Real Estate the Ramsey Way - Is Your Rental Property Helping You or Holding You Back?

Episode Date: June 22, 2026

Not every rental property is a good investment. We walk through the realities of long-distance land lording, losing money on a property, and how to know when a rental may be doing more harm than good. 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 🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership   Ramsey Solutions Privacy Policy

My husband and I have found ourselves in kind of an interesting position where we differ in opinion at baseline on which route to take. So we have a condo in California, and we are currently renting it out. It's not on the market for sale, but our tenants have expressed interest in purchasing it from us because they are looking for a home to buy. What's at worth? We are, it is worth between 375 to 399. Okay. All right. So we are not financially free.

We're currently in baby step number two, nor are we currently receiving an ROI on our rental yet. So we wanted to know is our best overall path to sell this place, or should we keep running it out? Yeah. Well, I can tell which one you want to do. That's good. And by the way, you're right. You're right. You win the argument.

So let's talk about this for a second. If in your situation, what do you owe on the condo? We owe 309. Okay. So let's pretend that you didn't own this condo. And you had $100,000 stacked in the middle of your kitchen table. And you said, okay, honey, we should go buy a condo in California and put $100,000 down. that won't rent for enough to pay the payment.

Both of you would look at each other like you got one eye in the center of your head and say, that's a dumbest idea I ever heard. Right? Right. I agree. You did not buy this condo as a rental. It's a leftover from a former life before you moved to Sue Falls, isn't it? That is correct.

Yeah, it was not. Nobody would do this on purpose. Right. If you were going to buy a $400,000, You wouldn't buy it in California when you live in Sioux Falls. You buy it in Sioux Falls. Right. And you would buy one that actually gave you an ROI.

So there's just so much about this. There's like six things to sell this and none to keep it. Long-distance landlords that are losing money. Nothing about this sounds fun to me to keep around as a toy. Right. So why does he want to keep it? He thinks real estate's the answer to all your riches. That he thinks that in time, the return on the money.

investment will be worth it. Nope. And I understand that, you know, renting, but the market in California with rent, it's California is the problem for me because the market there, even for landlords and renting, it's terrible. But he thinks that property value is just going to go up, and there's always going to be inters wanting to rent it. Property values in real estate do not go up.

fast enough to offset a bad idea. Yeah. And this is a bad idea. I love real estate. The larger portion of my net worth is real estate. So I'm big on real estate. I want you to own real estate. But this real estate, you don't own this real estate.

It owns you. Right. This is a crappy situation. Yeah. Sell it, sell it, sell it, sell it, sell it, sell it. You win the argument, Maggie. But you even knew that before you call. I did, but, you know, and I mean,

And I, and it's not a ha-ha, I win, you lose. No, I'm not saying that. And you're not. I agree. And, yeah, because I mean, I agree, you know, what's, I want you guys to get out of debt. And rent it out. Yeah, get out of debt. Build you a big old pile of money, pay off your house.

And with your next pile of money, if you want to go buy you a nice condo there in Sioux Falls, Sufals is a great market. Go buy a nice condo in there and pay cash for it and watch it go up in value and you'll make money every month. And yeah, then real estate is a good investment. But right now, you got freaking. consumer debt. And this thing barely breaks even if everything works perfect.

Yeah, and that's if everything works perfect. And it doesn't. And I think we kind of handed a nice little out of left field type of Yeah, get out of jail free card. Actually want to buy it. Will they buy it at the market value? We have, well, this is super early in the conversation. But they're, what we were told was that they're,

their looking price is well over, you know, what the condo is worth on the market. Right. Okay, so here's the thing. I love real estate, and I'm telling you this is a bad deal I would get out of it if it was me. Number one, I don't do long-distance landlarding. The most of the time people get into that, it's by default, not by plan, and that's how you got into it. Number two, the thing is not ROIing. number three, you would never buy it again if you didn't own it today.

If you had this amount of money piled in the kitchen table, you would never go do this deal. Not in a million years. No same person would. It's a bad deal. And so sell it, sell it, sell it. If this renter doesn't buy it, put it on the market and sell it anyway. Get rid of it. And number four, you guys have a bunch of debt to pay off.

And so you need this money to clean up the mess. So how much debt have you got? Yes. So total. Not counting your house. Not counting my house, 108. Oddly enough, you're debt-free. Yeah, that's what I was like, we could, you know, if we sell this place.

And that's like $4,000 a month in payments. Yeah. You talk about an ROI, $4,000 a month in payments. How long ago did you move out of this condo? We moved out in the summer, July. Oh, good. So you can still take personal residential. No capital gain on it.

Right. It hasn't been, yeah, it hasn't been a rental for that long. Right. You need to get rid of it before you lose that capital gains right. Okay. Yeah, because you could take all this money that you can get on the table and pay zero taxes and throw it all at your debt and have a $4,000 a month changing position. This is a no-brainer. That are a wise much faster.

It's not like, ha-ha, Maggie, I'm right. But Maggie, ha-ha, you are freaking right. I mean, my gosh. I guess her hope is to play it back, and she gets to say, well, Dave said. Well, and George said. I don't know if that's going to work. All of America said. I wish she the best.

The math says. It doesn't even matter what my opinion is. What matters is the math, this is just dumb math. It's dumb. You would never put $100,000 in an investment in a three states over that breaks even. And if something breaks, you go in the hole, while you have $100,000 in consumer debt. It's almost as if you borrowed money on a credit card and a car to go buy this condo. That's the way the balance sheet looks.

Crazy. Don't do it. Don't do it. Get rid of it. My mom and I want to sell our homes and buy one together, but I think I'll need to use at least some of her savings in order to achieve that. And I wonder if that's a bad idea. Where do we start with the bad ideas?

You just listed off. What's going on here with the codependency of you and mom buying homes together? Well, I'm going through my second divorce. She is widowed. She's 65 retiring this summer. She has limited mobility, and we had a really bad ice storm here this winter, and it was hard for her to take care of the house and the ice of the driveway and still try to get into work. I had to do the same to my house all by myself, and so I figured that way we can take care of each other if we get a house together. Got it.

So you are kind of partial caretaker, and you're coming off of this divorce, and you're kind of needing a safe place to land and have some emotional moral support. I guess you could say that. Okay. Are you an only child, Jessica? I am. Okay. Well, that's helpful. I was going to say, because, you know, if you guys have this plan long term and the house is left to you, right?

I don't know what sibling. I didn't know how that was going to work with all the will and the estate and everything, but that kind of simplifies it. Do you see living with her for the foreseeable future or are you going to want to own a home yourself? Well, she was going to put everything in my name, so it would basically be like she's just living with me until she goes to the reward. Okay. So why not just you buy a house on your own? I would like to do that. The problem is I don't think I have enough money.

I currently have a home. It's a townhouse, and I think I can only get about $190,000 if I sell it and try to get a bigger home so that I can accommodate her. but with doing that, the mortgage is going to be too much for just my income. Okay. And does she have income right now? She does, but with her retiring in the summer, that income is basically going to go away, and we don't know when Social Security and her 401K distributions will come in. What would she get if she sells her home?

We're hoping she can get $200,000. Okay. I just think this is going to be a lot cleaner and simpler and less traumatic if one person owns the home. that's what we were thinking to. So maybe she pays toward the mortgage while she lives there, almost like she's paying you some rent out of her profits. We were thinking that. I was just thinking with paying off the house in case something happens like I lose my job.

I didn't want us to have a mortgage payment over our heads. So that's where I was thinking if we could just pay off the house altogether. We have no debt. Oh, just buy it outright is what you're saying. So she would use her profits and give them to you almost like a gift. Yeah, it's almost like that's part of your, yes. Part of your inheritance, you're getting early while she's alive. Correct.

The worry that we were having is selling my home first, putting the $190 down on a house and maybe using some of her savings. She has $400,000 in savings, maybe using about half of that to put a lot down on the house for the mortgage is decent for me to use while we wait for her house to sell because there is some work that needs to be done on it. And I'm afraid that if it takes longer to sell than we anticipate, then she's going to have to pay this $2,000 mortgage with no income. How much does she have total in liquid assets right now?

$400,000. What's in her 401K? She has a 401K in the amount of $265,000, and then she has $164,000 in her government TSP. She's currently a government worker. Okay. So about 420 or so in retirement, another 400 in cash. Right.

So she's in a pretty decent spot. What I don't want to do is deplete her money to pay off this mortgage, and now she has no retirement, and now you're funding her life forever. I wouldn't mind. That was one of the things I was thinking. It's like, we'll come in. We'll get a house together. If you don't have income for a year while we're waiting on Social Security, that's all right.

If we have no mortgage, I'll have the money to be able to afford our food and utilities. Yeah, you're just signing. signing up for this is it. You were signing up to cover her bills for the rest of her life. And if you're okay with that, that's fine. But you also have to realize you have a life to live too and you could get remarried one day, right? I don't know. This is like a marriage. I don't think I'm doing this again. I mean, never say never. Just saying third marriages exist. And so that's my fear. As you marry this guy, he goes, hey, listen, you're moving into my house. Now mom is living in your house, I guess, rent free, or she needs to be a care, you know, you need to be a caretaker.

she moves in with you. Yeah, it just seems like a big, I mean, a house is the, you know, it is probably the largest financial purchase, right, that you're going to make. And she won't have, because I would not put it in her name. But if she called us,

I'm trying to think what I would be telling her, right? What's best for mom in the situation? And so, yeah, I mean, if you guys go through with it, Jessica, I would put the house in your name, and I, and if you need to, you know, wait a little. bit to make this all work and sell both houses first just to make it clean. You guys can do that, but don't deplete that $400,000 of hers because she's going to need that to live on as well as things in

her 401k as well. 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.