The Ramsey Show - App - Investing in a Bull Market vs. a Bear Market (Hour 2)

Episode Date: June 19, 2023

Dave Ramsey & Jade Warshaw answer your questions and discuss:  "Should we buy land right now?" "What's the difference between a bear and bull market?" "I took out a HELOC to flip a house and now I can't sell it", Dave walks through his first experience flipping houses. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the POTS Moving and Storage Studios, it's The Ramsey Show, where we help people build wealth, do work that they really love, and create actual amazing relationships. Yep, mental health, you got it. Money, you got it. Career, you got it. Jobs, we talk about it.

We're going to mess with every area of your life, if at all possible. Jade Walsh, all Ramsey personality, is my co-host today. The phone number is 888-825-5225 samuel in seattle starts this hour hi samuel how are you hey dave i'm doing well how are you better than i deserve what's up in your world um i'm calling in to ask for some advice about um lately me and my wife have been talking about buying some property um we just we think it's the right time to do it. We just don't know. Uh, we're kind of nervous about making a purchase that big.

Um, so I want to know what you thought about, um, making a purchase for land or maybe even a house on a piece of land that, um, kind of in our price range. So, um, are you out of debt? So we only have one piece of debt, and it's a fifth wheel that we're currently living in right now. We do travel for work, so that is our residence. And we owe about $46,000 on that. Okay.

Job ones, get that clear before you go. You need to be debt-free. Even if you're living in it, it's going down in value. And so it is consumer debt. Okay. And especially if you're living in it, it's going down in value. It's consumer debt. And so, yeah, you need to get rid of that. What's your household income? Right now it's about a hundred thousand. Good for you. Okay. And that's your only debt no student loans no nothing else correct very good okay cool well you can knock that pretty quick then because you guys live pretty frugal you're traveling what do you do for a living

uh we're travel nurses wow why are you making only a hundred um000? So right now I am off. My wife, we just had a baby eight months ago, and my wife just went back to work. I would have thought, I was thinking $200,000. Yeah, okay, makes more sense. One of you is working. Okay. So usually you're making around $200,000, right? Yes.

Is she going to go back to work, or is this the plan? Is she staying home with the kid? So the plan is to have her stay at home with the kid and then you work full-time so the income will stay about the same unless um we're able to be around family where we can both take a contract somewhere then that could boost our income for a short time um but otherwise the plan is for her to stay at home um okay so tell me about this land are you are you going to change everything with the baby then and go live in this house and get rid of the fifth wheel no so what the the plan is to buy a piece of land um and then build like an rv site on it so that way we have somewhere to go back to um whenever we're traveling we take a break we go back to that piece of land and we're paying on something

that's actually going to be ours and then eventually in the future once you just put hookups you put hookups out there and as a temporary measure and and as long as you decide to live on the road and baby's living with you and the wife's living with you in the fifth wheel and here we go yes okay all right i got it that's cool is it are you trying to do enough land to where more than one person could hook up? Or is it just for you guys? We're looking at like a minimum of three acres, but any amount of land, as long as it's the right price,

is going to be fine with us. Eventually, we could maybe add on to that more RV sites and help other people to do the same thing that we do and maybe make a little money off of that as well. What's something like that cost? I don't know that one. It depends on where you are. It's 100% of location, location, and location establishes price.

So, yeah, I'm going to treat this like anything else. It's just a matter of we're not going to buy a house, we're not going to buy land to do this deal until we're debt-free, have an emergency fund, and have a good good down payment and then you're going to put the land on a 15-year fixed where you pay off pay it off uh as soon as possible where the payment's no more than a fourth of your take-home pay uh and save up the cash to do the improvements to do the hookups okay after you after you get on the land okay uh and you can you guys can do every bit of this because you're still square in the middle of the travel adventure and as that adventure winds down and we want more permanent

routes that's what you're seeing out there in the future a few years probably um then you know you by then you will be easily into this land to have the hookups done we start talking about drawing house plans you know if you wanted to and and you know sell the old used fifth wheel that we used to use back when we were travel nurses and so on you know and so you're gonna you're gonna you know that's probably your 5-10 year reality that's kind of why i was wondering if he saw it as a piece of land that other rvs would also be using or was it just for them because if it's just for them i can see them converting it into land for a home yeah but if it's more of like this business model where do you see what i'm saying i would lean personally i would tell you not to do rvs in your own backyard i mean i just tell you just if you're gonna have three acres that's not enough room uh yeah personally i'm just gonna say i mean you're

raising a family you've been so uh utilitarian you know we're living on the road you've been doing it for money and there's nothing wrong with that but there's gonna you're gonna reach a point that your quality of life is what you're after next and if i'm gonna do an rv park later i'm gonna do that as a separate venture after i've got my home settled and that's a separate thing and instead of just plugging them in people right next door to me, I think by then that there's good, you're going to reach a point. The fund's going to wear off of that.

Yeah. Well, when the baby gets older and maybe school age. Yeah. I mean, when your kids are in college, you don't want, you're not,

you don't want, you're not gonna be living in a fifth wheel and you're not gonna be living with a fifth wheel with people living next door in a fifth wheel. For sure. It's just, I mean, unless you're very unusual, that would be highly unlikely so um just just so kind of think about it out there in the future a good rule of thumb by the way for

everybody is the further into the future your plan works the better the plan is that's good you know and unless you just say it's a temporary thing i'm doing this for a year like i know guys and gals that um you know after the uh iraqi war there's a lot of people did contract work in the sandbox and they'd go over there and make like serious money four or five times what they could have made back in the states doing whatever kind of work whether it was military or military related or construction or whatever it was but to get workers they were paying and they'd say okay I'm gonna take a year I'm gonna go make bank and then I'm gonna come back home yeah and that's but it's but they weren't saying I'm gonna go work in a sandbox for 40 years well that's an important

that's an important point you you've got to be somebody who's looking ahead otherwise those transitions that naturally occur in life can sneak up on you and you feel like you're not ready. Sam and I, for years, we traveled internationally 35, 40 weeks out of the year. And even though we were truly, truly enjoying that in the moment, I had to look around the corner. Both of us didn't go, okay, like, what's this going to look like if we have kids? And you got to be planning, okay, what's that pivot look like to get out of that and to get into something else. And just knowing that life has seasons and careers have seasons. And that helps you with your financial decisions. Real estate is a very permanent decision.

Yes. It's not permanent, but it is a very permanent decision. It's harder to jump in and out of a piece of real estate than it is a car or a fifth wheel. Right. So very, very good stuff. Well done. Good job, Samuel. Congratulations on the baby.

Everything's going good. You've got a good plan, man. stuff. Well done. Good job, Samuel. Congratulations on the baby. Everything's going good. You've got a good plan, man. Thanks for calling in. This is The Ramsey Show. Jade Walsh, our Ramsey personality, is my co-host today. The Ramsey Show question of the day is brought to you by Neighborly, your hub for home services. Neighborly is the place to find reliable help for your home from trusted, locally owned businesses like Glass Doctor, Mr. Handyman and Shelf Genie.

Great folks over at Neighborly. Visit Neighborly.com today and find home experts that are available to you. All right. Today's question comes from Christine in Virginia. She says, what is the difference between a bear market and a bull market? And why are they called bull and bear? I don't know how to take these into consideration when I'm investing. That's a really good question.

And I feel like you hear that a lot. It's basically the terms to talk about when the market is up versus when it's down, right? It's like the 20% swing between it being up and things looking great and everybody's optimistic and happy and it being down, which it had been better part of 2022 and even into 2021, I believe. And everybody's like, oh no, we're all dying. And it's a bear market, which I've always, I don't know if I'm right about this, but I've always just thought, OK, it's a bear market. Everything's asleep.

Like it's hibernating. The good stuff's hibernating. Well, I read a I read something that said that it's based on the two animals are based on how they attack you. So a bull like bores you with his horns up right and a bear slashes you and goes down oh i i don't know i've never heard that i had never heard that either that's why i shared a little bit i was more with the run you know bull in a china shop yeah you know run crazy yeah and charge right and uh the bear is hibernating it's more cold yeah so a bear is an extended down market a bull's an extended up market that's right that's what it amounts to

and it shouldn't change if you're in baby step four it shouldn't change anything about the way that you're investing um you invest when the market's down and you invest when the market is up and that's just part of it and over time it balances itself out and you know that's called dollar cost averaging yes when the market's down the shares are on sale like someone oh god the stock market's down when people say that i go oh great the stock market's down they're on sale yeah and so it's like get it you know you know flash sale on friday they're down you know jump in get get while the getting's, flash sale on Friday. They're down. You know, jump in.

Get while the getting's good. That's right. And when they're up, it means that all those shares you bought are doing really good. So there's always something to be happy about if you think of their proper perspective. The only reason you freak out when the market's down is if you think it's going to stay down forever, which there's no historical – I mean historical. There is some hysterical, but there's no historical data that that indicates that there's lots of hysterical data that indicates that so let's talk about i have an angle that i want to discuss this all right so let's say you are you want a dollar

cost average which is you're just putting that same amount you know month after month or whatever if you are a person with irregular income what's the best way to automate that? Like we've talked about before, just like automating these smart habits. What's the best way to automate that if you're not sure exactly what your income is going to be? Well, I mean, you'd have to automate an amount that you are sure about. Because otherwise, you've got to change it every time. But then at the end of the year, you're putting're putting a lot you'd have to do a make good yeah you got to do a make good a couple times a year yeah and look up and go i gotta play a little catch up and those are the times if i'm

gonna put in if i think i'm gonna put in twenty thousand dollars and but my income is very volatile i might automate ten thousand of it or fifteen thousand of it and then do the make good on the other five. And that's when this has got to not shake you. You've got to not go, oh, the market is down. I'm not going to put in this. Yeah. You've got to keep going. You've got to stick with a constant, consistent investment plan, 100%, all the research, all the data of the people that jump in and jump out.

They don't keep up with the constant people. That's right. You can jump in, the people that jump in and jump out, they don't keep up with the constant people. That's right. You can jump in, jump out, jump in, jump out. Because you're using way too much emotion 100% of the time when you jump in and jump out. That's right. And you're not using good data and you're not doing good long-term thinking. You're using freak out as your investment advisor. And don't use freak out.

Freak out is a bad investment advisor. Well, that's one of the reasons that it's good to have an investment advisor to help you not be the freak out. Exactly. So you don't fall for that. The dollar cost averaging is simply if the shares that you're buying in a mutual fund are down because the market's down, then $1,000 that month or $100 or $200 that dollars that month whatever it is buys more shares that's right down it buys fewer shares when the shares are up and the market's doing well but the shares that you already own are worth more it's like a sale so you end up

with you know that you end up with the benefit of having ridden the roller coaster that's right you got the thrill and you're perfectly safe everything's okay so it's all good no one gets hurt on a roller coaster except uh those that get uh those that jump off in the middle that's all that is so jade washall ramsey personality is my co-host today thank you for joining us america cole is in. Hey, Cole, welcome to The Ramsey Show. Thank you so much. Thanks for taking my call. Sure.

How can I help? Well, I'm in an odd spot. I have $55,000 of student debt from a previous career, and I'm in a new career, and I'm finally at a point where I can start paying it back, but I don't know if I should pay it back really quick or I should sort of spread it out and also try to save up. Why do you want to stay in pain? Why would you spread out pain and just stay in pain forever? Why not get rid of it? My thought is I have previously gone through a injury that cost a lot of money that I didn't have at the time and that sunk me some and that I'm finally out of, but that I didn't get out from under for a while. Okay. So you want to make sure that, I think I hear what you're saying.

You're like, do I focus all of my money on this student loan or do I, you know, try to keep some aside for savings and make sure that you don't hit a rough patch again? Am I understanding that correctly? Yes. Sorry, I didn't say that well. That's okay. So the way that we do this is we want to make sure that we're like focusing our intensity as powerfully as possible in one area so that we can get through it quickly right so to answer your first question yes i think that you should pay off these student loans as quickly as possible and the way to do that is to make sure that you're focusing all of your income effort towards that debt does that make sense that makes total sense what do you make uh i'm going to be making 32 000 a year as a graduate student that feels low for me uh it's i got a very good uh offer i know let me say this

i know other graduate students in my field that are making substantially less than that. So you're studying to get a what? A PhD in geochemistry. Okay, all right, so this is a fellowship program, okay, all right, cool, and how much student loan debt do you have? I have $55,000. Okay, and this pays this having this gig obviously pays for your phd yes yeah the phd is in essence free and then this is the money on top of that how long and so you're doing some uh proctoring and so forth as a part of the gig too right uh no actually i was given a fellowship that is entirely research based oh okay research but you're doing work for the university obviously okay oh yeah how long does that last until you're

how long does it take to get the phd four to six years i'm really hoping to do it in four yeah i'm aiming at four for sure. So you don't have a lot of wiggle room in living on $32,000. You don't have a lot of disposable income, income left over after food and rent, right? Is your rent free? My rent is not free. However, it is only $420 a month. Thank goodness. That's nice.

Okay, so you got an unusually low rent. That's very good. And I'm going to be living in a commune, and we all pool money for food so we can buy in bulk. Okay, wow. Cool. That's helpful, too. Okay, good for you.

Well, I'm going to put as much as I can reasonably towards the student loan debt for the exact same reasons. The reason we're pausing is we expected what you were saying to have a higher income as if you had graduated, but now you're still working on the PhD and it changes the conversation. But it's still, as quickly as you can get rid of the $55,000, the faster you get rid of it, the faster you prosper. So back to Jade's point. This is The Ramsey Show. Well, paying off debt is smart. Investing is smart.

Those are both on the offensive side of the money equation. On the defensive side, there would be this thing called insurance, protecting your finances. And, hey, you've got to have good offense and a good defense if you want to win. There's ten kinds of insurance you might need based on what your life looks like, and we built a coverage tool called the Coverage Checkup. It's completely free, and it allows you to really quickly figure out what insurance you need, what insurance you don't need, what you need to upgrade.

And it'll automatically connect you, if you ask it to, to the Ramsey-trusted insurance providers. Ramseysolutions.com for the free checkup. Ramseysolutions.com slash checkup. Ramseysolutions.com slash checkup. Make sure your defense is in order. Nate is in Austin, Texas. Hi, Nate. Welcome to the Ramsey Show.

Hi, Nate. I appreciate it. Sure. What's up? So I'm trying to find out 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 contractors 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 dropped 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 different how much have you lost all the idiots on tiktok have to use residential contractors too yeah agreed yeah yeah this how is easy i got 57 million dollars in 20 minutes and a bunch of crap okay how much of your i'm so sorry nate i've been right where you are and it ain't no fun let's go ahead i'm sorry no no no i want to know how much he's lost no he hadn't lost anything yet he sold it he hadn't sold it i still still have it and haven't sold it yet and um 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 HELOC that I owe,

and then the rest was paid in cash. And I'm in it at $221,000 right now, so I'm estimating with realtor fees and closing costs, it'll be about $241,1 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 messed 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 uh 227 was what i was estimating to get then the market went way up and then it went way down and 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 it's on the market for 260 and it's 200 square feet less than this one so why why hasn't yours 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 work is the workmanship not good well it's it's about an hour outside of austin It's not in Austin. If the house down the street is worth $260,000 and you have yours at 200 square feet more on the market for $217,000, 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 $217,000 and $23 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, I've got about $50,000 in 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 it out? Why? The HELOC is independent of this decision. It's on your home. You could sell this house for $10 and you've still got the HELOC.

Well, I would pay. I'm just saying the interest rate. 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 loan sit around. I know. Correct. Okay. So the, the, the, all right, number one, you need to get, um, 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. A house does not vary as much as it has in this conversation in 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. 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 that's 260 was a new build. Mine was a full renovation. So that's a little bit of a difference. Yeah, 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 water bad bad analysis okay so yeah i i think you need to get some help and look at a 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 i'm either going to change realtors and or i'm going to drop the price when you pay down the heloc you can do that in three months four months five months if you need to or you can sell this house i'm gonna keep lowering this house i mean if you got to drop it at 195 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 your 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 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 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 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 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 exactly that. 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 it 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 Tic 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? 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. Mmm.

Thank you for joining us america open phones at 888-825-5225 jay washall ramsey personality is my co-host today so let's talk flips for a second all right since um gymnastics real estate gymnastics, doing flips, is a big deal. 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. 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. I knew everything about the house before I bought it. I'd gone through it with a fine-tooth comb. In those days, 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 the real estate business so I crawled around on my little back under there with a little torch and fixed all of the spliced, all these pipes, fixed all the pipes, put new carpet in it, went in on the 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 obviously good at this which means that i probably paid myself what a dollar an hour labor yeah well you know i didn't get paid for the labor the 842 was with this free labor i had i had slave labor me yeah you and my wife and my wife yeah so we're in there so that was job one okay the next one i i bought and i thought well i'm not buying any 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 seven thousand dollars 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 park trying to get my $1,500. I wonder if 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 1500 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 uh when i finished with that property it i had already done a whole bunch

of other deals by then uh 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, wait, if that second house had been your first house. I would have been out of business.

Yeah. I would have been Nate. 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 hundred thousand dollar 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 walk around nashville and say i did that house that house that house that house 30 40 years later i want to take that tour and uh now you don't want to be in that neighborhood probably but um okay

some of those neighborhoods are now gentrified but um gotcha yeah they've come back a long way from seven thousand dollars now it's 260 to live on that street and it's a great property not really still in dodge city you shoot up down the street if it's dodge city i don't care whether it's gentrified or not so anyway the uh you're killing me here but yeah so this is this is my real estate career so when i get aggravated at the idiots on ticac 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 i was 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 you know i had to i had to had to be tough with

contractors i had to get with good ones and i and i had to have 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 uh you know not like her we're not in the rental business and then i then i ended up buying a bunch of property i buy packages of houses i buy 10 or 20 at once and they were rental portfolio and i lost every bit of that when i went bankrupt in uh in 1988 five years later i had now i had four million dollars worth of real estate when we went in that's a fast one in a bankruptcy that's a whirlwind it was 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 dumb is what that is yeah 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 uh so you know when you guys are talking about real estate real estate real estate real estate because real estate's real hot right right it's 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 says people who've never had renters that's a dumb butt statement okay let me tell you let me teach you some words 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. 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, I didn't know that. You cannot talk to them. You cannot do anything except everything they wish 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 always, 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 well here's real real estate is great but you 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 what the uh how how much money i'm gonna make i underestimate the contractor the time it's gonna take to run it i i i think it's

gonna 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 bloodied. 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 making money in real estate. It is not a poor man's game.

I think that's the part that anybody can take away from this is it would be one thing dave i feel like if you were sitting here going i tried that real estate thing and this is what happens and it was just like this negative story but then you go on and figure out the best way to do this the smarter way to do it the way that actually works and that's what you're teaching it's not like you're saying stay away from real estate never do it there's just a right and a wrong way to do it. I was 24 years old. I had a million dollar net worth in 1984.

And I made $250,000 that year. That's $20,000 a month in 1984. Okay. In 1988, my taxable income was $6,000. Wow. All I did was sell property in bankruptcy. This is The Ramsey Show. Dave here.

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