Dave, Is This A Dumb Idea?
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- Опубликовано: 17 окт 2024
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Dave earns the bulk of my respect when he demonstrates that he is a reasonable person. For example, how strongly he disagrees with Ronald Reagan's housing policies, but still admitting he was a fan of him. It's a reasonable mindset, unlike many people today, who are all or nothing.
Exactly. Dave is right until he is wrong and he doesn’t mind admitting when he has to move the needle to still be right.
I knew that this was going to lead to:
"well, back in the day...." 🤣
@@saulgoodman2018 lolololol
@@saulgoodman2018 And you have proven you have no smarts at all. Trolls aren't smart.
This caller will do well in life--he's young and energetic, a plumber and already doing projects. He should call back in a few years so we can hear how he's doing.
Wonder if we could ever get Dave to debate Roberrt Kiyosoki or Grant Cardone, or any of the top people who preach using debt. No arguing just a good old fashioned debate
I listen to all of them. I would love hearing them all in a civil debate.
100 💯 percent of the homes foreclosed on; had a mortgage!
That would be great.
Kiyosaki is annoying.
He asked Dave if a HELOC was a dumb idea! 😂
Whats a heloc? Lolz
Apparently he doesn't know Dave.
Dave love questions like these. Its shows they are interested in being Realtors but dont have all the answers but are eager to learn. Thats why they are asking questions before making a mistake.
Caller: Should I fly to the moon?
Dave: Sell the Dog
Sell the Doge
😂😂
If you have to ask if it's a bad idea, it is a bad idea.
Of course. Young boys and real estate don't mix. Chris asking about getting a HELOC to make a deal on a property proves he's too naive, inexperienced, clueless and too simpleminded to be messaging in get rich quick real estate. Flipping properties is an imbecilic idea regardless of money involved.
People tell me to use OPM. The problem with using other people's money is that once I borrow it then I'm responsible for it, as if it's MY 💰. If I lose it in a bad investment then I gotta come up with the difference.
OPM=YOM+Interest
Haven't watched it yet but I hope the answer is yes
Noo
Silly comment.
It was Yes lol
Lol
Me either. 3:47 pm
Lol, ask Dave what time it is, he tells you how the watch works.
I’ve done debt with rentals and I can HIGHLY advise to not do this! It’s not worth it. Listen to Dave’s advice and move at the speed of cash.
I done it with debt and succeeded. What went wrong?
Can I ask why?
@@abrahamflores2566 I’m glad it worked for you!
@@bensondentalassociates8690 I don’t like the risk. I would rather have it paid for.
move at the speed of cash...I like that
Dave talks like he's an older man who's been through some things and knows what he's talking about.. oh wait, Dave IS an older man who's been through some things and knows what he's talking about. -_-
Just take his advice and use cash for your transactions (all investments for that matter).
He was born in 1960. When he was 18 and losing money, I had been a Marine flyer for six years. The only risk he took was with money. His crash was survivable; some of the guys I flew with weren't so lucky. You're right, though, he's good at it and I've found his advice helpful.
I don't think there is a dumber idea than taking something you just renovated and letting other people live there. People are gross.
They will wreck your house lol
Some are gross, as you say, but not all. We've had both. Now that we're aged, we got out of the rental business and still have only one house with the most wonderful tenants we every encountered. They do exist.
Some are not gross but most are--I've been a landlord.
Skinny-dipping when the tide goes out lol there’s a picture!
Dave explained it so well to this young man.
After all those expenses, renovations, realtor, taxes, other garbage. You will make literally 0 money selling the house.
Asking Dave about getting a HELOC isn't a great idea for this strategy. There's not a lot of equity in this house, so he may only be able to get $20k - $30k. Probably not worth it.
You're right. Banks will only give the guy 70-75% on a HELOC. That $20-30k could be a 25% DP on a duplex in Springfield, MO. It really depends on what the guy's goals are though.
HELOCs is one of the reasons many boomers can't retire.
Reminds me of when I asked the police if I can rob that one bank.
Narrator: It was a dumb idea.
I wouldn't take out a HELOC to get into rentals, but I'd definitely recommend using a mortgage to get into RE. You have to make sure you have a solid amount of reserves
This seems like the more prudent path forward. A HELOC just for the down payment on a second mortgage is… a lot.
In 2008 and 2020 reserves weren't solid enough for most.
Great opportunity for people with cash when they failed.
A HELOC is a mortgage... please get educated.
@@johnSmith-uz8nl yeah on your own home. Different risk profiles dude. If you fail on a rental property, you still have a roof over your head. If you fail on your rental property with a HELOC, you’re in much rougher shape
Dave skipped a detail. He only got those loans because of family connections, not his own merit, so when ownership changed they called notes on a completely unqualified buyer. Us normal people, those not born to a real estate family like Dave, will never get those loans because we don’t have unfair connections at the bank
The honest is appreciated
I thought a mortgage was a contract between you and the lender. How can the new owner of that contract say they want the money back before the contract says you have to pay it back?
Back in the time Dave owned that real estate, the bank was able to call the note. You needed to provide the cash or they took the property, which is exactly what they did to Dave. If you sign a 30 year fixed note with specific payment terms and are making those payments, they can’t call the note or raise the rate on you.
He wasn't using typical mortgages. He was using 90-day loans which could be called by the bank. If a house didn't sell within 90 days, he'd roll the debt into another 90-day loan.
They can call the note due if they find a transfer of ownership. For 30 year mortgages there’s language in most contracts that say they can’t call the note due unless payments are missed or the buyer is misbehaving. For short and intermediate loans it’s common to have a more drastic acceleration clause
@@megalodon1726 Oh. Yeah that sounds risky.
Idk how many more times I can listen to Dave's story
Then don't. Coward.
I always enjoy listening to his story because he makes me realize that it's better to cashflow in real estate.
Sounds like rebellion.
Yeah, and Dave used 90- day ARM loans, absolutely horrible. By the 3rd/4th property Dave was in the gutter.
Seriously. Dave went full extreme risky leverage. If I had the capital I would throw down at least 30-40% or use the heloc but you better have 9-12 month savings.
I'm no fan of leveraging debt to make money, but yeah Dave never brings up that fact. And being honest is very important.
@@daltonbrasier5491 I think it’s fine if the deal makes sense and you can take on the responsibility. Problem today is people put down 2-5% and go belly under or they don’t and they come out but I rather not go bankrupt and have to rebuild for years when I could have just saved up for a bigger payment or put it elsewhere to make more.
@@tonysoprano6265 The issue is deals will often make sense until something unforseen happens. It's very risky and you only hear about the successes and not the 10s of thousands of failures from this.
@@daltonbrasier5491 agreed.
Dave leaves out that when he was younger he was financing homes with short term 90 day loans. Debt might not be a good idea in certain circumstances but I feel confident his financial product was the real issue with his bankruptcy.
Exactly.
And??
@@FatMenace what do you mean and??? If I got into a car accident going 150 MPH and wrote a book about how all cars are dangerous and to be avoided you would still drive a car because you know better. Dave did the single most dangerous thing when it came to finances
@@FatMenace and what?
@@abrahamflores2566 very good analogy!
Even if he wanted to do this, a HELOC is a callable loan. So even if Dave was for debt, this is still the wrong loan to get.
callable loan... tell me how many banks have called in a HELOC when you pay your interest every month... I will answer it... ZERO.
@@johnSmith-uz8nl but they can if they want in a downturn.
That’s another risk you are choosing to have when you could do a cash out refi and not have that risk.
@@Devinfrbs There are probably a hundred million HELOCs in America and not one bank has ever called one when a person pays their interest off monthly. But if you are not in good standings, then I would agree with you. Being in a downturn has nothing to do with the bank calling your HELOC. Someone that stopped paying off the interest and ignores the bank calls and letters... that is the person at risk, that is the only person at risk. Banks would only call a HELOC in the direst of situations such as non payment of interest over many months.
@@johnSmith-uz8nl - I agree. Highly unlikely. But also - why have that as a risk when there’s a perfectly good alternative that doesn’t hold that risk?
@@Devinfrbs I left out one more risk to a bank closing your HELOC (and this is me). If you don't use it after so many years the bank will want to close it. I hope this does not happen but it may.
Just like shutting the whole world down during that thing going around messed everything up.
What about the millionaire that called Dave’s show who used this method? Dave didn’t tell that guy anything. Why? Because he knew he had to shut up when talking to someone who understands what he is talking about.
Btw you got to CARRY IT by way of paying property taxes. So you can still lose a property if you don’t pay those taxes.
Yes but property taxes without a mortgage and potentially pmi is so much nicer.
I did it. It worked out great.
Dave is so off the mark here. Anybody that has made wealth in real estate is doing it exactly how this caller described. Just because Dave was greedy and dumb when he was younger doesn't mean he has good advice in this situation. Don't forget, Dave made his money selling books, not investing in property.
Source: I'm a successful property investor going on 20 years.
Getting high leverage is the best way to get broke when houses take a little dip in prices
Well like Dave said, he made the money twice. Once in real estate and once in the finance business.
I have used a HELOC to buy property before. I’d never have done it if I didn’t have a LOT of experience with it, and complete analysis and comfort with all the numbers well in advance. I also work in real estate and save commissions on deals and know how to find good deals.
I would not recommend it to someone who has never done this before, and it’s very easy to get into a hole too big to recover from very fast. Be careful out there.
This is the correct answer not Daves NO.
If you research and understand how he numbers and the deal makes sense do it. I wouldn’t because it’s too risky for my taste but I would put 40-45% down on a property so I can manage the payments and rent to make a better profit and invest the income into a Mutual fund. Then keep until death.
However I am not in this stage so just hypothetical idea.
I found all the good deals I want with cash after housing crash in 2008.
Preferred just paying cash,live debt free,and retiring in 40s with two pensions,lifetime flight benefits,company paid retiree medical until 65, and financial freedom to do what I want.
except when govt says. no need to pay rent
@@blackworldtraveler3711 right but if someone is able to handle it and sustain it eventually it will pay off. It’s the same as having a mortgage. Sure you can pay cash but if you can sustain the mortgage then get a mortgage
@@NaNa-lt1po Agreed. But that’s when your renters are either prepared and can make smaller payments and if they choose to make no payments then the landlord should have savings to weather that storm as well.
During 2020 I paid my mortgage even when it was tough I didn’t want to be on the banks program
"It wasnt that i was stupid it was that debt was stupid"
Uh...
Wrong channel bud lol. Go to bigger pockets channel for guidance on this strategy. Dave will just tell you to deliver pizza until you can pay cash for a house
100 percent of the homes foreclosed on; had a mortgage!
Real Estate is the way to go if you have an income capable of doing it
The real estate part of Reagan's tax reform act of 1986 was designed to make it less advantageous for investors to hold residential property (note not commercial) and more advantageous for owner occupants (note non investors). I'm not sure I understand why Dave has an issue with this other than he got burned (probably why lol) If anything something similar would be a good thing today. Institutional investors are a huge factor in this crazy housing pricing surge. They are buying up a substantial percentage of your classic ~800-1500ft starter homes. Simply don't see how making it less advantageous for Wallstreet to buy and hold properties that should be purchased by homeowners is a bad things. Wallstreet has hundreds of other vehicles to pursue wealth, does single family housing really need to be one of them?
My take on Dave's going broke is that he financed illiquid assets with short-term, callable debt. He has a degree in finance, and the first lesson I remember from finance education is to match your maturities. If your debt is short-term and callable, the property you bought better be quickly salable in case the debt is called. If your assets are illiquid, your debt better be long-term debt.
This video should be perfect timing with a lot of people.
Interest hiding fees 🤔
Why do people call Dave and ask him stupid stuff?? As if they do not know what he will tell them.
For a similar or same reason that people post stupid comments.
Yes.
Why did the bank call your notes if you were not behind on your payments?
He was using 90 day loans and rolling them over into another loan if the house didn't sell in time. He was rolling in debt
I watch HGTV alot and all or most of these flips are on paper. Most make a profit. Some borrow to buy house then use there cash to fix just incase something would go wrong. But it is a tv show. Im old so i wouldnt do it but if i was young and had the cash in the right location i woukd try one at a time. Location, Location
There goes Dave again saying he was a millionaire at 26. Maybe he was managing over a million in properties, but he didn't own them. Net worth is assets less liabilities (the total amount he owed the bank). Sounds like he was counting properties 100% as an asset when a bank actually owned the property and he had little or no equity (his liability).
Exactly but that just proves his point even more that these people that are "millionaires" are actually broke
My understanding of the story is that he did technically have $1M+ more in assets than liabilities, but it was all tied up in houses that he wasn't able to sell fast enough before getting foreclosed on. Which just further proves the point of how dangerous a game it is.
It doesn’t prove anything except 90 day loans are way more dangerous then the average real estate investors who uses 30 yr mortgages. He’s comparing apples to oranges
@@MichaelAnderson-wk1no Liquidity issue.
@@stevenporter863 Exactly, but it's not an issue when you have no debt lol
So he got rich but tells the listeners to not do the borrowing method only because Dave Ramseys bank ended up going bankrupt.. come on now.. get a good bank. Get rich
He was doing 90 day loans had nothing to do with the bank being bought out. The new bank just realzed what he was doing. And it is more complicated than I can explain
If your flipping and can't do the work your in trouble. Try find contractors that are fair prices is imposable
Ima guess “Yes”
Debt is okay just have the odds in your favour, cash is a very slow way of going about FIRE
It's usually the ones who want to get rich quick who get burned (instead of reaching FIRE), whether debt is involved or not.
Unless it’s to stop bleeding (e.g., getting a personal loan to get from under a car loan you can’t afford) the answer to debt is always no.
Yes, it is a dumb idea... don't do it!
If you are reading this, remember that Life is worth working on yourself.... make yourself a new brand of yourself to be known and loved and create value to others....a fellow creator~
And yet all those same risks are still true when buying a personal home, but Dave always advices that. No one that ever got rich did it without debt, even Dave acknowledges that in his “millionaire” study - 90% of people have a good portion of their net worth in their home. How did they buy that? With debt.
HELOC is not acceptable with DR for those new listeners.
Ok,Dave this sounds like nonsense.If you’re satisfying a note no bank will “call” your note.I’ve owned all kind of real estate used to have notes paid them all off and never once did a banker bother to even call me as long as I was current.
What Dave is REALLY saying is that you should make as much cash as possible before you do ANYTHING. Similar to what my grandfather told me. Sounds great, but pulling that off isn't always so easy. But if you can, Dave's methods are the best and least risky for the average Joe. Problem is, most really aggressive young men aren't gonna wait that long. So, for that breed of cat, Robert Kiyosoki's method of using debt for real estate is probably the better choice. Debt is like a tool, you can use it the right way or the wrong way. It's hard for me to believe when I hear Dave say that millionaires don't use debt. One size fits all may be best for the average, but in actuality, there are undoubtedly more ways to skin a cat. Don't get me wrong, I am NOT a real estate investor, and Dave IS. I am just thinking common sense here.
Ben Mallah?
I hate how Dave equates the more moden methods of using debt to build a rental portfolio to what ge was doing. Is it a good idea, probably not, but nothing like the idiocy he exhibited when he did it. He had 4 million dollars worth of real estate on 90 day ARM loans with the bank having the ability open to call the notes at any point after the initial 90 day term.
Ken's coffee intake is hurting their bottom line. Hugh thermos.
🤣
If you have have been following/listening Dave for at least a month, maybe even a week, you would know the answer. NO!
But Dave that was not the question
This guy clearly doesn’t listen to the show very often. Dave, should I get a loan to buy something?
Dave wont even get a loan for heart surgery
Dave has several hundred million dollars. Just in case you didn’t know people. Several. Hundred. Million. Now what’s your question?
He’s a Plumber! Already is doing well.
Why you say that?
@@m.c.58 Licensed plumbers in the US make $45-75k and up in a year.
@@m.c.58 Why would you not say that?
Most of your banking you can do online now, I don’t see a bank being bought out in todays society
Banks continue to buy and sell each other all the time.
Remember Washington Mutual? I know that was a while ago but never say never.
I guess these banks didnt go out of business technically but Suntrust and BB&T merged and became Truist Bank. This happened in 2019.
What the heck is a heloc
This guy obviously hasn't listened to Dave. Yes, it's a stupid idea.
The Bible does *not* mention debt negatively 100% of the time. See Prov 19:17 for details.
Dave just talks about his ONE experience. Never mentions all the thousands of good experiences by others. Weird isn't it?
But he’s also taught thousands of people his method and it’s worked for thousands of people. There are many ways to build wealth, but any wealthy person will tell you not to risk going into debt, rich people will tell you to never use your own money meaning borrow it, they look great on paper but are often chasing debt. I know one guy who has about 20mil of property, he borrows from multiple banks so it doesn’t catch up to him, but one day it will. Not everyone will crash and burn but hundreds of thousands do.
You didn't listen to the full call. He said he was in a club that was buying and selling the way he was and they all went broke, about 150 of them.
@@merrileemcdonald8395 They were using 90 day no money down loans and that is why they all went broke. Look at someone like Graham Stephan who loves a mortgage because he does a 20 year one at 3% and invests his other money where he makes more than the 3%
"Don't do it because it didn't work for me 35 years ago."
Hmmmm... I wonder if the world of banking, finance, and real estate has changed since then?
you do it and go broke then
@@AndreOliveira-cu3fy okay.
A lot of triggered comments here...🤣
I like that Dave is consequent.
Dave's personal experiences will not be everyone's.
Then don't call in and ask for advice. Simple
But it was for another 149 that did the same thing
It’s like nobody listens to him and knows what he’s gonna say every single time he says it.
Small time landlord. what's that?
They only have a few rentals. Not like folks who have 25,50,etc…
Airbnb is huge right now, heloc might be tooooo risky
Just keep the new one as airbnb amd save for the down
And yeah dave keeps mentioning his idotic history when he used 90 days loan to flip
Its totally DIFFERENT
NEVER EVER pay cash for investing real estate, never, dont listen to their dumb advise
Dave’s story is good, but he denies that many people do the borrow/invest approach and it does work for them. A wise person will consider both approaches and decide accordingly.
Plumber wants to get rich quick. Maybe he sees the writing on the wall about his chosen profession.
What is the writing on the wall?
bad advice
Who really believes Dave is worth 100s of millions of dollars?? Lol 🤦♂️
Because he is lol🤦♂️
Ramsey is being disingenuous with his “private loans” story..
No bank, nor lender is simply going to “call your loan due”. I don’t disagree with his advice.. but his reason is BS.
Yeah I’m pretty sure he did 90 day balloon loans
Another knock on Reagan, he ended open carry in California and we've been trying to get our rights back ever since 😢
First here imao 🙌🏻🙌🏻
Clown
@@thedoc6932 😀🤣😂🤣😂
First 🕺