Real Estate the Ramsey Way - "You're Broke. You Don't Need A Duplex."

Episode Date: October 5, 2026

Mortgage payments across three properties have become overwhelming and are putting serious pressure on this caller’s budget. 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

My husband and I have gotten ourselves into a bad situation. We just moved into a new house before selling our old house. And then we also have some rental properties that are not currently rented. So we are basically drowning in mortgage debt and the house that we're in now. We've been in for about a month and we're almost considering listing this house too and just seeing which one sells first just to get one sold. And so I just wanted to see, I guess, what you would do in our situation. So the other two are on the market?

So one is not on the market. We're trying to get it rented. It's a duploid. It has a house with a base. Oh, no, no, no, no, no. Sell it. Okay. You're broke.

You don't need a duplex. Okay. We just don't know that we could. sell it. We could make probably a thousand a month on it. We just don't, I guess we haven't listed it, but we don't know that we could sell it to make enough money, but I mean, I want you to sell it anyway. It's not, it's not an asset, it's a liability, because it's not renting for enough to screw with. If you think you've got $12,000 gross cash flow, you know what that means? That means annually you're probably losing money when you incorporate vacancy and repairs and legal fees

for evictions and so on. Yeah, you're not making money. Okay. That duplex has zero fun in it. So list that and then just keep our other one. I'd get them both listed. I'd get them both listed aggressively so I don't have to sell my new house. Okay. The house that we moved out of, we have had it listed for four months and we've had almost no interest.

Drop the price. We've dropped it 25,000 a week ago. Okay. I just keep dropping it until... Yeah, and when you lose your butt on this, learn your lesson. Yeah. You should never have done this deal. Yeah.

You turned yourself into a motivated seller. Yeah. Okay. Yeah. And I hope you don't have to sell your house. You may have sell your house, though. How much shorter you guys a month, Elizabeth? Um, well, I don't really know.

My husband does construct. He has a construction. company, so he some months makes no money, some months will make 50 grand. But we have, we have about $100,000 in our savings and we are feeling like for the next few months, if we keep all these properties, we're going to be taking out of our savings, and then we have some credit card debt too. Yeah, how much credit card debt? $30,000. Okay. Yeah, my hope is that you can get these two properties sold really fast without having to dip

into the 100 too much, and then you can write a check when that's done and get rid of the credit card debt, and you guys need to quit living hand-to-mouth. Construction businesses, I grew up in the real estate and construction business, and too many people in our world think we can out-earn our bad decisions in chaos. And I tried for a long time, and I couldn't do it, and I don't think you guys can't either. The problem with dropping the price on the house we moved out of is that right now, if we sold at the price that now, we would make about $175,000. His dad loaned us the down payment for this house, which was $150,000.

So the deal was that he would loan us that until we sold the house, and then we would use that money to pay him back. So would it be worth it then to just keep dropping the price? Yeah, you might have to write his data check out of your $100,000. Yep. okay okay you've become um all right that it's that or sell the house you're in i mean i don't care but you you called me and said you're drowning i'm trying to keep you from drowning yeah and you have to get very precise very clear and sharpen your machete to keep from drowning and quit trying to

hold on to all these different things with i'm got to hold on to this and the problem with this and i got a and it makes a thousand dollars and it's a stupid duplex and my daddy-in-law and You know, you're going to have to go, something's going to give here. We better decide what it is or it's going to decide for us. Yeah, I think one of the bigger problems is my husband really wants to. We have a few other rental properties that don't, I mean, may maybe a few hundred a month, but he wants to have eventually a bunch of rental properties that will pay. You're going to go broke.

You guys can't make this. You guys are going to lose everything. Elizabeth, I wish I could just wave a wand and just create peace in your life. you guys are just running and running and running and it's not worth the stress. He has bought off on this idea that if you buy real estate, it'll make you rich. Real estate will cause you to go bankrupt if you're highly leveraged in it and you have no money. I know I did it. I'm an expert on that.

I have a Ph.D. in that. And so, you know, just, oh, man. Did you guys have, what's the $30,000 in credit card debt? Was that just to keep? Something else. Is that lifestyle or was that a specific? No, that's my husband, for his business, he will, like, run up his credit card for a job that he's doing. And then when he gets paid for that job, you're, yeah, you're living, y'all are all living backwards.

If you guys, if you guys don't get your business organized and you don't sell off all this rental property and you're probably not going to, you're going to go broke. You're going to lose everything. It's going to come crashing down around your head. I've done this for 30 years. You have all the symptoms of somebody who's going to be bankrupt in 30, months, you're not going to make it. If you don't get your freaking business act together and get your business acumen going where you actually know what you're making and quit running a dad-gum construction company of this size out of your hip pocket with a credit card, that's just completely primitive.

You're going to have to add to your sophistication level to stay open and you're going to have to quit borrowing money up your eyeballs on all these real estate deals and acting like there's no tomorrow. And have to go to dad. You bought a duplex. You bought properties that are cash flowing 100 bucks. translation they're losing money every year you're losing money on all of that and then you bought a house without having the other one sold and you're handcuffed to your father-in-law i mean you guys have done like a whole laundry list of everything that's going to cause people to go broke and if you guys don't rush and undo that laundry list you're going to go broke yes i hope i'm scaring you i hope i'm terrifying you enough that you go in and put for sale signs on everything and you hire a

freaking accountant and get somebody in there to straighten this construction company up and make sure it's actually making a profit. I'm not even sure it is. We may just be swapping dollars the way we do things over there. You guys got to stop this, Elizabeth. You're scaring me to death. My dad and I have been building this house, bit by bit, and we're hoping to have it finished by fall. But to do this, my parents have a heel up on our house where we've been using it to kind of cash full of build. and so I'm at this point where, you know, I went through the baby steps. I started $1,000 paid off the debts that I had, closed my card of cards, have a $23,000 six-month emergency fund.

Oh, good for you. So now I'm sitting at this point where as we're getting closer to finishing the bill, my mom and I are trying to decide what is a better option. I've been paying on the key lock as like as if I have a mortgage, right? but we're deciding if we should be if I should refinance it and just have a mortgage that way they don't have a key lock and they can you know and they're good on their play

right right but refinancing means that I'm adding the cost of insurance I'm adding clothing costs and all these other costs and so we're trying to decide is it worth it if to do that at a benefit to save like half a percent on the fixed rate versus the current adjustable rate that's on the HELOC right now. Well, it's a great question.

So how much would, how much did they take out in the HELOC that would become the mortgage for you? It's sitting at 100, like about 130, 140,000 right now. Okay. And that'll be the total mortgage for you, right? There's nothing else. Or is there another loan that you would? The total is going to be about 155. We're finishing building the apartment.

and so there's some stuff that I still have to buy. Okay, gotcha. To finish, you know, walls and stuff like that. And question, do your parents, are they going to own this home, or is this going to be yours? No, it's under my name already. Okay, so they're just helping pay. Okay. Well, I know what I would do, Ann, if I was in your case, George, I'd be curious if we're on the same team or not, but I would move it to a mortgage.

First and foremost, for me, it's the relational aspect. I wouldn't want any level of risk from my parents from a financial aspect, considering it's equity and their residents. And so separating it out. And I would push to say, if you can't afford the closing costs and all associated with getting a mortgage, then that makes me nervous to be like, okay, can you even afford this house? Right? Is this too much?

But you have a great emergency fund that you can maybe pull some from to kind of cash flow it. But I would do it out of more the relational aspect of keeping this separate and that, yeah, this is yours. This isn't theirs anymore. What would you say, George? This is a gift that is wrapped in a liability. So it just feels icky.

Like, I want to get out of it as soon as possible. So what was the balance on the HELOC remaining? Currently, it's 140, but I can't refinance until I have final occupancy. Yes, right, right. We're looking at a couple of months. But have you actually looked into the math to see if you can afford this mortgage on your own? Yes, I can. Once to refinance.

Okay. What is your take-com pay every month? take home is $3,000, but I have a partner who has an additional $2,500. And are they going to be paying into this as well, the mortgage? Yeah, we're going to be getting married. Okay, okay, perfect. Yeah, so together, it's, so what, it'll end up being what, probably $1,200 a month? Do you know what the payment will be?

I'm thinking it's going to be in the payment being probably about that somewhere between $1,000. $1,12,000. Finally right now with the key lock, I'm paying $860. Okay. But it has the adjustable rate attached to it, too. Yeah. Yes. Yeah. I would contact our friends at Churchill Mortgage, Ann, and they can walk you through all the scenarios, the numbers, the refinance, and walk you through. There might be a third option we're not even thinking of that they can help you with, but I would just get out of this weird relational quagmire first and foremost before any of the math comes into play, whether it's a half percent or I'm going to pay close, costs, this is sort of the cost of salvaging this relationship before anything happens.

You're sort of getting ahead of it because it is putting them at risk. Yeah, and there's something so true about, you know, when scripture says the borrower, a slave to the lender, there's something about when you owe money to someone and you're, you know, having Thanksgiving dinner together. Like, it just, there's just this money piece in the middle of it that is there. You go on a honeymoon after you get married and they go, wow, look at that nice vacation. they took while they owe us $140,000. That they could have put toward the HELOC.

Yeah. And even if it's all goodwill, there's still a, there's a new label on your parents. Like, whether you like it or not, but they are your bank, you know? And so there's just, there's the separation of that. Like, let them just be your parents. Don't rope them in with all that. So, I mean, it's very generous of them, you know, I probably wouldn't have even, you know, we wouldn't suggest a helot to do this.

That's love. But, you know, like it sounds like you guys have a great relationship. You've worked really well. but I, you know, I would. I would have my parents be my parents and not my lender. A lot of these calls could have been solved by connecting with a Ramsey trusted agent. We don't want you to make the same mistake. To find a trusted agent near you, go to ramsysolutions.com slash agent.