spend XXXXX on College -- **** I'll place an asterisk here as it is necessary for some professions but not all - and certainly the educational system has not reacted or attempted to change in the internet age - The present education system is antiquated and just wants to suck every last dollar from folks - It's broken like our healthcare system. 

    1Reply
  • Nick Heil
    Specialist · Corry, PA · Member since 2015 · 75 posts · 67 votes
    6y

    I just sat in a an awesome real estate meeting last night and a man in his 60's told us about how he retired 9 years ago with millions of dollars worth of paid off rental properties because he started buying 40 years ago. He had a son late in life who is only 14 now and he got emotional talking about how awesome it is he can do whatever he wants everyday and spend his time with his son. American Dream Realized. Countless stories like this. One of the primary reasons real estate is such an effective wealth builder is because debt can be used so efficiently. If debt could be used in a similar fashion in the stock market then the stock market would clearly be better, but you can't. It's much more costly and risky to do so... So yes, there are millions of people still in the real estate game after 10 years utilizing debt. 

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  • Darren Rayborn
    Spring Hill, FL · Member since 2019 · 4 posts · 4 votes
    6y

    I think Dave Ramsey does a phenomenal job with getting folks out of debt, understand what should have been taught in school and onto a new segment in life. Yes, a release the "chains of debt", the "bondage of debt". Now, once a person or couple is past that point, there is a "new" way to leverage money, debt and knowledge, their next step. Each step that is taken requires a new and potential/probably adjustment to reach their goals and dreams. That itself means that everyone has their own dream, determination, speed and of changes that will occur over time to get reach their goals. This took me some time to figure out, as with many people. 

    Have a great day!!!

    1Reply
  • Mark Rickert
    Rental Property Investor · Albuquerque, NM · Member since 2015 · 39 posts · 48 votes
    6y

    Totally disagree with Mr. Ramsey.  Still here and I know numerous multi-millionaires who started in the mid 60's who are thriving, and still here.  Consumer debt, (anything that goes down in value not a good debt).  Real estate debt, (used properly), can be a game changer in your real estate holdings.  

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  • Anthony Vann
    Investor · Hampton, VA · Member since 2017 · 49 posts · 86 votes
    6y

    I think of Dave Ramsey as Level 1 and Kiyosaki as Level 2. I started with Dave Ramsey many years ago. I will be forever greatful for his program. He got me out of a lot of consumer debt. I definitely had that if I can make the payments I can afford it mentality which was destroying my finances. That's level 1 and it's probably the path the majority of people should follow. But once you decide to move to level two and the world of business and investing you need a different playbook.

    1Reply
  • Todd Powell
    Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Wade Kulesa been going strong since 2001 and created $4 million net worth and $13000 in monthly cash flow.  Doing RE Dave’s way, I would be stuck in the rat race and no financial freedom. I also took his course and was the only one in the room who refused to cut up my credit card.  His advice is solid for the average American, but I don’t want to be average is my problem. 

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  • Wade Kulesa
    OP
    Member since 2020 · 22 posts · 82 votes
    6y

    Well said Todd Powell

    0Reply
  • Arsen Atanasovski
    Investor · Rochester, MI · Member since 2017 · 1k+ posts · 584 votes
    6y

    @Todd Powell

    Agreed 100%

    0Reply
  • Katie Cole
    New to Real Estate · Grand Rapids, MI · Member since 2020 · 7 posts · 0 votes
    6y

    In my high school economics class we went through the Dave Ramsey's curriculum/training which I enjoyed but am glad I took his advice with a grain of salt. What I learned through his training was never even open a credit card and my parents told me I needed to build my credit and no matter how much cash I end and how much money I made I would have trouble getting a mortgage. Luckily they put me on their credit cards as an authorized users and I began establishing my credit early. I was really against it at first and thought they were wrong, but now I realize if I had waited to establish credit until I tried and failed to get a mortgage it would have been a long road. 

    In closing - Dave Ramsey has valuable information, but I feel he is too old school in his approach. I think his info is best for people in trouble financial situations, but he's definitely wrong about real estate.

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  • Alan DeRossett
    Investor · Thousand Oaks, CA · Member since 2017 · 306 posts · 123 votes
    6y
    40 years 3rd generation multi-family only no mortgages but may buy up some more during next year's Panic selling.
    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    Silly advice. I stick with the Rick Edelman school of thought. I have been in since 2006. How in the hell can you build up a portfolio by saving all the money up for it? There are people who have multi million dollar portfolios generating them cash consistently on borrowed money.  While saving up for it what is cash flowing? They should have saved up 5 million dollars to do it? Good luck with that. The comment is obviously false............

    0Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    "one thing from Ramsey is still ringing in my head. He says there are no real estate investors that borrow money to do so that are still around 10 years after they begin their journey."

    A) It's not exactly what he said or

    B) It's BS

    The big guys 25+ years are still all quite fat and happy with a ton of debt and units.

    I'm not doubting Dave at all, since about 80% of people mis-handle debt and a cash-only budget is what they need.

    However, if you understand the power of using OPM money (ie you borrow o$1 at x% and get a return on it >>x%) it is a major tool in growth.

    Now if you're 60 and unwinding, I understand.  But with rates <4% and you can still get a return >>4% why wouldn't you?  I understand the RE (like stocks) has a risk factor.  However, its not enough to justify putting your money away at 0.5% (if) since ANY inflation makes you lose ground.

    Long story short - Don't dislike Dave, but he has an audience that his approach works for.

    OTOH - What would Dave invest in today (something he neglects to mention)?

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y
    Originally posted by @Mark Cruse:

    Silly advice. I stick with the Rick Edelman school of thought. 

    Damn!!!  He does good commercials then, I thought he was based in OR!!!!

    Unless Rice-delman is a different guy?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Steve Morris:
    Originally posted by @Mark Cruse:

    Silly advice. I stick with the Rick Edelman school of thought. 

    Damn!!!  He does good commercials then, I thought he was based in OR!!!!

    Unless Rice-delman is a different guy?

    As it relates to rentals I think it really depends on the assets themselves..  for those buying low end Mid west C D F houses like we see here on BP i am a big proponant of paying cash for those.. you know the 10 to 40k houses..  rents are high enough that you can scale if you actually get your rent.. with out downside risk of risking your credit on those type of assets.

    For better props in stable areas obviously debt is the answer and as the deals get bigger debt is almost mandatory for most.

    I did broker a 100 unit in Gresham some years back and that buyer paid cash and still owns it with no debt.  they own a tonne of real estate in Hawaii with no debt.. But keep in mind they made 100's of millions in Tokyo real estate and just moved the cash.. :)

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y
    Originally posted by @Jay Hinrichs:

    You still do stuff in OR?  I have to meet you, I'd love the feedback on why/why not you're here and about the local market for apartments.

    DISCLOSURE - Am a broker.  I may or may not have your best interests at heart :)

    BTW - Am not discounting cash at close IF it gets me a big discount, just your C-C is a lot better with OPM. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Steve Morris:
    Originally posted by @Jay Hinrichs:

    You still do stuff in OR?  I have to meet you, I'd love the feedback on why/why not you're here and about the local market for apartments.

    DISCLOSURE - Am a broker.  I may or may not have your best interests at heart :)

    BTW - Am not discounting cash at close IF it gets me a big discount, just your C-C is a lot better with OPM. 

    Yup active in Metro area  mainly home building I have a 89 lot project in Canby that just fired up..  ivyridgeestatescanby  dot  com if you want to check it out..  

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    Good for you - You'd have to be a strong person to build inside Portland proper.

    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @Jay Hinrichs yes I get that. I got a class D for 28k and it worked out well, but that is one small segment in the game. It's hard to get financing for that anyway. However, this dude is still making false claims that are obviously wrong. No multi million or billion dollar real estate investor saved up and bought it all in cash. Also, the majority of major players around for 10 years plus for the most part have borrowed something. 

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  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @Steve Morris not sure where he is based but he has offices all over the nation. I listen to his Saturday morning show. I have never heard anything he says that I flat out disagree with. I sent my mother to him for her management. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Steve Morris:

    Good for you - You'd have to be a strong person to build inside Portland proper.

    I have a few left in PDX proper that i have to finish once done.. then I will only buy projects that are fully permitted and straight forward.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Mark Cruse:

    @Steve Morris not sure where he is based but he has offices all over the nation. I listen to his Saturday morning show. I have never heard anything he says that I flat out disagree with. I sent my mother to him for her management. 

    Yup no argument from me..  Just wanted to mention my personal opinion on the low cost RE and how I beleive those that get heathy in that asset class do so without debt and many FAIL when they take on debt in those assets.. 

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  • Matt B.
    Investor · Chicago · Member since 2018 · 113 posts · 51 votes
    6y
    I can't really attest to what Ramsey says as I'm not a follower, but I do know he's anti-debt.

    From my understanding he was overleveraged when he was younger and after a market crash he learned his lesson.

    Debt is neither good nor bad, it depends on the context. In an inflating market (future money is worth more than it is today), debt can be good to help you grow. However, once the market starts deflating, taking debt doesnt make sense.  Your purchasing power is less, asset value would likely decrease, your debt is the same (but feels larger since purchasing power is decreased)

    Taking on debt is not a bad thing, but it's good practice to have a diversified investment portfolio thus reducing your risk to any unanticipated market corrections.
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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Steve Morris:

    Good for you - You'd have to be a strong person to build inside Portland proper.

    I have a few left in PDX proper that i have to finish once done.. then I will only buy projects that are fully permitted and straight forward.

    Apartments in Hillsboro?

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