Dave Ramsey on paying cash for real estate preferably with no debt

Member since 2020 · 148 posts · 39 votes

What's your opinion on Dave Ramsey method for success, he mentions a lot its best to buy real estate property cash with no debt or as last resort 15yr mortgage, for most that are just starting out its almost impossible to have over a couple$ 100k to invest in real estate cash.

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

1mo

many real estate investors will not agree with his methodology or teachings .

if you are someone who has financial acumen and is good with managing money then many would not follow what he teaches. unfortunately many americans are not financially savvy and significantly struggle with managing debt and understanding how increased debt can put a lot of pressure and stress on someone. in those instances what he preaches is correct.

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Aristotle Kumpis
Specialist · Long Beach, CA · Member since 2011 · 879 posts · 398 votes
3w
He's wrong. Having a mortgage and using leverage for buying real estate is much better. However, given the higher interest rates and what your purchase price is, paying cash could be better for the next 2-3 years until rates come down a little. Then cash out refi and pull most of it back out
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Garrett KeithPro Member
New to Real Estate · Dubuque, Dubuque Iowa · Member since 2026 · 35 posts · 19 votes
3w
Dave Ramsey's approach makes sense for his audience, but not everyone is his target audience. You're going to have people tell you never to buy a property with cash, and people like Ramsey tell you to pay cash, or worst case a 15-year mortgage. People tend to push whatever route worked for them or whatever they're comfortable with. But everyone's comfortable with different things, and it comes down to understanding the trade offs. Buy a property in cash and you give up leverage, but your cash flow is going to be a lot better than if you put 20% down. Don't let people sway you one way or the other. You have to think about what you're comfortable with and what you actually want in the end.
The problem with Ramsey's method for most people starting out is access to capital, it's almost impossible to have a couple hundred thousand dollars sitting around to buy real estate in cash. So realistically, most people are working with leverage whether they want to or not.
I work as a Financial Planning Advisor, and two terms I use a lot in that role are risk tolerance and risk capacity. Risk tolerance is what you're comfortable with. Risk capacity is what your finances can actually handle, or what you need to take on to hit your goals. Say a conservative investor is 60 and wants to retire at 65, but his portfolio is too conservative to get him there. That's where risk capacity comes in: what risk level does he need to take on to earn the returns that get him to retirement at 65? Maybe the answer is he pushes retirement to 67 instead of getting more aggressive. It's the same idea with real estate, it's about knowing yourself and knowing what you actually want, then working backwards to figure out the path: full leverage, all cash, or somewhere in between.
Habit 2 of The 7 Habits of Highly Effective People is "begin with the end in mind" figure out your end goal, then work backwards. My current goal is to pay off my primary residence, then put 20% down on investment properties going forward. I'm conservative by nature, and I don't want to risk losing my own home over something going wrong. I could house hack, but that leaves my cash flow razor-thin with no room for error.
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Erin W.
Investor · Everett, WA · Member since 2026 · 7 posts · 3 votes
1w
Seems like a moot question because Dave Ramsey has also said quite a bit that mortgages are an exception to his rule for most people because they do cost so much .
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Patrick KrawczykowskiPro Member
Investor · Chicago IL · Member since 2026 · 38 posts · 39 votes
6d
Real estate investment is the cheapest leverage you’ll ever acquire. Agree with Greg on the twice shy comment.
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Chris BrownPro Member
Investor · Locust Grove, GA · Member since 2023 · 20 posts · 12 votes
1d
Dave Ramsey played a significant role in helping my wife and me get our finances under control. The discipline and structure of his principles gave us a strong financial foundation and ultimately helped us begin our real estate investing journey.I agree with the majority of his Baby Steps, particularly Steps 1 through 6. Where I differ is with Step 7. While I understand and respect his approach of saving large amounts of cash before purchasing rental properties, I believe it can be both challenging and time-consuming to accumulate that much capital.That said, I don’t think his method is wrong. I simply see it as a different approach. There is rarely only one way to achieve financial success, just as there are multiple strategies in real estate investing. Dave’s real estate philosophy is based on what he has learned and experienced throughout his career, and it has clearly worked well for him. My perspective differs in some areas, but I still respect the principles and wisdom behind his overall plan.
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Divin KanyamaBusiness Member
Accountant · Seattle, WA · Member since 2025 · 433 posts · 177 votes
1d
@Jimmy Rojas Dave Ramsey’s approach is built around minimizing risk, and there is real value in that. Buying with cash eliminates foreclosure risk, reduces monthly obligations, and can make it easier to hold through vacancies or downturns. The tradeoff is that waiting to save the full purchase price may keep many new investors on the sidelines for years, while concentrating a large amount of capital in one property.
Debt is not automatically good or bad; the structure and the margin for error matter. A conservative mortgage can allow an investor to preserve cash for repairs, vacancies, and future opportunities, provided the property still cash flows after realistic operating expenses, reserves, and debt service. A 15-year loan builds equity faster but often creates a much higher payment, so a 30-year fixed loan may actually provide more flexibility; extra principal can still be paid when cash flow allows. For someone starting out, a reasonable middle ground may be a meaningful down payment, fixed-rate financing, strong reserves, and avoiding deals that depend on appreciation or perfect occupancy. The best method is the one that keeps the investor financially stable enough to hold the property through an imperfect year.
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Jimmy Rojas
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Member since 2020 · 148 posts · 39 votes
1d
I believe Daves philosofy on buying real estate makes sense , especially for the ones that are barely starting in RE, its not written in stone you have to buy a multiplex or even build a large portafolio quickly, that can be a recipie for disaster if you dont plan well and bank could even forclose on your homes, In my case, i decided to start real small, where i live you can find a 2br 850sft condo, balcony, hoa $225, $130k (j would never pay asking price), assuming i can get it for $115k , 50k down , the rest im sure i could pay off that loan in a year or so.
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