Real Estate the Ramsey Way - My Husband’s Ex Is Our Tenant, She Always Pays Late—What Should We Do?

Episode Date: September 8, 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 home ownership with confidence. Beth is in Philadelphia, Pennsylvania. What's going on, Beth? Hey, the crux of my question is essentially my husband owns a home in New Jersey that he rents out to his ex-girlfriend. And, whoa, let that marinate for a minute. You just fed past that.

Ooh, okay. I know. So they, well, he bought it. It's entirely in his name, both the mortgage and the deed. He bought it in like 2016, 2017. And then, you know, a few years later, they broke up. They do share a child together. So that's kind of where the rental.

agreement came in. Yeah. So I wanted to make sure that, you know, there was limited, like, you know, disruption for his child. So, yeah. So he runs out the place to his ex. And now, you know, fast forward a few years, we are trying to get qualified for a home. And the credit report came back and she has been late on payment. So it's affecting our, our qualification process. You don't say, no way. Yeah, I know. I thought X's always did exactly what they said they were going to do. So he's not collecting the rent and paying the mortgage.

He's just assuming that she's paying it. Correct. Oh, yeah. Oh, amazing. This is so great. Okay, okay. And let me say, I kind of get that. He was probably like, I don't want to have to be involved in this if I don't have to be, right?

Like, limit contact kind of thing. That's exactly it. So it wasn't a fun breakup, and so that's a part of the dynamic here, right? One, he wants to obviously be low conflict, what's back for his child in the situation. So just keep that in mind, right? Like that's where his intention was. So that's kind of the situation we're in, right? So how far behind is she?

She's actually, like the payments are up to, you know, are up to date. She has just had a history of like payment. So in this year alone, right, like as of mid-May, she was late on three payments and it's like past the 30-day mark, right? So it's being, it's hitting his credit report. And then we did a more extensive credit report and she was late about 20 times over the history of like the last like five or so years that she's been paying. Yikes. So you're not getting a house. Yeah, you aren't getting a house.

Not for a while. That's surprisingly enough, right? We did our credit report, and his score isn't as bad as you might expect. What is it? Because he's in, I think it was in like the low seventh. Okay. Yeah, that's not as bad as I would expect. Right, exactly.

And that's what the lender said as well, you know, that he was really surprised. But it goes to show you that he is on top of his finances with the exception of this situation. So what's your question? Yeah. Yeah, my question for you is. What would be your advice in the situation to move on from it, right? I would sell the house. Yeah, you got to sell the house and let her get her own space.

It's been how many years? Five years. Yeah. Yeah. She's been married and they hit her and her new husband have a child together. Oh, gosh. Yeah. This is overdue.

Yeah. This long overdue. And I wouldn't make a big drama about it. I wouldn't go talk about the past missed payments. And I would just say, hey, it's been five years. I think we've all moved on. I think we're all in a good place.

And honestly, we're about to buy a house anyway. So we need to clear this out. We're going to give them the right amount of time. We're going to be selling the house in six months or, you know, give them a window to get out of there. And then sell it. Or if there's an incredible, I'm making up a number here. But let's say the house is worth $500 grand and he's got $200,000 in equity. If he wanted to make them just a stupid deal.

on it, they let them buy it as like a gift to his daughter or something like that. Yeah. He could do that, but you're going to sell the house. It sounds like if she's late 20 times over the course of five years, she's got other issues financially. Right. And that's the other thing where like, you know, conscious of because, right, if she can't, like, for context, too, like the house, the mortgage payment is like $1,100 a month, right?

And if like you're late on that, you know, the last thing that I think he wants to do is, and he's not responsible for their finances. So, like, understand that. But the last thing he wants to do is kind of, like, throw them out. You know what I mean? And he's not throwing them out. You're giving them five, six months to get their own space. And it's fair.

He owns the house. I personally wouldn't wait five or six months just because I don't trust what they would do to the house. Or they might just stop paying on it altogether. And they might. And if that, you can stipulize all that. Like, that can all be stipulations in how you do this. But the point is you're giving them a fair amount of time. to find something new.

And if you find that they are not holding up their end of the deal, yeah, you accelerate that process and you can let them know that ahead of time. We're telling you this out of good faith because we love this daughter and we care about making sure you land on your feet. Now, if you abuse that, then we'll accelerate this and you'll be out in a month. Yeah, I'll evict you in 30 days. Exactly. What's the custody arrangement with daughter?

Every other weekend. Okay. Every other weekend. So she stays almost all the time with... With mom. How come? You know, that was an agreement when they first broke up because he was working, you know, two jobs and like he, you know, insane hours. And so that was kind of what they agreed on then. But that's kind of, yeah, outdated as well. Yeah. So. Yeah. Here's the, the broader picture for me is this. He doesn't have an obligation to that mother or that her new stepdad. That's their, that's their, that's, that's their, that's, their responsibility to figure that out. And what I'm going to say is going to sound harsh, and I don't mean for it to sound harsh.

But you and him, by the way, this house is yours too. It's y'alls. Mm-hmm. Okay? And y'all need to decide what kind of life y'all want to live to have, right? And I wouldn't personally want my wife's ex-boyfriend five years later still messing up my financial life. I know.

That's right. Okay. And I can't breathe right if I'm away from my daughter for more than three or four days. Call me a sucker. I don't care. I don't like it. When I'm on the road for two weeks at a time, I get out of sorts. And so if he is okay seeing his daughter every other weekend, more power to you, I couldn't live like that.

And so it may be we're going to revisit a whole bunch of things. And if her new stepdad and her bio mom cannot afford to find a point. place to live, cannot afford groceries. I'm going to have a different conversation with them and the courts about my daughter's well-being and safety. Right. But I'm not going to burn down my financial life supporting somebody that has no interest in supporting themselves.

Yeah, because you're right. If they're struggling with $1,100 on this rent, they're struggling, struggling, struggling. They really, yeah. Or they're struggling, but you know why? Because they can. Yeah. Exactly. Yeah.

I don't know, yeah, how much of that, because it's not like, obviously with the mortgage being only in his name, his name and everything, she wasn't the most financially responsible person. Yeah, because she didn't have to be. He allowed them. You've been the safety net there this whole time. But John is exactly right. You have a stake in this and you all sit down. You sit down together and say, this is what we want. This has been going on long enough.

It's been five years for crying out loud. They're okay to go out on their own. And yeah, I am with you, John. I don't, I could never see my. walk through that house and I put on the market sooner rather than later. 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. Let's go to Lauren in Detroit, Michigan. Lauren, how can we help?

Hi, guys. Thanks for taking the call today. You bet. I had a question. My husband and I are finally able to live together after being married for three years. But I own my house, and he doesn't. He rents. But because of our jobs, you know, his house is the better option to live at. I'm just not sure what to do with my house.

It's got that great interest rate. It's, you know, I'm not sure what to do. What's it worth if you were to sell it today? Um, probably two, over 200, 220. What do you owe? Um, 122, $122,000. Sell it today and put $100,000 down on a new house, both get out of his rent house and you find yours. Who cares about that stupid interest rate, man?

Yeah. You don't want to be a long-distance landlord. Really? People are parking their whole lives on a once in a millennium interest rate. Yeah. Let's play this out a little bit. Let's play it out. because I hear the doubt and we love doubt.

Doubt's not bad. Love it. Let's put this to the test, okay? So let's say you keep it at that fabulous interest rate that you're in love with. What do you think you would rent it for? Any idea? Well, I think it depends on the runner. My daughter, she's an adult.

She's actually interested in either renting it herself or buying it. Let's keep playing this out. Let's play the rent. renting thing out because you presented us with, I kind of emotionally want to keep the house. Am I right? No, I don't think I'm emotionally tied to it. You seem very confused by John's suggestion. You don't want to give up your, this is the last attachment to your former life.

Oh. Is this true? And you may have gone through a divorce or somebody passed away and you got up and you dusted yourself off and you worked your butt off and bought a home and you've paid off half of it. And by moving in with this person, your husband, by the way, this is the period at the end of that former sentence, right? Well, I am just so nervous. I just hate the thought of so much of that new house payment going to so much interest. It just makes me sick.

So much so that you're going to have a $100,000 brick tied around your ankle when you move in with your husband after three years in a new state? No, I mean, I move right now. Right now. All right. Let me go back to where I was going. Let me go back to where I was going. Here's why you shouldn't keep the house. Number one, you're going to be long-distance landlord.

I don't care if it's your daughter renting or someone else. True or false? Two hours away, yeah, yeah. The answer is yes, Ken. Okay. All right. And let's add to that issue. I'm not, I don't know home repairs.

I know you don't. I'm getting ready to make this situation worse. All right. So you're two hours away. and you don't know anything about home repairs. You have to hire somebody. Now, let's talk about how much actual money you would make on renting this house. Okay?

What I was trying to get at, I never got an answer from you, is what is the market-based rent for that house? You don't have to tell me now because we don't need to get bogged down. But here's what I'm going to tell you. You will be shocked if you run the numbers, John, at what you can get in rent versus your mortgage payment. Okay? And let's just say you cleared three, four, five hundred bucks a month. Is that a fair guess? I could, yeah.

Okay, great. Let's say 500. Let's be aggressive in my example, okay? Okay, 500 a month times 12 is $6,000 a year. That's your gross that you're going to get. Then you got home repairs, somebody taking care of the house. That's all on you. So you aren't even going to net $6,000 a year.

All that nuisance, all that worry for maybe 3,000, 3,500, 4,000. a year. It's just not worth it. That's why we were so quick to say sell it and move on. Yeah. Oh, yeah. That's when you lay it all out like that, man, I really was stuck on the industry, too. It's 2.875. I know, and I wanted to destroy the emotion around that because guess what's going to, guess what, when you get a call at 10 o'clock on a Saturday night, and you've just settled down with some ice cream to watch a movie, and the person who's rent in your house goes, we're out of water pipe purse, and you're going to go, ha, man, that's a bummer, but 2.875%

I'm doing the happy day. And then you're going to call somebody. It's not going to happen. It's not going to be $6,500 to repair it. We'll get it done on Saturday. And then your tenant's going to say, whoa, whoa, whoa, whoa, in our lease, you have to put me up in a hotel, and I have to actually have two rooms because just sell the house. But you know, no, no, no, because what you're going to do is you're going to go, man,

that's a bummer. Just out of pocket 10 grand, but boy, that interest rate is great. I love that interest rate. No. No, it doesn't sound so good anymore. So you would just sell it for anything I could get for it and then just put... No, that's you being dramatic. No, sell it for market value.

That's what I'm wondering. What is what you guys would recommend? I would get a real estate pro in that area and sell the house. Or I'm not opposed to you cutting your daughter a deal. You got $100,000 in equity. And maybe you say, I'm going to knock off $25 grand for you because I love you. Or $50,000. I mean, you picked the number.

I'm going to sell it to you for $150,000. I'm going to take $50,000 into my three-year-old marriage that we're finally combining our households. Honey, I'm not living in your gross rent house because sick. We're getting a new place, and I got $50,000 to put down on it. Yeah. And then your daughter's got a great start. That's a lot.

I like that option. That's actually what I wanted to do. And I talked about that with her, too. Like, if that's what they decided to do with her and eventually, like, I was going to say, I was going to say as a parent, don't do any. sweetheart deals just for the daughter. This needs to be a big girl deal. Now, cut her a break on the overall total,

but don't start getting tricky with financing. She needs to be a big girl, and she goes and does it just like everybody else. It's a mortgage and buys the house from you. We're not going to shake hands, and you just pay the mortgage. That's my only concern. Then you're going to blow up every Christmas from here the next decade. Well, I told her flat out.

Like, I'm 42 years old. I can't start out, you know what I mean? Like, at a full house. payment. Like, I need to have that chunk to put down to make sense where I'm at my life. I don't want to start over, you know, nothing. We gave you two really good options, but they're both sell the house, and let's move, and you said you were ready to go today. I think this is the last piece. This is great. Listen, go to ramsysolutions.com and look up the real estate pros, interview two or three of them, have them come over and look at the house, go with the one that you like the most, that feels like

they've educated you and let a pro walk you through this process and to begin to exhale and get excited about this new chapter. Can I do, can you do one exercise for me? I want everyone listening at home in this similar situation to do this exercise, but will you do this with me? Can I do it as well? You can't, can. Okay. All right, are you ready? Yeah. Lauren, close your eyes and I want you to picture that interest rate. What's the number? 2.753. 2.875. I want you to see those numbers. Okay. I see it, John. Now. I want you to open your eyes real quick. That's a little pallet cleanser.

Close them again. I want you to imagine you're looking at your laptop at your checking account that has $105,000, which is what you've cleared. Oh, I like it. Which number do you like looking at more? That big one. That's right. A bank account. Sell the house.

Awesome. And America, stop holding up your life for a freaking interest rate. If you got to move, if you got to change jobs, go. Go! I loved that visualization because I was envisioning her money in my account. I don't know if that was supposed to be what happened, but boy, that's where I went.