So Dave Ramsey says.....

[Sam Booth]

So Dave Ramsey says that when he interviewed 10,000 millioniares close to none used debt or leverage to get there. 

So how many of you out there have used leverage, maybe conservatively, to increase you net worth and cash flow with real estate? Or did you pay cash like Dave?

I feel like its not so bad to have a ton of debt if say you had a good pile of reserves for when you need it. What do you think? 

Additionally are 7% mortgages worth it?

[Carini Rochester]

Quote from @Ray Hage:

Dave Ramsey says some things that make sense, but it is rare. 

Wow! That's funny! Thanks for putting a smile on my face!

[Carlos Ptriawan]

Quote from @V.G Jason:

In my circle, very few have debt. And if they do, it's maybe 20-30% levered but not 75-80% levered. Most do not have any debt.

However, I don't believe a single one got to where they are without debt and copious amounts of it.

Baby boomers ?

once you look at GenZ you would see massive differences …

it is generational issue Jason, there is no way one can avoid debt right now especially when you are young.

[Alexander Felice]

buying an underpriced asset and putt subsidized debt on it (3-5% mortgages like we had for the last 10 years) has dramatically changed my life for the better. This creates so much positive leverage without much risk

but buying a retail priced asset, like much of the real estate market today, and putting market priced debt on it seems like the opposite - higher risk without an exciting upside 

I would not do the same now.

Leverage is great, I don't care about even 7% rates, it's the retail asset prices that make me steer clear 

[Alecia Loveless]

@Sam Booth I use leverage but maintain enough equity in my portfolio that hopefully I am safe from problems.

I’m not finding as many great deals with 7% interest but am still finding some deals. It has gotten harder but I don’t have enough money to simply pay for stuff without the aforementioned leverage.

[Karolina Powell]

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

[Sam Booth]

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

[V.G Jason]

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

In my circle, very few have debt. And if they do, it's maybe 20-30% levered but not 75-80% levered. Most do not have any debt.

However, I don't believe a single one got to where they are without debt and copious amounts of it.

Baby boomers ?

once you look at GenZ you would see massive differences …

it is generational issue Jason, there is no way one can avoid debt right now especially when you are young.

 Old Millennials & Gen X. 

I'm not saying to avoid debt, I'm saying once you create your empire the best thing to do is start lessening debt. Debt was absolutely apart of the process.

[Karolina Powell]

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

[Sam Booth]

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

[Karolina Powell]

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

 To get my 9 I probably made about 50 offers.  I would see everything in my buy box up to 200K and make offers that made sense to me.  Most of them were turned down of course but I got some properties at a steal.

[Sam Booth]

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

 To get my 9 I probably made about 50 offers.  I would see everything in my buy box up to 200K and make offers that made sense to me.  Most of them were turned down of course but I got some properties at a steal.

Awesome right on! Yeah I have worked with a few realtors and they balk at making low offers and disappear without notice. Sucks 

[V.G Jason]

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

 To get my 9 I probably made about 50 offers.  I would see everything in my buy box up to 200K and make offers that made sense to me.  Most of them were turned down of course but I got some properties at a steal.

Awesome right on! Yeah I have worked with a few realtors and they balk at making low offers and disappear without notice. Sucks 

 Get an RE attorney to help walk you through a contract and the blind spots. Pay that one time fee + any extra questions as you do it. Submit the offers yourself to the listing agent with a signature needed from the seller to sign off they read it. 

I'm with you on what you said, lots of agents on and off this board deny that accusation but it's 100% true. They don't like to play ball with folks trying to invest like this. There's a way around it though. 

[Sam Booth]

Quote from @V.G Jason:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

 To get my 9 I probably made about 50 offers.  I would see everything in my buy box up to 200K and make offers that made sense to me.  Most of them were turned down of course but I got some properties at a steal.

Awesome right on! Yeah I have worked with a few realtors and they balk at making low offers and disappear without notice. Sucks 

 Get an RE attorney to help walk you through a contract and the blind spots. Pay that one time fee + any extra questions as you do it. Submit the offers yourself to the listing agent with a signature needed from the seller to sign off they read it. 

I'm with you on what you said, lots of agents on and off this board deny that accusation but it's 100% true. They don't like to play ball with folks trying to invest like this. There's a way around it though. 

Wow that's a great idea. Yeah I hate using realtors but I am doing this from out of state so I also need someone to walk them. For a foreclosure it looks like an agent had to do the paperwork as well. But for long days on market that's a great idea and I should do it myself. Great tip!

[Scott Mac]

Quote from @Sam Booth:

So Dave Ramsey says that when he interviewed 10,000 millioniares close to none used debt or leverage to get there. 

So how many of you out there have used leverage, maybe conservatively, to increase you net worth and cash flow with real estate? Or did you pay cash like Dave?

I feel like its not so bad to have a ton of debt if say you had a good pile of reserves for when you need it. What do you think? 

Additionally are 7% mortgages worth it?

This guy knows 10,000 millionaires???

Every syndicator from Poughkeepsie to the Congo would love to have his Rolodex.

[Edward Condon]

@Karolina Powell  Go, you!  Outstanding!

[Andrew Syrios]

"So David Ramsey says...."

Yeah I'm gonna stop you right there bud. 

[Edward Condon]

@Andrew Syrios  Good point!

[Sam Booth]

Quote from @Andrew Syrios:

"So David Ramsey says...."

Yeah I'm gonna stop you right there bud. 

I am learning! Yeah I was for a second thinking about paying mortgages down but I am still in the acquiring phase so I will wait until we have a few more properties first. Dave is good for consumer debt, not investors!

[Karolina Powell]

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

 To get my 9 I probably made about 50 offers.  I would see everything in my buy box up to 200K and make offers that made sense to me.  Most of them were turned down of course but I got some properties at a steal.

Awesome right on! Yeah I have worked with a few realtors and they balk at making low offers and disappear without notice. Sucks 

 I found that I had to guarantee a minimum commission to the realtor and also had to give them a script so they feel more comfortable with the low deal.

Regarding Dave Ramsey's millionaires - if I remember correctly, they sought them out and then asked them to fill out a questionnaire.  If I am a Dave Ramsey fan, I am tickled pink about being included and thus fill out the survey.  If I'm not a Dave Ramsey fan or I don't know who that is, I ignore the survey.  Hence I think the results are obviously biased but it shows you there are many roads to Rome or millionaire-hood.... some people do it nice and steady without debt, and some use all of the tools at their disposal.

[Jeremiah Dunakin]

I have used debt to buy real estate. I will say this on a couple points.I look at this a mid western factory worker. 
1. saving money is not rocket science. People over complicate it. Save more than you spend. Don’t keep up with Joneses. Drive your car for a long time. Pay it off and keep driving it. 700$ a month for a car is 8400 a year. I have 3 vehicles that are all over 10 years old. They all drive fine. My avalanche is about to get a tune up new suspension and 4 new tires less than 2000$ and it will be ready to go anoter 75k

2. A factory working couple each making 50k can live on 50k a year and save 50k a year. Each could also get after it and work overtime and make 80k a year. 

3. Young people can do things without debt. They just can’t work part time buy a new phone ever three months and be a world traveler. Stay at home at 18 get a job in a factory work your guts out while living at home for two years save every penny and buy a house with cash or put 75% down. I work with a guy who worked 90+ hours every week right after high school saved every penny and now not even at 30 he is doing great as a factory worker. 

I think a lot of time we say things can’t be done, when in actual the road is hard. It can be done. In saying that I have used debt to buy a rental and don’t think it’s wrong. That said I am trying to buy real estate in cash goin forward. 

[Kristine Ann]

His study was not scientific.  He interviewed his own followers and the data is completely skewed.  Everyone who follows him shuns debt so of course his study would show that.  Most of the millionaires in his circle become millionaires in their 401k after investing in the S&P consistently for 20-30 years. It's classic "The Millionaire Next Door" stuff.

[Joe S.]

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

 To get my 9 I probably made about 50 offers.  I would see everything in my buy box up to 200K and make offers that made sense to me.  Most of them were turned down of course but I got some properties at a steal.

Awesome right on! Yeah I have worked with a few realtors and they balk at making low offers and disappear without notice. Sucks 

 I found that I had to guarantee a minimum commission to the realtor and also had to give them a script so they feel more comfortable with the low deal.

Regarding Dave Ramsey's millionaires - if I remember correctly, they sought them out and then asked them to fill out a questionnaire.  If I am a Dave Ramsey fan, I am tickled pink about being included and thus fill out the survey.  If I'm not a Dave Ramsey fan or I don't know who that is, I ignore the survey.  Hence I think the results are obviously biased but it shows you there are many roads to Rome or millionaire-hood.... some people do it nice and steady without debt, and some use all of the tools at their disposal.

I would be interested in the script you gave the realtors. :-)

[Karolina Powell]

Quote from @Joe S.:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

Quote from @Sam Booth:

Quote from @Karolina Powell:

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

Awesome! What did you end up getting and how many properties? Just curious and like your approach. Thanks so much for your input

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

 Awesome! Good for you! I am in a similar market and in contract on #4. High rates and not many deals make it tough though 

 To get my 9 I probably made about 50 offers.  I would see everything in my buy box up to 200K and make offers that made sense to me.  Most of them were turned down of course but I got some properties at a steal.

Awesome right on! Yeah I have worked with a few realtors and they balk at making low offers and disappear without notice. Sucks 

 I found that I had to guarantee a minimum commission to the realtor and also had to give them a script so they feel more comfortable with the low deal.

Regarding Dave Ramsey's millionaires - if I remember correctly, they sought them out and then asked them to fill out a questionnaire.  If I am a Dave Ramsey fan, I am tickled pink about being included and thus fill out the survey.  If I'm not a Dave Ramsey fan or I don't know who that is, I ignore the survey.  Hence I think the results are obviously biased but it shows you there are many roads to Rome or millionaire-hood.... some people do it nice and steady without debt, and some use all of the tools at their disposal.

I would be interested in the script you gave the realtors. :-)

 I change it up as needed but overall it's below.  Keep in mind this is meant to be conversational.

"Hi X, it's Y.  I have an investor interested in your (older/further away/inexpensive) listing - (address).  How has the response been to that one?  Any offers?  How are people responding to (Largest Deterrent Here).

As I was saying, I have an investor who is going to be making a written offer so I wanted to give you a heads up. Have you worked with investors before? So as you know, they base their offers on what the rent prices in the area look like and not what your homeowners would pay so make sure your sellers know that. This is a seasoned investor and she knows her numbers even though I may not like it. Lots of pluses though - fast close, cash sale so no appraisal to deal with, and she waives all contingencies. So your seller won't have to worry that the buyer will try and ask for a credit to fix/replace (another large deterrent here). For us, we know that (appraisal/FHA loan fixes/it's a stale listing (insert another problem) can be a killer for a deal so this way we can make this deal happen quickly and move on to the larger fish.

I'm going to send this offer over shortly.  If you need help in explaining where the offer number came from, I can help with that.  Keep in mind that she is looking at multiple offers at a time so we do need an answer within the 24 hours I'll list on there.  This listing (hasn't had offers/don't qualify for a standard loan/is up against four other listings in the area/etc) so I think we can get a deal done here.  What do you think?"

Usually the response is one of two - 1) "maybe you're right, I'll talk to my seller about this opportunity" and 2) Heck no.  If the second, they still have to present the offer which is why I make sure it's in writing.  And if it's a property I do want, I'll have my realtor say something like "Well if it continues to sit like it has, reach back out to us."

I'm trying not to give my realtor a bad reputation so she/he can blame it on me.  Otherwise the realtor isn't willing to work with me.  I'm also trying to show them why going with an investor is best.  

[Terry Ouimet]

Dave Ramsey presents one way to achieve wealth through real estate. It’s not right or wrong , to say that Dave Ramsey rarely says anything right is like saying Henry Ford had no idea what he was talking about but Elon musk and Tesla is the right way. We can learn from everybody’s path to wealth, I think it’s short sighted & ignorant to rule out any successful persons advice, one thing I’ve learned in life ..when I get advice from somebody I don’t like, is to ask myself could this person actually be right? -that leads to wisdom and wise actions .. you have to choose what fits your personality, priorities and life mission. I sleep good and have peace with my properties paid off, yes I’d like to have 400 doors , but it doesn’t line up with my personality and priorities.  

[Jeremiah Dunakin]

Quote from @Terry Ouimet:

Dave Ramsey presents one way to achieve wealth through real estate. It’s not right or wrong , to say that Dave Ramsey rarely says anything right is like saying Henry Ford had no idea what he was talking about but Elon musk and Tesla is the right way. We can learn from everybody’s path to wealth, I think it’s short sighted & ignorant to rule out any successful persons advice, one thing I’ve learned in life ..when I get advice from somebody I don’t like, is to ask myself could this person actually be right? -that leads to wisdom and wise actions .. you have to choose what fits your personality, priorities and life mission. I sleep good and have peace with my properties paid off, yes I’d like to have 400 doors , but it doesn’t line up with my personality and priorities.  

 Excellent post