From Ramsey Disciple to Interested STR Investor. Help!

[Chris McKenna]

Hello -

I am a disciple of Ramsey's Baby Steps and for those of you that follow him, I am on Baby Step 6 (Pay down my home mortgage) + Pay off my second home which has become an investment property since we left Maine for Texas and our lakefront cabin has turned into a great investment by accident. 

Now I'm hooked on finding another one (Lake Front Cabin). Our retirement plan is to 'buy and hold' so we can manage a handful of cabins in our retirement as a second career and move back to Maine in 15 years. 

I have a property I have narrowed down to and think it checks all the boxes...my struggle is breaking the Ramsey cycle and I just need some validation from experts that I should look to get into a property with as little money down as possible and try to boost by CoC.

Here is what I have worked out with the bank. 

10% Down (Includes PMI ~ $40/Month)

Rehab financed (Mortgage and Rehab can be up 80% of the ARV)

$140K target price, $50K rehab  - Total value of loan = $190K

ARV = $225K

Cash Needed - $23,200

Cash Flow - $614/month

CoC - 31.8%

Thanks so much for some advice here! 

[Ken Boone]

Wow - I think you have opened up Pandora's box as you will find a lot of people both love and well, not love Dave Ramsey.  I for one like Dave Ramsey for the idea that his method will help anyone learn how to get out of debt.  There are tons of people that have no money management skills whatsoever nor have they been taught anything about financial responsibility. Dave Ramsey is great for these people and helps thousands of people get their life back on track.  Now - what I personally don't believe is that all debt is bad and that business type debt can be good because it helps you to grow.  So having said that I am a Ramsey fan when it comes to getting people out of debt, but not a fan when it comes to building wealth.  If you are comfortable with the business risks you are taking then go for it to reach the reward that comes with it my friend!  Best of luck to you.