Dave Ramsey - There’s a widespread notion that real estate is easy money

from https://moneywise.com/real-estate/real-estate/ramseys-big-clue-youve-never-owned-investment-property

Dave Ramsey says when he hears 1 thing about US real estate, it’s a red
flag they’re ‘novice at best’ and ‘idiot at worst’ — here’s the ‘ridiculous assumption’ Americans often make
A still of Dave Ramsey speaking on set of his radio show.
Anna Webber/Getty Images for SiriusXM
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Vishesh Raisinghani
Updated Mar 16, 2025
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There’s a widespread notion that real estate is easy money. Just buy a property, rent it out and let the tenants cover all the mortgage and maintenance expenses while you sit back and sip a margarita. Couldn’t be
more simple, right?

Well, finance guru Dave Ramsey vehemently disagrees, calling this a “ridiculous assumption” that trips up a lot of potential investors.
Anyone who believes the rental business is that simple is “a novice at
best, an idiot at worst,” he said on The Ramsey Show.

Here’s why the entrepreneur and veteran investor, who says he’s owned
more than 2,000 properties worth “several hundred million dollars,” dismisses this common misconception.

How rental property really works
The assumption that tenants take care of the payments every month hinges
on a misguided assumption that rent payments are predictable, reliable
and consistent. In the real world, Ramsey explains, that’s simply not true.

“Anybody who’s ever had a renter or been a renter, and I’ve been both, I have been a renter too, knows that sometimes renters don't pay,” he
says. “Sometimes, there’s cancer. Sometimes, there’s car wrecks and job loss. Sometimes, there’s a pandemic.”

Ramsey calls it a “ridiculous assumption” that renters provided a steady stream of income every month that investors can rely on to make their
“stupid little payment” every month.

Indeed, 42% of Americans said they don’t have an emergency savings fund, while 40% say they can’t deal with a $1,000 emergency expense — despite
60% of them reporting facing an unexpected cost in the past year,
according to a survey by U.S. News. In other words, an unexpected
medical bill or vehicle breakdown could delay rent payments.

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As of November 2024, 14% of renters had faced a late fee on their rent
payment within the past 12 months, according to the Consumer Financial Protection Bureau. That ratio was 23% in early-2023.

Missed and late payments are only some of the risks landlords face. In
the 50 largest metros across the U.S., it is now cheaper to rent a
property than buy one, according to Realtor.com. The combined costs of
mortgage interest, taxes, maintenance and homeowners association dues
can be higher than the rent available in certain cities, which means the
rental property is cash flow negative.

Put simply, many landlords are actually paying more for their property
every month than the tenant is paying them. If cash flow isn’t properly managed, a sudden rise in interest rates or unexpected maintenance costs
could derail the rental business.

For those looking to invest in real estate, here’s how you can mitigate
these risks.

Invest in real estate without the headache of being a landlord
Imagine owning a portfolio of thousands of well-managed single family
rentals or a collection of cutting-edge industrial warehouses. You can
now gain access to a $1B portfolio of income-producing real estate
assets designed to deliver long-term growth from the comforts of your couch.

The best part? You don’t have to be a millionaire and can start
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Savvy rental investments
If you’re considering buying real estate for passive income, it could be
a good idea to include a margin of safety in all your financial assumptions.

Experienced investors often assume that the property will be vacant for
a while or that some rent payments will be missed or delayed. Be sure to
keep some extra cash on hand to cover the mortgage when tenants miss
their obligations.

You could also keep some funds available to meet unexpected repair costs.

Another way to mitigate the risks is to conduct due diligence. Buy
property in prime locations that attract good, reliable tenants and seek
out credit scores or past references from prospective tenants before
they sign the lease.

AAs a landlord, you should remember that the tenant has no obligation to
ensure you don’t miss mortgage payments, ruin your credit score or lose
money on the venture. It’s on you to ensure your investment keeps
running smoothly.

For those who are less interested in the work associated with investment properties, there are other ways to dip your toes into real estate —
without having to become a landlord. These days, real estate investment
trusts (REITs) give investors access to a slice of the income made
through commercial real estate investments without actually having to
buy or manage any properties themselves.

Crowdfunding apps are another great opportunity for investors these days
to get access to prime real estate investments at a far more accessible
price point.

With a little savvy investing, before too long, maybe you’ll be the one giving Ramsey investing advice.

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Vishesh Raisinghani
Freelance Writer
Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having
covered family offices, private equity, real estate, cryptocurrencies,
and tech stocks over that period. His work has appeared in Seeking
Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions,
National Post, Financial Post, and Yahoo Canada.

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