Real Estate the Ramsey Way - They’re Building 1,100 Apartments In Our Backyard—Should We Sell?

Episode Date: June 30, 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. Crystal is on the line in St. Louis. Crystal, how can we help? I am looking to get your guys' opinion on some real estate. My husband and I purchased last fall. It's our home. We purchased a home. It's on like three quarters of an acre. It meets a lot of our boxes and stuff like that. But our inspector missed a lot of major electrical stuff. I missed a lot of major cosmetic things that needed to be fixed.

But the big question that I have is after we closed and started doing some renovations and projects on the house, we found out that the vacant land behind our house is, is there is a developer attempting to get it rezoned to put 1100 apartments on. So right now we're in a very like spread out. It's all, I know, it's all like acre lots. Everybody is spread out. And then they're going to plop about 50 or 60 acres behind us. And they're going to put 1100 apartments.

So we are kind of on the fence. So we bought the house last fall for 360. We've already put about $40,000 into it. It appraised for 380. We could maybe sell it for anywhere right now between 380 to 400. Do we go ahead and take advantage of that development not being there yet and sell it and potentially have a loss? I don't think we'd have to bring money to closing, but. Well, how long ago did you buy it?

October. Yeah, so you're going to have a capital gains hit on that if there's any actual gains. And that's up for debate, correct? Yeah, right. I get out of there. Because the market is as good as it was in October. Now, I'm going to give an emotional answer. George may come off the top ropes and hammer me on the financial part of this.

But based on what I've heard, I'd want to get out of there quick as I possibly could. That's kind of how I'm feeling about it. I just don't, I mean, you never would have bought that house had you known that all those apartments were coming in there, correct? Oh, heck no, because they're very small apartments. that are going to be at a very reasonable slash low rent, which isn't going to attract high-end tenants either. And we are going to be sharing a property line. Oh, and eminent domain is going to come in and take like the third of my front yard

because they're going to have to widen the road. Well, that's my question. Are they paying you for this? Well, they'd have to do the eminent domain part, but like the rest of it, they own the land. They're just going through the motions of getting it rezoned right now, which they've gotten like 80% of it rezoned, and they're just waiting for this last little bit.

Yeah, chances are this thing happens. And the chances are the person who might buy your house knows that all of this is happening. So won't that hurt your chances of selling for the price that you want? I don't know because, I mean, we just bought it six months ago. They did not disclose it to us. I would be hard-pressed that the people that sold us to us didn't know

because they've been working on getting it going for six years. And like we got a notice in the mail a week after. and we bought it like, oh, by the way, there's a, I don't need it happening. How many houses are there in your predicament? You made it sound like there were several other folks. So how many? How many would be having? I mean, like, 10 other houses are in the exact same predicament as me and that we share a

property line. Have you talked to all 10 of those people to say, hey. Oh, yeah. And how do they feel about it? They hated. They said they have hired attorneys. And there's two major subdivisions that are going to be impacted quite a bit. So there's probably 50 to 100 houses in those subdivisions. But everybody is opposed to it. I've gone to our county meetings to have for the rezoning stuff. And there's always a line of people to say against it. I see the two things here. Number one, you have a right to be upset and want to get out of this. And the second part is I don't think it's as bad as you think it's going. I don't think this is like end of the. world, the housing market's going to crash in your neighborhood. No one's going to buy. The prices are going to jump down. I think everything's going to be fine in the end. This is a part of

living in America. Yeah, this happens all the time. It's happening in my neighborhood. I don't think it's into the world. I don't think she said into the world. But I don't think it's going to like tank her housing value. I don't think she's worried about. Are you worried about the housing value? Are you worried about the the type of people that are going to be living in your backyard? Both, because I do think like I think we paid more than we should have. because we didn't know a lot of the stuff that was wrong that needed to be addressed. So we spent more money on the house than we had originally anticipated, which is normal. But then we're thinking, like, if we do decide to go to sell it in five years,

we're going to maybe be able to sell what we paid for, which isn't what you buy property for. You know, like that's supposed to be. And that's the part. I don't know that we know the future of what the zip code values will be. The apartments very well could bring, you know, better economic times to your area. We just don't know the future. And so that's the part.

But I also don't want, like, I don't want Riffroff going in and out of my yard because right now the biggest deal, I think I've got to deal with is raccoons, not teachers running around. And again, I don't know how close it's going to be. I don't know what the boundary lines are going to be like. And so there's just a lot of question marks,

and right now it feels like it's all emotion. I would just want more facts because this is the biggest financial decision of your life and selling it will be the same. second biggest financial decision of your life. So I also don't want you to just impulsively jump out either. So I would work with an agent and get some more facts on what's going on and what the timelines are. But are you guys in a good financial spot? Do you guys have any debt? Oh, yeah. No. No debt. Do you have a mortgage on the house? Yes, we do have a mortgage on the house, but everything else is,

we're paying cash for everything else. Okay, good. So again, if you took a loss on this, it's not going to disrupt your financial life and your future. You would just go out. We paid a stupid tax. We're going to do a better job next time. I'm doubling down on my answer. Ken's selling today. I know. I'm not I'm not saying panic. I never give advice like that. And I think what you said is good. But I'm going to weigh in on this what I'm hearing. And I think if you can get out, I would get out. The other option I would be doing is I would be thinking about bringing the 10 people together. And again, I'm on operating with a map here. But if you're all in same situation. I might, if you can't win against the zoners, by the way, I hate to be a predictor of this,

you're going to lose. The county administration, they're always going to go for affordable housing and all that. And money talks. So I'm just going to tell you, I don't like your chances. So maybe you guys come together, go to the developer and go, would you like to give us a fair offer for our land and you get to add more apartments? I'm always going to be creative and try to get out with a win. But if I don't want to be there,

That's what I would do, but I think George is right. Go get a whole lot more information. Don't completely make it on emotion. But I feel bad for you in this situation. That's tough. 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 caller. 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 Ramsey Solutions.com slash trusted agent. Ryan is in Grand Rapids. Hey, Ryan, welcome to the Ramsey Show. Hey, Dave, hey, Rachel. It's an honor to talk to you guys. You too. What's up? So right now, I'm 23 years old. I'm in my first year working.

I have about $53,000 saved up. I'm working to save up for that 20% down payment for the first house. In my mind, I really hate the idea of, of, um, of, renting. I personally just think it's a just kind of a money sink of throwing money away, right? So what I'm struggling with right now, and I feel like it's really difficult for me, is with my income, purchasing a home. It just feels like the housing market is really tough in terms of having to pay that or being able to pay at least, or at most 25% of your monthly take home. What is your income?

So I make about, I take home about 3,700 a month. I did just get a 6% raise. So it's taking effect this month. So I'm not too sure what it's going to be this year. What do you do? I'm an engineer. You have a four-year degree as an engineer and you're making $40,000 a year. That's after tax, but yes.

$60,000 a year. Yep. That seems low. It is my, I am in my first year of working, and I do foresee some salary. Yeah. Still seems low for an engineer straight out of college, making $60,000. What type of engineer are you, civil, electrical, mechanical? So I graduated with a mechanical engineering degree.

And right now I'm working as a control. engineer or like in I've been I'm in a rotational program pretty much where I go between different different areas of engineering so my last one was with maintenance and equipment and then this one is with controls well what I what I would say to you Ryan number one is 20%'s great because you're going to avoid PMI but we do say for first time home buyers to get in the market your down payment can be as low as 5% so just have that in the back of your mind and then also the idea of renting it's not throwing your money away. I understand it can feel like that and you hate it, but it's also buying you time because home ownership is very expensive and to have a take-home pay of, you know,

$3,700 a month and owning a home and all of this. Like it gets, it does get very expensive. And so you want to be in a place where you're able to support yourself for this home that you're going to buy, which is going to be probably in a couple of years, is, is a blessing. And it's fine and it's a low percentage of your world and you're able to fully be able to maintain it and do what you need and pay the mortgage and all of that. And so, you know, that's why our numbers are more on the conservative end with home ownership. But at the same time, it puts you in a better spot when you are patients where we just see people rush in and they get something and it's 40% of their take home pay. And then, you know, they have to switch jobs. You know, a family member's sick.

They have to move. I mean, it just becomes this like overwhelming burden. and putting yourself in a more conservative aspect, it's just better long term, but that's going to mean you having more patience while your income goes up while you're working and saving more. That's all that means. And I'll say this too, Ryan, your first home, when you have it, it may just be a, it may not even be a single family home. You know, you may get a condo or a townhome or something like that, too, just to get into

the market. You can do that as well. So I think shifting expectation is one thing. And then also knowing that, you know, patient. patience is a good thing. And at your rate, you've saved a lot of money. I mean, you've saved a lot. How did you save $53,000?

With what you make? So I did make a good amount of money off of crypto like a couple years ago. And then I just told myself I'd never do that again because it was just, I knew it was stupid. And then I just never did it again. But you made money off. You made 53. That's where you got it. Well, I made about 12,000, but that was a couple years ago.

And I basically just reinvested that into the market. And then I guess the other couple thousand that I've had was just constant monthly contributions that I put into my brokerage account. And then I've also had an internship while I was in college where I made about $12,000. So I just kind of back in. You're doing a great job. I mean, I think you're going to be, you're going to be fine, Ryan. Yeah. You're 23.

You make $60,000 a year. You got $53,000. That's way ahead of 98% of your contemporaries. If you talk to 23-year-olds that make $60,000, the number of them that are debt-free and that have money saved is close to zero. So you're way ahead. I'd like to see your income double in the next five years. As an engineer, it should.

I'm still concerned about that. And it's okay with me if you don't buy a house for two years. That's okay with me. It doesn't bother me a bit. It doesn't hold you back from building wealth. It doesn't keep you free. It doesn't cause you to be poor. It doesn't do anything.

So you're, you know, you're chomping at the bit here. And I'm just going to say, down boy, just calm down a little bit. you're okay you're okay you got time you got time you're 23 uh by the time you're 33 you're probably going to be a millionaire um you know the way you're going so i i i'm not worried about ryan i'm really not uh and if you don't buy house in the next 18 months so what no biggie no biggie and um that you know this is the second generation of americans that has expected to buy a home in the first three years after they came out of college. Prior to that, most people thought it takes five or six years of building your career,

getting yourself established before you become a homeowner. Most generations didn't view homeownership at this stage as being, quote, unquote, normative. And so you're okay. You're going to be fine. I want you to buy a house, but I don't want you to fret over it the way you are right now. So enjoy this ride a little bit and make sure you're getting all you can out of this wonderful degree. And renting right now in this season of life, it's great.

Like you're not having to fix heating and air. I mean, like, you're okay. You know, that patient's element and not that responsibility of homeownership, enjoy that because it's not going to be like that forever. Eventually you are going to own a home and you're going to have everything that comes with it, which is great long term for your financial picture. But just, yeah, you're okay. Like, just enjoy it.

Yeah. And I think it's a good message for, you know, this idea that, you know, the home prices are impossible. No, they're not. They feel impossible because they're way up and they're not coming down. So you've got to start making plans to all of you, all of us, have to make plans to exist in this current world. Because the current world is a 5% interest rate

and prices on homes are not going down. As this economy heats back up, real estate heats back up as the grass starts getting green here in the spring, you're going to see prices start to move up again. And you're going to start to see an inventory shortage that we have get even worse. And any time there's a shortage of something, it drives prices up, not down. So if you're sitting around waiting on all this stuff to get better, it's not going to happen.

No, but you need to be in the financial position to do it. Absolutely. And, you know, so in Ryan's case, he's not waiting for it to get better. He's waiting for his situation to get better before he's ready to go.