Real Estate the Ramsey Way - Everyone Thinks This Is A Good Way To Make Passive Income

Episode Date: August 31, 2026

Everyone talks about Airbnb as an easy way to make passive income, but is it really? Dave and George discuss whether short-term rentals are a good investment and the hidden challenges many buyers overlook. Next steps: ·   🏠 Not sure what to do next when buying or selling your home? Check out our ⁠⁠Real Estate Home Base⁠⁠ for free tools and resources to guide your next steps. ·   🏠 And if you’re ready to buy or sell your home, ⁠⁠connect with a RamseyTrusted® real estate agent⁠⁠. They’re experts who’ll help you confidently navigate homeownership the way we teach. Explore more from Ramsey Network: 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💰 George Kamel 📈 EntreLeadership   Ramsey Solutions Privacy Policy

I'm 61 years old. I make 3744 monthly. I have my home is paid off. All my bills are paid off. And I kind of have extra money. Now I'm putting money in my Roth. I have a $500,000 401k. I have $7,000 and HFSA. And I'm just building my Roth up right now. I only have $3,000 in there. But I'm next thing. Okay, the $3,700 is, the $3,700 a month is Social Security? No, no, no, no. I'm working. I'm 61 years old. I'm working. Yeah, okay. You said you're 61.

I heard that. Yeah, okay. Yeah. So, that's okay. So your questions, your questions what? So I'm looking forward towards retirement, and I feel like I should have, I don't have a pension or anything. So I was thinking about investing in something that I could make money at.

And I was looking at an Airbnb situation. I just wanted your opinion on those. Well, have you ever had dreams of running a tiny hotel? Yes. Really? I actually have. You love that idea of changing the sheets and dealing with all the issues and the damage and the wear and tear from the party. That excites you.

Well, yeah. I don't know how much... I didn't think that all for it. I'm just kind of... I'm playing it up a little bit, but Airbnb has been marketed on social media as this like get rich quick hack and you'll make $20 grand a month if you just do this.

And the truth is it's a lot of work. There's a lot of risk. There's a lot of vacancy and issues to deal with. And your money might be better off put into the stock market if you're trying to make, quote, passive income. This is not passive at all. I just, no. You're running a hotel.

Yeah, I know that. Yeah, I know, but I'm looking also for something to keep me busy in retirement. I'm not going to travel the world. I don't do that stuff. So I guess I'm a little worried about being bored. Well, I think I, well, you know what you want to do. I, in real estate, there is a spectrum, uh, from, uh, uh, a hassle spectrum. spectrum and along the hassle spectrum goes the income. And so the higher the hassle and the more

garbage and trash and weird people you have to put up with, the higher your rent. Okay. So let me give you an example. Some of the best rate of return on real estate is owning a trailer park. Fabulous return on investment cash on cash. But you're running a trailer park. Right. Hello. Okay. I owned a bunch of lower income property and I, in my 20s. Some of it was weekly rentals, about as close to Airbnb as you could have in those days. But it wasn't really they move in and out weekly. It's they paid weekly because they were irresponsible. So they didn't snort it or drink their paycheck over the weekend. They gave it to me on Friday. And that way they kept a place to live. And the weekly rentals were high hassle. Friday afternoon lining up at the door of the office, paying us their weekly rentals. And we made seriously good money because we're renting it for 25, 30 percent more than we'd rented it for by the month. But we had a lot of hassle because of the type of clientele we were dealing with there. I mean, we're having to keep people from running prostitution and drug rings

out of our houses, you know. It was a constant pain in the butt. Now, that's on one end of the spectrum, all the way over on the other end of the spectrum, you could buy a warehouse that's called a triple net lease where they pay the utilities, they pay the taxes, they pay the insurance, and they send you a rent check that's much smaller. But you will never do anything except look up in the mailbox and see a rent check. They do the maintenance. You don't do anything. But you don't make nearly as much return on investment in a warehouse as you do on an Airbnb.

But the Airbnb will work your butt off. You turn yourself into a maid, changing sheets after a batch. Lorette party. Mm-hmm. No, thank you. Okay. The other part I'm seeing here, Michelle, I'm going to find a different side hustle. I don't see the money to even buy the Airbnb in these numbers.

Yeah, where are you going to pay? How are you going to pay for it? Oh, yeah, no, I'm not doing this right away. It's just, I'm trying to think of, you know. Okay. I would buy some rental real estate if you want to buy some real estate and pay cash for it later when you're ready to do this. If you did it six or seven years from now, maybe you got a million dollars, your

half million has turned into at that point. And maybe you put three or four hundred thousand into a rental property and that's part of your deal. And if you want something to do, just go open a small business, have a side hustle that you can solve the border without all of this. Yeah. I personally, I'm just not a fan of the Airbnb. I think it's overhyped, overdone.

Well, the numbers are now showing there's an oversupply and not enough demand. Well, in some areas, in some areas, there's been legislation come out to stop them from happening. Because your neighbors don't want to exist. run a hotel in the middle of a neighborhood because it's not zoned for it. And they're stopping it in some areas. So people that bought a house got a big old payment on it because TikTok told them to be an Airbnb landlord.

Then now they're screwed. So now, I'm not a fan. I'm not a fan. If somebody wants to do that and that's what you, you know, you ought to do 10 of them and you ought to just hire four maids that work for you and three repairmen. And, um, and you plan on being over there every week. and plan on, you know, have the cops on speed dial. And, you know, then you've got your Airbnb, ready set go.

And that's what you're dealing with. TikTok doesn't tell you that part. The neighbors are going to call you. They're going to go, hey, the freaking music over there, hello, it's cranked up again. This is not a rock venue. It's a house. You know, I mean, it's just, this is the kind of stuff you don't deal with all the freaking time. Not a fan, not a fan.

I've seen a lot of these videos, Dave, and I know exactly where Michelle got this from, because people send me these videos saying, what do you think about this? And it's some couple going, we retired and we don't work anymore. We just own 17 Airbnbs, and here's our numbers. We make a million dollars a month, and you can buy our course, and we'll show you how to do it. So that's how these people are making money. Why are you selling a course? That's the big question mark, everyone.

Well, at least I have, not everyone. And the course is only 3,000. I'm going to sidestep my million dollar end. income and I'll go over here and make sure for $3,000 I'm distracted. This is a warning. Untrue, untrue, untrue, and, eh, and, yeah, lied. You just lied. They're selling you a dream.

I'm in California, so I'm considered in their world of high net worth based on my income. I have about $5 million in equities, a little over $2 million, 401k on top of that. So we're looking about seven income around 600 a year. Good for you. Now, my question to you, my question to you is this. It's bothering me that based on discussing with my CPA, that the house that I live in, I guess around 6,000 square foot house, I bought it for 2.5 mil, maybe it's worth 4344 today. the mortgage is about 1.1

and I know I've been listened to you a long time but I feel I want to continue to keep the mortgage because it's free money it's at 2.2, 2.3% fixed but that's a separate issue. But the bottom reason I'm asking is question is I have a lot of equity sitting there roughly around 3 million

and I could be given the fact of my income it's not allowing me to write off any of the $30,000 a year in taxes for property taxes. I have zero write-offs on that. They won't allow me to write up any of the interest. So I'm thinking, like based on my return that I'm getting on my equities with the 401k or the other $5 million, I'm averaging, you know, maybe 12% a year in good indexes. And the amount of money I could be making $250,000,000 a year, that equity I'm better off maybe renting given I'm not getting any benefit of the right off of being a homeowner.

And I don't think in this country necessarily it's a benefit to be a homeowner if you're not getting the ability to be. Well, your analysis, the problem is your analysis is based on a moment in time rather than projecting into the future. And so your analysis is flawed. Okay. And so I'm calling bull crap on your statement that in America today, it's not a good out of the house. That's just bull crap. Because you're looking at this particular moment in time. You forgot the fact that this house has gone up several million dollars while you owned it.

You seem to leave that out of the equation. True. But then again, if I would have put, you know, based on the money. California real estate has done better than mutual funds. R-O-I return on investment. Right, of course. Period. Okay, it's done better.

Yeah, you can't write off the taxes. Welcome to your socialistic state. But that's, you know, that's the problem that you got where you chose to live. But the issue is that California real estate remains an excellent investment. And so, no, no, renting and, you know, putting all your equity in an S&P does not outperform owning real estate. I own a whole bunch of both. I believe in both. And all the people that we know that have $10 to $60 million net worth that we coach,

my net worth several hundred million, own a good mixture of real estate and mutual funds, and they've owned their own home paid for for decades. They haven't over-analyzed this. 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.