Real Estate the Ramsey Way - How to Get Rich in Real Estate the RIGHT Way

Episode Date: November 13, 2023

Real estate investment may sound like a great idea, but it could ruin your life if you don’t do it the right way. In this episode, learn when house flipping can work for you, when to run the other direction, and how Dave Ramsey lost it all in real estate. Helpful Resources: Learn more about the types of investment properties, how to get started, and how to make money in real estate: ramseysolutions.com/realestateinvesting.   Find the only real estate agents in your area endorsed by Dave Ramsey.

What's up, folks, Dave Ramsey here, and you're listening to Real Estate, the Ramsey Way. I'm excited for this episode because we're talking about how to build wealth in real estate. Investing in real estate's a hot topic these days, and if you do it right, you can make some real money. I'm personally a big fan of using investment properties to earn income and to build wealth. It's something I personally love to do. But before you jump in feet first, here's a few things you need to know about using real estate to build wealth. Otherwise, you can make some major mistakes with a lot of zeros on the end of them. And trust me, I've done that.

So, stick around to get answers to some common questions about real estate investing. So I did my first flip in 1983. The year before I was born. So that would be 30 years ago, right? Or 40 years ago. 40 years ago. 40 years ago. Yeah.

The first flip I did, I was so stupid that I thought that everything that was a foreclosure was a good buy. That if it said foreclosure, that it must be cheap. I equated foreclosure with cheap, which sometimes is true. I think most people do. But I bought a HUD repo. They used to put them in the newspaper and you would bid on them, FHA foreclosures, HUD repo. out of the news you had a newspaper as a bid process i turned in the bid i talked a banker into financing 100% of it because i had a real estate degree i was a real estate guy i knew all about

real estate and i was 23 years old so i was a freaking genius okay and so i bought this house um i knew everything about the house before i bought it i'd gone through it with a fine tooth comb okay the um in those days they used uh we used uh we used copper pipes for the water supply. And the house had been sitting empty, and so the copper pipes had frozen and split. And so it was pretty much a sprinkler system underneath. And you had to go through and redo the copper pipes.

And I knew how to do that because I'd done renovations work in high school, working for my dad in real estate business. So I crawled around on my little back under there with a little torch and fixed all of, spliced all these pipes, fixed all the pipes, put new carpet in it, went in it on the water, weekends and Sharon and I repainted it. Okay. And I kept all of my receipts for what I spent and paid myself zero labor. Okay. That's how stupid I was. And we put the house on the market and it sold in five weeks. So I'm a huge success. Net, net, net, when I got done, I added up what we had in it,

what we paid for the closing cost, what we paid on the closing cost on the resale. What actual, after every dollar is recorded, what actual net profit. did I make, $842. You're an overnight success. I'm now game on. Can't nobody tell you nothing? Because I'm obviously good at this. Which means that I probably paid myself, what, a dollar an hour?

Labor? Yeah. Well. I didn't get paid for the labor. The 842 is with this free labor I had. I had slave labor, me. Yeah. And my wife.

And my wife, yeah. So we're in there. So that was job one. Okay. The next one I bought, and I thought, well, I'm not buying houses in bad neighborhoods because I don't know anything about all that stuff. I'll get in trouble. But this guy called me up and he had a house and he sold it to me for $7,000. And I ran the, what I thought was the estimate, and I had three contractors look at it and give us bids.

And the first contractor wanted a $1,500 deposit up front, never saw him again. Right. Went to his trailer and knocked on the door in the trailer. trailer park trying to get my $1,500. I wonder I didn't get shot. By the way, he had already left and gone to Kalamazoo or wherever it is. Contractors go when they take your $1,500 because you're an idiot and you give it to them up front, moron.

Yeah. And so then I started on the second contractor, the third contractor, the fourth contractor. And when I finished with that property, I had already done a whole bunch of other deals by then, like 60 or 80 more deals. Oh, my gosh. By the time I finished that property, I ended up only losing $14,000 on a house. I paid $7,000 for four and a half years later. Oh my gosh.

This is how dumb I am. So if that had, wait, if that second house had been your first house. I would have been out of business. Yeah. I would have been out of business. Yeah. You would have been like, I'm never doing this again. My wife would have been going, yeah.

Instead, I managed to delay the pain on that one, meanwhile, doing a whole bunch of others. And I made a lot of money. Yeah. I made a lot of money. I ended up in my life I have owned over 2,000 pieces of real estate. I flipped real estate as my job for four years. I was using 90-day notes to fix them and flip them. I made, and I started buying property at 70 cents on the dollar minus repairs. Wow. So a $100,000 property, I buy it for 70 minus the repairs. That was the formula. And that means I bought a lot of foreclosures, a lot of estates. I did some historic rehabs. We've done a bazillion deals. I can

and walking around Nashville and she had did that house, that house, that house, 30, 40 years later. I want to take that tour. And, you don't want to be in that neighborhood, probably. Okay. Some of those neighborhoods are now gentrified, but they've come back a long way from $7,000. Now it's $260 to live on that street, and it's a great property. Not really. Still in Dodge City.

Shoot up down the street if it's Dodge City. I don't care whether it's gentrified or not. So anyway, the, you're killing me here. But yeah, so this is my real estate career. So when I get aggravated at the idiots on Tic Tac, it's because I was one of them. Yeah. Okay?

I was doing the exact same stuff, and I can smell neophyte, beginner, a mile away. Yeah. Because I was 23. I was going to get rich in real estate. I made $842 minus the cost of my labor. I lost $14,000. And then I went on to make money and make money.

I started figuring it out. that I had to be tough with contractors, I had to get with good ones, and I had to be tough on schedules, you had to be finished, and then you put the house on the market aggressively, and you flip it, you don't keep it, ever. And, you know, not like her, we're not in the rental business. And then I ended up buying a bunch of property. I buy packages of houses, and I buy 10 or 20 at once, and they were a rental portfolio, and I lost every bit of that when I went bankrupt. in in 1988 five years later. I had now, I had $4 million with real estate when we went in.

That's a fast. Went in a bankruptcy. That's a whirlwind, Dave. I worked all the time. And I was really, really good at doing deals. But I'm saying to go from zero to hero, or hero to zero. And back. Zero to hero to zero.

That's a PhD in D-U-M-B is what that is. And so, but I got a lifetime of learning there, and it led me to have. a bullcrap meter that is very sensitive to real estate people. And so, you know, when you guys are talking about, real estate, real estate, real estate, because real estate's real estate's real estate is a popular fad topic again. Everybody wants to do a real estate deal. Everybody wants to do a flip.

Everybody wants to own a real estate. And your renters will pay your rent. Renters will pay the payment. You don't worry about it. It says people who've never had renters. That's a dumb but statement. Okay. Let me teach you some words.

It's Chapter 13. Bankruptcy for I will pay you when by God I want to. Okay? And let me tell you what you can do with a tenant who's in a bankruptcy. Nothing. Wow. You have a stay on you, which is an injunction. A federal court has looked at you like a dog and said, stay.

And as a creditor, if you even call your tenant, you can be held in contempt of court. Wow. You cannot talk to them. You cannot do anything except everything they wish as far. as far as repairs while they pay zero rent. Wow. Because you stay, dog, stay. Yeah, you learn this when you've had a couple of them.

So when renters are, they're going to pay the payment, and it's a free house, and I have a jet airplane, and you're just an idiot. You're just an idiot on TikTok. That's what you are. It's unbelievable. So real estate is great, but there's a people factor with the contractors. There's a people factor with the renters. There's a people factor when I overestimate how much money I'm going to make.

I underestimate the contractor, the time it's going to take to run it. I think it's going to sell faster than it is because I'm always a glass-half-full guy. And right before that's when you get your freaking nose-blooded. Slow down people, pay cash for this stuff and run it like a business, not like a get-rich-quick scheme. It's your only hope of doing making money in real estate. Cat is with us in Pittsburgh. Hey, Kat, welcome to the Ramsey Show. Hi, Dave.

How are you today? Thank you for having me. My honor. What's up? Yes, I just wanted to give you a little bit of background about me. I'm married currently. Mark and I just got married on May 7th. And we are currently debt-free.

Thank you, Lord. And we have approximately, about 70 to 80k in liquid. And we make collectively right around 70 to 75 yearly. And what we are doing right now is we're renting an apartment. So with our rental, rent and utilities, our expenses are right around 850 to 900 a month. And right now we do have some crypto investments. And we'd really like to get into retail, I'm sorry, real estate investment as well.

But we're not sure if maybe either moving into a duplex for our first home would be the right choice as far as making, you know, having a place to move into and obviously making some investment on the other side of that duplex. Or if maybe we should like buy a smaller home, fix it up and within a year's time maybe move out of that to another one and then just rent that home out or flip it. But that's what we want to ask you. Well, I think a precursor to the answer is the rule that we use at Ramsey is we give you, we answer your questions of what we would do, knowing what we know, if we woke up in your shoes. Okay? And by the time, I started with nothing. And by the time I was 26, I bought $4 million for the real estate.

I was doing flip this house before Chip and Joanna were born. Okay. Literally. I mean, I'm not kidding. It was early 80s, right? And no disrespect to them because they're wonderful. But the, you know, and I was using short-term notes to borrow money to flip the house and make a profit. I made a profit on almost every deal I did. And I still went broke because the bank got nervous and called all our notes at one time. And there's a word we use for real estate that sells really fast. cheap. So we end up selling the real estate for less than it was owed on it, which was way less than it was worth to keep foreclosures from happening. And it broke me. And I lost everything in my 20s. Okay. So that's who's answering your question. I, by the way, do love real estate. I own several hundred million dollars worth of real estate today. But after that, I quit borrowing money. And so that's the guy and the place that you called to get your question answered. You need to know that.

It's in fairness, okay? So if you want to, to flip this house with money, borrowed money, and all that kind of stuff, you're really on the wrong show. You're not going to do what we tell you to do. Okay. So having said all that, you know, here's my answer on duplexes as your first property. And then here's my answer of what we would do if we woke up in your shoes. The beautiful thing about a duplex is your renter lives next door. The problem with a duplex is your renter lives next door. Can you tell I've been there? Okay. So if they want something, they can knock on your door. But you also don't have much trouble collecting the rent because they're right there.

Cars in the driveway, you know, and so we're going to get our money. We don't have to wait on some thing to happen. And so you have to set some relational, emotional boundaries if you're going to do that. That's the problem. It's not that bad. The biggest issue I had with duplexes, and I've owned, I don't know, probably a hundred of them, is that the, uh, typically are rental properties. And so typically the buyer, when you get ready to resell them is another investor who's looking for a deal. The buyer, when you get ready to sell that same square footage of house as a duplex and a single family is a cute little couple that wants a picket fence and a place for their French bulldog to run around.

It feels like a personal attack. Yeah, it was a personal attack, George. Just take it for what it is. And they're willing to pay more like retail. And so single-family homes of the same square footage within a two-block area will go up faster in value than duplexes will. Because of who your pool of buyer, future buyers are in general. Now, a nice duplex will outperform a lousy single-family neighborhood. I'm not talking about it.

I'm talking about apples-to-apples comparison, okay? So if you could find a really cool duplex, in an up-and-coming sweet, re-gentrified neighborhood, might be a real seriously good play, right, versus buying a dumpy single family, okay? So that's your upsides and downsides on duplexes. What would I do if I woke up in your shoes, and George, I'll let you chime in after the personal attack.

But the, is I would pay cash for my first home as soon as I can, and you're very close to doing that once you have decided you don't like losing 50% of your money in Bitcoin. And so... How much do you guys have in crypto? Just curious. Um, well, since we just got married, we haven't merged all that yet. I really don't know how much he has. I have approximately just shy of 10 grand. Okay. Okay. You guys are much, you like risk more than I do, but I've been broke. That's another thing you need to keep in mind. I don't like risk much. I don't like losing money. I lost a bunch of it. And it's too hard to make. I don't like losing it. So, and I know that because you're playing with lottery money over there. crypto's, you know, you've lost your butt on it. And I'm going to stand around acting like you did

something cool. You know, it's just, it's, it's horrible. So I'd be getting out of that. I'd be buying some real estate that I pay cash for, George. Yeah, I mean, you guys don't have a home currently, right, primary residence. So that would be my first goal. I wouldn't mess with the duplex. And plus, they're really hard to find right now because you're not the only one who had this awesome idea. And so if I'm you, I'm getting to a primary residence with the money you have, put a strong down payment down, work on paying that office. as possible, and then, man, the world is your oyster. Pay cash for your real estate.

What I did after I went broke at was I got my house paid off, took me a little while, then I saved up to pay cash for my first rental. Not the sexiest answer, though, because they want to do this tomorrow. You know what happens with a rental that you have zero debt on? Cash flows like a bandit. It starts just stacking money up. And able to pay cash for the second one fairly quick. and you got two of them sitting there with zero payments,

you're just stacking money. And you can buy the third one. Then you're just stacking money. And ever since then I've been just stacking money. And then I have some idiot walk up to me and go, you're so lucky. Look didn't have squat to do with it, Dober. I used a system and a process, you know?

But, Dave, the renter's going to pay my mortgage. No, they don't. It's a brilliant point. Can you say pandemic? Can you say... eviction moratorium. Yeah, yeah. Yeah, you can't get them out.

And you know what? I had some people that had some serious problems during COVID, and I could be gentle as a landlord. Because you don't need the money. Because I didn't have to have the money to eat. You know, I had one that had cancer. I don't throw somebody's got cancer in the street. I'm not heartless. Survey show that most Americans think real estate is a great long-term investment.

And I agree, but it's a big commitment. that involves a lot of time, money, risk, and hard work. So you don't want to go into this thing blind, but you can learn more about the types of investment properties, how to get started, and how to make money in real estate. Just check out the link in the show notes, or go to ramsysolutions.com slash real estate investing. Nate is in Austin, Texas.

Hi, Nate. Welcome to the Ramsey show. I appreciate it. Sure. What's up? So I'm trying to find out I have about 12 years of trying to convince my wife to let me buy a flip house. Finally convinced her after saving up about $50,000 to do so. And she didn't want to do it, but she made me promise I wouldn't try to rent it out that we would sell it at the end of it after a three-month construction duration that was supposed to be.

This was back in November of 21. I bought it. And we're now a year and a half later. That three months has turned into a year and a half. And finally, after three contracts, got the house finished and put it on the market in April. And it's been on the market for a little over 60 days now with showing or two every other week or every week. And no offers or anything like that.

I've got the price from 240 down to 217 and still not seeing much more movement. So this is harder than they say on TikTok, huh? Much harder with the residential contractors. It's a different... How much have you lost? No, all the idiots on TikTok have to use residential contractors, too. Yeah. Agreed.

Yeah. Yeah. How is easy. I got $57 million in 20 minutes. Mm-hmm. A bunch of crap. Okay. How much of your money have you lost?

I'm so sorry, Nate. I've been right where you are and it ain't no fun. Go ahead. I'm sorry. No, no, no. I want to know how much he's lost. No, he hadn't lost anything yet. Not yet.

He hadn't sold it. Correct. I still have it and haven't sold it yet. Do you have a mortgage on that property? So I have a HELOC on my personal property, my own home, and I've paid cash for the rest of it. So I've got $157,000 in the HELAC that I owe, and then the rest was paying cash.

And I'm in it at 221 right now, so I'm estimating with realtor fees and closing costs. It'll be about 241 that I'll be all in. but you're on the market for 217. Correct. So you're going to lose money? Yeah. Definitely going to lose money for sure.

Okay. And because you missed your estimates up and your contractor choices up, and so your construction cost was way above what you originally planned in your pro forma? Well, no, my pro forma actually was 227 was what I was estimated to get. Then the market went way up, and then it went way down. Well, I didn't go way down, but it's, for some reason, it's just not selling. The house, there's a house three, three-story, or three-houses down that's selling for 260, and it's on the market for 260, and it's 200 square feet less than this one.

So why has insurers, you should be giving yours away at 217? Why are people not crawling all over it? The Austin market's not that dead. Is the workmanship not good? Well, it's about an hour outside of Austin. It's not in Austin. If the house down the street is worth 260 and you have yours at 200 square feet less on the market, 200 square feet more on the market for 217, someone should have snapped yours up in a heartbeat. I would have thought the same thing.

My realtor said that the comps, when we were going through this, was between 217 and 238 is what the comps were. Other realtors that have come through said it's a great price point at 225, and now I've dropped it down even more. So I don't know why it's not selling, but I'm trying to figure out at this point, do I, I've got about $50,000 in cash that's not going to, or investments that are not going to have a penalty if I take it out. I'm trying to figure out, do I pay down the HELOC and just wait, wait it out? Why? The HELOC is independent of this decision. It's on your home.

You could sell this house for $10 and you still got the HELOC. Well, I would pay, I would, yeah, I'm just saying that. In your mind only are they connected? Well, he's just trying to think, I don't want to lose more money on interest, having this loans sit around. I know. Correct. Okay.

So, all right, number one, you need to get, jump online at Ramsey Solutions and get in touch with a Ramsey trusted, endorsed local provider, real estate agent, and have them come out and look at it. Because they're someone that's going to have at least three years of experience, and they will have moved hundreds of units, not tens of units. And they will be able to give you some insight. and you may want to change real estate agents again. So, first thing, because the numbers you're giving me don't make sense.

I agree. The house does not vary as much as it has in this conversation and value. Have they given you any, what you would call, negative feedback as to why there's the variance there or why it hasn't sold? So she's still saying that we're within the right range. The only, there isn't anything like the house looks good. There's no concerns about the house itself. The neighborhood is up and coming. There's a lot of new builds.

The house was a 260 was a new build. Mine was a full renovation. So that's a little bit of a difference. Yeah, they're not, it's not a little bit of a difference. It's a completely different product. They're not comparables. You wouldn't use a new build as a comp for a renovated old house. They're not comps.

So your earlier comparison doesn't even hold you. water. So bad analysis. Okay. So, yeah, I think you need to get some help and look at truly go to Ramsey Solutions and check out Ramsey trusted person. Have them look at it. This is what I would personally do.

And then based on what they're telling me, I'm either going to change realtors and or I'm going to drop the price. When you pay down the he lock, you can do that in three months, four months, five months, if you need to, or you can sell this house. I'm going to keep lowering this house. I mean, if you've got to drop it at $1.95 and get it gone, get it gone. Because here's the thing. You have gone to the school of life, and you are paying some stupid tuition.

Okay? You did not analyze or understand the marketplace for contractors. You do not know how to hire or manage contractors. You do not know how to run a pro forma on a flip because you didn't have any margin in your flip. Your flip needed to have another 25% margin that had. You paid too much for this thing going in, considering the amount of work you had to do to it, because your margin after you sell it is not anything. You're not making spit.

If your contractors had worked well, it would make spit. And so you've got to go back through and do an autopsy on why this deal failed, where you failed in the process. Since you're going to pay $40,000 or $50,000 for this lesson, learn the lesson in detail. And the most painful lesson of all is his wife going to say, I told you so. I told you don't do this.

So you did not put proper valuation on the house. You underestimated the cost, and you underestimated how hard it was to deal with contractors, and you underestimated the time it was going to take to flip it, and you underestimated that you were going to continue to be in a white-hot market. That's three things I can tell right now. You didn't know the value. You thought you did. You didn't know the heat of the market, and you thought you did,

and you don't know how to deal with contractors, and you thought you did, and you missed your estimates on your construction, and you thought you did. Those four things combined are going to cost you $30,000 or $40,000 before you're done, if you're lucky, only that. But either way, sell the thing, get rid of it, dump. You can pay off the home equity loan then. It's just a matter of how much of your cash you're going to lose. You're going to net $150, so your home equity loan's gone. It's just a matter of how much of your cash you're going to lose.

Then the last piece of this is this. I used to do crap like you did. Only I did it to the tune of about $4 million worth, and it caused me to go bankrupt, Nate. That's why I got no patience for it because I was like, Exactly. Only, I was successful at flipping them and making a profit. But I had a lot of short-term notes, and the banks called my notes. I was 28 years old and bankrupted me 30 years ago. So I've learned my lesson on doing flips with anything but cash. And I don't listen to people like Tick-Tac people that are doing real estate seminars either. I'm done with it. So those are the things I learned. The last one is this. Proverbs 31 says, who can find a virtuous wife for the heart of her husband, or she is, she is more valuable than rubies. For the heart of her husband safely trusts her, and he will have no lack of gain. I don't do crap like this when my wife doesn't feel good about it.

It costs me money every time I do. Christian is with us in Greensboro, North Carolina. Hi, Christian. Welcome to the Ramsey Show. Hey, Dave. Yes. So I was calling because I had a question. I have $6 million worth of property here in the area.

and I owe almost $3 million, about $2.8 million in loans. My question was, do you think it's wise to sell some of my portfolio to pay off the loans and be debt-free, or should I utilize the monthly cash flow to pay off the loans fast? What do you think? Well, congratulations. You've done a good job. You've got a good equity position. and you've obviously got a going concern.

And there's a lot of different ways to attack the situation where you are. You can keep doing more of what you've been doing. Here's what I learned when I had, when I was 25 years old, 24 years old, I had $4 million worth of real estate. And I owed $3 million on it. So I did not have as good an equity position as you do. Okay, I was about 75% loan to value. You're about 50%.

all right but i ended up losing everything because the bank got sold to another bank called our notes we had a lot of flip notes out of 90-day notes and it caught me and took me out and what i learned from that going broke process in my 20s 30 years ago was that those of us that love real estate people like you and me christian uh sometimes we forget to measure risk common sense tells you and actual business analysis tells you that the more debt you have the more risk you have. Would you agree with that? Yes, indeed. Okay. And what I've discovered now over 30 years, not only of teaching these things, but of living a completely debt-free life, and I, today, on several hundred million dollars worth of real estate. And what I've discovered in that

process, building that portfolio a different way over this 30 years, is that the lack of risk with having no debt has accelerated over the long haul the amount of real estate I can own because I don't make as many mistakes I don't have setbacks I don't have cash flow problems

I've always got cash can you imagine how much cash my real estate throws off with no debt it's obscene okay and so but I can buy another piece of real estate with just cash full

flow fairly often because we've got tremendous rents coming in on these things. Now, so all that to say, what I have learned from my personal walk and from walking with others is that where I know you will be the best off in 10 years and have the most wealth because of the lowered risk and the increased peace in your life is if you were debt-free. Now, do we have to burn everything down and do this? suddenly because you and I had a conversation? No, I think you have a gradual process and you say, okay, over a year, two years, three years, whatever it is, I'm going to move in that direction because if I were in your shoes, I would rather have $4 million of paid for real estate than

$6 million of real estate with $3 million with a debt. Very sure. And that's about where you will be because your real estate will go up in value while we're doing this. All right. So how long you've been doing this? Apparently you've been doing it a while and you're good at it. Well, I've been doing it since 2012. I actually used my W2 to help me purchase property,

and I was also flipping at the time. Yeah, okay. And in 2019, I decided to leave my job because I was able to sustain myself and all the deals. Yeah, and so you're doing flips in addition to this. Yeah, well, flips are more so like, For fun, I do a flip maybe two, three times a year. Okay.

Just good pocket money. Okay. Yeah, you can probably live off your flips and then your other stuff just generates income. That's awesome. Well done. Good for you. Well, here's what I figured out. When I'm doing a flip, I buy something differently if I'm paying cash.

And when it is paid for, I am in no rush to sell it. So I never become a motivated sell. or a motivated buyer. And I get better deals on the buy, and I sell for hire on the sell, because I got all kinds of patience with no payments. But when the payments eating your back pocket out, it makes you want to jump and get rid of that thing. You know what I'm saying?

Exactly. And I've been phoned you for quite a while, and I would like to be debt-free at some point. That's why... Have you got any properties that are higher L-to-Vey? that are 80, 90% LTV? No, like usually when I borrow, it's really, really low. I mean, you're at about 50% on the portfolio.

You don't have any that are higher than that. They're all about 50%. No, not at all. Okay. Because that would be the first ones I divest. But since you don't have those, what I would do is just look at the portfolio and go, okay, 10 years from now, which one of these suckers do I want to own? and start going, okay, I'm going to use some cash flow and knock out a few, and I'm going to

liquidate, I don't know, a couple million dollars worth or a million a half worth or whatever it comes out to be. And, you know, between those two things have a two or a three-year plan to be free. Because, again, you're going to be wealthier and you're going to have a better life if you start with $4 million of paid-for real estate three years from today. I'm not arguing with that. I think he got a, I think he got the nice Dave version of that. That was great. Well, he's, he, the reason is is because he's actually pulling it off.

Yeah. He's not, he, he could probably survive and not, and do, you know, 10 years. Now, you start doing this nothing down real estate crap on Tick-Tac. Mm-hmm. You're not going to survive 10 years. Yeah, that's true. Because all the guys that I knew doing that in any generation have gone broke, including me. Mm-hmm.

So, but he's sitting in a 50% equity position. and so he's going to cash flow. And if he manages the property well, and he's been doing it a decade already. Yeah. So that tells me he's really got his crap together. But now we're down to the simple philosophy is, you start asking yourself,

is this debt-free thing really better? Mm-hmm. And the actual end result of the data is, yeah, you end up better. Not just a better feeling. Right. You end up with more money. Well, yeah, you laid that out really clearly. I think that he has a good,

good strategy for him and something that he can start walking towards, which is really cool. Yeah. Those of you that are playing with real estate or want to play with real estate, let me just tell you something. You will never put in, you will be less likely. Never, you can always do something stupid. You will be less likely to put a bum tenant in a property when you don't have any payments. But when you got payments, you're looking for somebody to pay those payments with their rent. And you're more desperate as a landlord. to fill your vacancies and you're more likely to go, well, I know, I kind of had a bad feeling.

Turns out she was doing drugs, who knew? Wow. But, you know, I mean, whatever it is, right? And you put a tenant in there that's a bum, and then you've got a mess. They tear up the place. You go through, you still go through six months with no income. You go through an eviction.

You go through all this stuff, bankruptcy's on them, everything else. It's a mess. But you won't overlook that if you're going, I don't think unless you really make me, feel good that I'm going to let you have the privilege of living in my property because I don't have any problems now and I don't need you to bring your problems to me. That's such a good point. Yeah, so you just, desperate landlords make stupid decisions like desperate people of any kind.

And it ends up costing them more. Yeah. Okay, guys, remember your first investment property should be your primary home. After that's 100% paid off and you've completed what I call Baby Step 6. you'll be ready to start saving to invest in additional properties. In other words, you're completely debt-free house and everything. You have a three-to-six-month emergency fund. You're also investing at least 15% of your income into retirement accounts, and you can put down 100% on an investment property. You're going to pay cash for it.

Then you're ready to get started. I know that's weird, and I know that waiting until you paid off your home probably sounds like it takes forever, especially if an opportunity is knocking at your door right now, but trust me, it's worth it to wait until you're really ready. You won't have to take steps back for penalty. Thanks for listening today. Make sure to share this with a friend who you think would enjoy it.

And don't miss the last episode in this series where I talk about why you should pay off your mortgage as soon as possible.