Real Estate the Ramsey Way - Do My Rental Mobile Homes Still Make Financial Sense?

Episode Date: October 27, 2025

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Dave Ramsey here and welcome to another episode of Real Estate, the Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate homeownership with confidence. Donna is in Charlotte, North Carolina. Hi, Donna, how are you? Hey, I'm great. How are you guys? Better than we deserve.

What's up? So I've got a question. We have some rental property. I've heard you speak before to people about buying mobile homes that are not on your land. We have multiple rental properties and their mobile homes and they are in different areas that they are not on our land. I've been talking to my husband about trying to pay some of the debts that we have and I'm just wondering if should we sell those mobile homes. I know that lot rent goes up every year because they are in mobile home parks. We paid

approximately $122,000 in just lot rent last year. How many do you own? I'm trying to figure out if it's something we should sell. We own about 30 and we own all of them free and clear. Okay. All right. And what would they, if we sold all of them, what would it bring? You could probably get 20 apiece, roughly, give or take.

Okay. All right. $600K? Is that right? Probably so. Do I do that right? Okay. All right.

Now, here's the question. Lot rent's going to go up every year. Rents are going to go up to cover that and then some. It'll go up more than the lot rent goes up. So your rents are going to continue to net you more and more and more. Dollar for dollar, the $20,000 you put in versus the rent you get out is excellent. You get great rents for the $20K you put in. Agreed?

Right. And so they're a cash machine. Mm-hmm. The downside, of course, and you already know this, is 20 years from today, the $600,000 investment you have will be worth close to zero. Right. So the only return you're getting on your $600K, and you're not going to get the $600K back, is you've got to recoup the $600K with the cash flow, and then you've also got to get a return

on it. Right. In 20 years, if you keep them. so if you if you run the numbers out that way and you like what you're seeing return on investment wise you know I'm going to make 600k in 20 years plus I'm going to make uh what 20 percent will be 120,000 a year on these things for 20 years are you going to do that uh probably so we have we have some that we on a rent-to-own program just because you can't find anybody that's got the kind of money to buy these things with cash. We're trying to unload a few of them. We own a management property

business and a property management business and I do work for these people that own the land, but I still have to pay the lot rent. So we've got other rentals as well. My husband has, he's got this idea that he wants to get our liquid funds in the bank to $1 million before we sell or do anything. And I'm wanting to try to get us out of debt. So, yeah, how much debt do you have? We only have, we have a few mortgages and then we have just a few vehicles. So what does that add up to? Our, our home is about 250. We have a condo that's on an Airbnb program. It's about 200. And then we have an apartment complex. We only have about 49,000 left on it. And you got, you're managing it too? Yes. You guys work hard.

We self-manage everything. I've got about 750 ten-inch total. Yeah. You got all, you work your butt off. Yeah. Been doing it since 2018, so it's a, I've got a little practice in by now. Okay. And you have 30 of these. correct okay um hmm well i mean i i i i looked at two or three different mobile home parks where i bought the land and the mobile homes and the cash return on the investment was incredible uh even if you look even after you look at the value of the mobile home themselves evaporating i did the ones i was looking at i would own the dirt under them and so i didn't have lot rent and i would

end up when it all the smoke cleared with the junk trailers left over, I would have had a lot of cash and a paid for a piece of dirt. You're not going to have that. You're just going to have a big old pile of mobile home mess in 20 years. So, um, and the lot rent's pricing us out. It's pushing us, kind of squeezing us because we can't, you know, we can't charge $1,200 for rent in a mobile home park, not here. Yeah, that's true. All right. Yeah. So it's kind of putting a squeeze on us. Yeah. I guess if I ask the question, I mean, you can't sell them all for $600K in two months. That's not possible based on what you said.

But if I had $600,000 in a pile and I did not own these, would I go buy them? No. Then it is time to sell them. Why would you not go buy them again? Well, besides, it's a lot of work. A lot of them are just really old. And to me, they're not worth $20,000. but that's about what they would sell for around here.

Mm-hmm. Mm-hmm. Okay. And like I said, we've had, we've got several tenants that have been there from the beginning since 2018. I mean, we've made, we've made our money back and then some of them, probably 90% of them. Yeah. The $600K would clear all of your debts plus your mortgage. Now, here's the thing.

I bought a, I bought a condo in 2008, one of the properties that we own. I bought it for $260,000. I looked it up the other day, and it's worth about a me. and I've been collecting rent on it. You're collecting rent and your assets going down in value. And that just bothers me about this whole thing. That's my concern.

That's what I call it. It's just, I just don't, even though I know the numbers are, return on 20 grand is excellent. I mean, it's not 260 grand, it's 20. You know, I mean, two condos that I bought in 2008 is all you could get was 600 grand. You know, I paid $2,000.

60 for it back then. So you pay a million for that condo today. But that's the other end of the spectrum, in other words, on the rental side. So I'm making more money on that condo and increasing in value than I'm in rents. You're making all your money and rents while your things going down in value. You're the opposite end of the spectrum. It is a valid mathematical equation. It's not invalid. You're not, you're not, you are working your butt off because per tenant Man, the time you put into all these apartments and 30 trailers to collect the rent, oh, my God, you are working. And keep them rented and clean them up after somebody moves out and you're self-managing all that.

Y'all are working. You've got a full-on property management operation. 750 tenants. I might just simplify my life and clear the deck, pay off the debts and see where we're at. I think I'm on her team. Yeah, that's what she's wanting to do. She's wanting us to vote with her, and I think I am going to vote with her. But it's not to say that the process they used to get here was completely stupid or invalid

because mathematically they're making money. But the hassle factor and the loss in value is going to cause me to systematically liquidate the trailer portfolio and move towards properties that are not as hard to manage and they go up in value. And by the way, folks, that's a good rule of thumb if you're thinking about residential properties. The less expensive, and a $20,000 trailer is pretty much the bottom of the barrel on the expense side, the less expensive the rental property is the higher your rate of return on rents is, but also the higher your hassle factor. Because the cheaper the rent, the more problem you have with the tenant.

Not all cheap tenants are bad people. That's not what I'm saying, but the more likely you are to have trouble. So when you move up into a higher grade of tenant, you don't make as much on the property return on investment percentage-wise, but the property is going to go up in value faster because it's a better area. Yep. And the quality of tenant is easier to deal with. Less hassle factor. So what if instead of $750, you had $75 dollars with the same money? That sounds simpler.

And you didn't make as much monthly, but you made a lot more in appreciation. That's a different mix of portfolio than what she's got. But they've done very well. Congratulations. I'll give you a high five. Hey, guys, thanks for listening to Real Estate the Ramsey Way. Now, if you're here, you're probably thinking about buying or selling a house. It's exciting. And one of the biggest financial decisions you'll ever make.

But you don't want to do it with an inexperienced agent who will rush you into costly mistakes, like the ones some of our callers find themselves in. You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted real estate agents. These are vetted, hand-picked pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent near you, go to Ramsey Solutions.com slash trusted agent. That's ramsysolutions.com slash trusted agent. Seth is in Virginia Beach.

Hi, Seth. How are you? Hey, Dave, and Rachel, how are y'all? Better than we deserve. What's up? All right, so I'm 27 years old, and I'm married with three kids. And me, my life has been on Babyset's 4, 5, and 6 for the past few years. And I'm currently in the military, and we live in military housing, so we're renting.

We're trying to figure out the best way to kind of save for a down payment on a house. So since we move every three years, we're not trying to jump on buying a house right away, If the opportunity presents itself, then we'd like to maybe be in a place where we could do so. So over the past few years, we've saved about $25,000. Good for you. Yeah, so also while saving for retirement and kids' college. Which branch are you on the Navy? I'm in the Marine Corps.

Marine Corps. Thank you for your service. All right, very cool. Yeah, thank you. And your question was what? So we're trying to figure out the best coach to saving up for a down payment on a house. My wife's taking some time off work to stay home with the kids with the birth of our kids. But she's a nurse and she's going to be starting a job here in the fall as a school nurse.

And we were thinking like potentially going back to babysat 3B and just pausing retirement in kids college to just back up cash for a year. We're just didn't know if that would maybe be the right move with, you know, still trying to invest steadily for retirement. That's fine. The first thing popped into my head was I'm under the impression a school nurse does not make. make near what a nurse makes. Correct. So she used to work like in a hospital on the floor. So why would you take a job that pays less when you're trying to hit a financial goal? So because of with our three kids, the schedule is a lot easier with having three kids

instead of working at 12-hour shift. Yes. And so like I said, we're not trying to jump on like buying a house. Yeah. How old are your children? There are five, two, and then about to be one. The school nurse doesn't have anything to do with a two or a one-year-old. Correct.

They would have to be in daycare, but our oldest is in kindergarten. Okay. So the schedule thing is bogus. It's not true. Well, she'd have summers off. I mean... It's not, well, I mean, you can take summers off whenever you want. I mean, you can go work three-twelves and be done for the week and make three times more than she's going to make while the other two kids sit in daycare.

So it's not logic. Anyway, I think that's a bad choice. Anyway, back to your question, you're not in a hurry, so you can do whatever you want to do. And you've done a great job so far with your money. But I, you know, I'm a huge fan of nurses because it gives you the potential to earn a lot of money and work a very, very flexible schedule and do a lot of different kinds of things. And I think you're not getting good use of that opportunity with what we're talking about. But, okay, back to it.

Now, the, I wouldn't pause babysat for it. No, I wouldn't. You can pause the kids college, though. If you guys were putting in a certain amount of money every single year for them. You had a one-year-old and a two-year-old year old. Yeah, if you want to pause that to save up some extra money. Or just drop it down to $50 or something. I wouldn't stop it, but I'd drop it way down.

And you use that. I really wouldn't because you're not on a tight schedule to buy. You don't have an urgency to buy. And so I don't want to build up a down payment over here. in a high-yield savings account while I'm missing out on good mutual fund returns over in my retirement accounts. No, I'm going to leave that at 15. Now, if you want to turn up the urgency, you say, okay, in 24 months, we're going to buy a house. If you want to shut it down for that, that's okay. But just in general, I'm going to just want to build a slush fund so someday I can buy a

house. No, I would not do that. And then I want to add one more thing for I let you go. Like you said, you guys move every three years. And it's going to be very unusual market that you can buy a house and sell it quickly and make money on it in three years. Okay, so here's how, I mean, I'll teach you how to do it. I talk to the military guys and gals all the time. I love what you guys do. And thank you for protecting our country. The thing you do, when you get ready, it's your next stop and you think, okay, we got the money. Let's buy a house. What you want to do is you want to look at two different statistics with the local real estate. And just go get one of your Ramsey trusted real estate pros off the website at the ELP site, okay, on our website.

And ask them two things. Number one, in the area I'm looking in, within a five-mile radius of the houses I'm looking in in that area, what is the average DOM days on the market? And if it's an average of 27 days, well, you've got a hot market and you'll be able to sell the house. If it's an average of 270 days, that's nine months. You're going to be stuck with this thing when you move next time. and it's going to end up a rental property in another city, bad idea.

Okay? So days on the market. The second thing you want to look for is average appreciation rates in that five-mile radius. For the last five years, four years, what have the houses gone up in this area? If they've gone up 2% a year, in three years, that's 6%. You're going to lose money when you sell this house with commissions and closing costs. Right. Okay.

But if they go up 10% a year, it's going up 30%, you're going to make money. I will tell you that you will find these two numbers will only appear together and give you the right answer. In other words, if you see high appreciation rates, you're probably going to see short days on the market. And if you see long days on the market, you're probably going to see low appreciation rates. So a low appreciation. And so what happens is if the town is a military-only town, and the military is the military is, the economy, you've got a bazillion houses on the market all the time because the people are moving in and out all the time. There's always a glut in the market. You don't see a lot of

appreciation. It's very hard to sell. You're going to get burned. But if you're in a metro area like you are right now, Virginia Beach is a vibrant economy, separate and apart from the military, heavily influenced by the military, but separate and apart for the military, it's got its own economy. So that could be one of the markets right there that you could make money on. San Diego It would be a market you can make money on and get in and out if you're military. But if you're in the middle of whatever cornfield and it's all military, you're going to get stuck with the house, dude. So be careful with that. We do talk about renting a lot for families.

Yeah, just rent. Just rent. If you're going into the cornfield market, if it's not a vibrant market for whatever reason, and you're going to get stuck, you're much better off financially to rent for that three-year period of time. and your stress levels are way down. Because if you're buying and you've got to move in, fix up, and you're selling, you've got to move out, fix up. And it's a lot more stress to be an owner than it is to be a renter on the short-term basis. So that's what we're looking for. So good question, man.

Thank you. And again, thank you for serving your country. Last thing I'll throw out because I got just a second is don't use the VA loan. The VA loan suck. The Veterans Administration was formed to be a blessing to veterans. and to active duty, and they may be in some areas, but in the real estate world, they're not. VA loan is more expensive than an FHA loan. The interest rates are higher and the fees are higher.

But veterans do it, and active duty people do it because I can get nothing down. It's one of my benefits. Well, nothing down is not actually a benefit. It's causing you to buy something you can't afford. And so don't do the VA. Don't do it. Do a traditional, conventional, Fannie Mae mortgage. Don't do an FHA either.

It's the cheapest. Fannie Mae is the cheapest. A standard conventional mortgage is much cheaper than either one of the two government programs. Well, there's a shock. And so, you know, don't fall for that either for those of you that are out there in military. So we've done a bazillion hours of work with the military folks and love them and try to help them any way we can. So thank you guys.