When Is It Okay To Buy A Rental Property?

[Music] kevin's in boise hi kevin welcome to the ramsay show hey hello sir how are you better than i deserve what's up in your world hey and question i was trying to find out when you instead of seeing a smart investor pro at what point do you buy a property for a rental income versus investing it versus you know to a investor pro okay well we won't i wouldn't suggest you start buying rental property unless you pay cash for it after your home is paid off and so if you're using ramsey lingo that would be in baby step seven then yeah kevin where are you at financially do you have a paid for house currently yes okay yeah we we have zero debt we have nothing way to go it's amazing yeah i would begin right now to pile up some money as fast as i could to pay cash for my first rental if i was you and i think meanwhile you could probably save 15 of your income still uh towards towards mutual funds that's the way i did it i i you know i got my house paid off and then i just kept doing 15 of my income into retirement in mutual funds that's not that much really and then i every other dollar i could scrape together for investing i just piled it up until i paid cash for my first little rental and that as soon as you do that that you all that rental income will help you buy the next one too so it snowballs in a good direction after you get it going well i guess that's where i'm at now is we do have the cash available to buy a rental income great do it and have it paid for when you get that money you do that so then you get that money where do you put the money from the rent you just put it in some account to go towards another rental yeah that's what i've done uh and i use some of my other money to go towards the next rental because i love real estate it sounds like you do too but you don't have to do that it's not like mandatory part of the ramsey plan or something some people don't like real estate in dealing with renters and all and they just do mutual funds that's okay but what i have done was i would took i would take extra cash and i just opened up a simple s p 500 no commission uh low turnover mutual fund just an index fund okay and i just dump money in that index fund until there's enough in there to buy another piece of real estate and then i dump money in there until there's enough money to buy another piece of real estate the interesting thing was it got to the point that uh it turned out to be a lot of money because as you get a few properties that account builds really fast you know what i'm saying mm-hmm so just just keep going it just seems like a better a better a safer bet with the real estate versus putting it in in the funds it is safer in some ways in that you control more of the variables and real estate is less volatile it doesn't jump up and down as much in price as the stock market does uh it's also a whole heck of a lot more hassle you know stuff breaks on real estate they never call me from my mutual fund company and want an air conditioner yeah and the me and the mutual fund company never calls and says you know i lost my job i'm not paying my rent we don't ever get that from them so uh it makes a little less and it's a little more volatile but it's also a whole lot less hassle i just kind of open up my email and see how much money i made it's not much to it on the mutual funds but i like the real estate but i grew up in that business i love real estate and i've got a bunch of it so but you're doing it exactly in the right order that's incredible paid for house has the cash to buy a rental property i'd i'd go ahead and pull the trigger on this one yeah and and you know usually when we get that call it's somebody who's uh still fighting through their credit card debt or their or their student loan and they're wanting yeah they see dollar signs they've been watching some weekend get rich quick thing on real estate crap and they're about to get their self into a mess yeah i see that a lot on tick tock that's the hot thing is flip houses and real estate investing and these are the same people who have a hundred thousand dollars in student loan debt who are about to walk into a nightmare yeah i mean tick tock pretty good for dance moves maybe but not great for financial advice yeah i'm just thinking financial advice and tick tock this is like there's a lot of bad financial advice on tick tock i will say that yeah that's like the uh youngster's version of stupid you know the other one that gets me is on the other end the old people version is if your financial products are advertised between snuggies and walk-in bathtubs uh they're probably not good you know if washed up uh hollywood figures are if tom selleck is selling you whole life insurance yeah that would be um yeah it would be long-term or not long-term care what is it that yeah no they're selling uh reverse mortgages oh that's a horrible shout out yeah you need to do a fine print on reverse mortgage that would be a fun one that would be good i'm here we can play some tv timeshare in there you could do timeshare on one you could do because if you guys want to the next step the next season for fine print you guys need to email and let george know what he's supposed to talk about we've had lots of great ideas come through it's the email the fine print at ramseysolutions.com if you've got an idea for an episode around a company that is scamming people a product that's terrible for people and there is no shortage dave yeah apparently there's not the time share industries won the reverse mortgages are another one that you could do um and i thought of one this morning when i was listening to the fine print and i'm on my walk and uh is uh actual scams we had a lady calling a guy calling his mom had gotten scammed and uh not not just uh you know semi-legal scams like we're talking about right here like time shares are legalized fraud right but getting your personal information i'm talking about like you know the spanish set up or the nigerian prince or there's you know there's some basic setups with these scams and if you learn kind of how they work and expose them and uh maybe interview somebody with the fbi or something on on these scams that was good i mean we've had some we've had some really interesting calls over there i have fallen for one i fell from one of them yes i was really embarrassed to say it i shipped some shoes to nigeria off of craigslist i was selling some shoes on craigslist the guy said hey send them to my cousin i'll pay you extra for the shipping and i got the email and i said wow he's really willing to pay the extra 50 bucks to ship him and so i just went ahead and shipped him and it turns out the email was not from paypal no once i shipped it i never checked my actual bank account to see if the money was really there i just saw an email from paypal and i went all right he's good to go and i shipped him so that was my uh it was an ebay scam similar to that for a while yeah that they would actually cut and paste and put the paypal on it and uh you know get you to go ahead and pay the wrong account and it was somehow they were hacking into the system and it was a real embarrassment you can replicate emails and websites to look just like the actual company irs is one they is we need your information they're fishing scams we need your information in order to get fishing with a pap by the way oh yeah yeah but the yeah you need to do an episode i know that's good i have a lot of stupid tacks with with scams that's very and senior citizens are the most successful needed tennis shoes and you weren't suspicious i just thought wow what a nice guy he wants to send these to his cousin in nigeria and i was you know i was probably who happens to be a prince yes there was no prince involved there was no red flag no royalty here no red flags except i'm shipping tennis shoes to nigeria than that and guys looking on craigslist for these yeah this is where we pick them up that's generally where we buy our shoes for not here well i just did a segment uh on for media today helping senior citizens figure out cell phone plans and there was one about they wanted to know how to avoid scams exactly and so because that's the primary target of the scams is senior citizens wire us money buy us gift cards give us some personal information so i always say when in doubt hang up if it seems suspicious it seems too good to be true yeah yeah and that pretty much ends the whole thing when you do that

Channel: Ramsey Everyday Millionaires

Views: 198,382

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Id: DuK0D-ohL9k

Length: 8min 5sec (485 seconds)

Published: Mon Dec 06 2021