Dave Ramsey says: The rental game’s not for everyone, potential landlords
Dec 31, 2024, 6:30 PM
Dear Dave,
I’m 38, and after looking and waiting for years, I think I’ve found a found a rental property scenario I like.
My plan is to take $30,000 out of my retirement account, and use it as a down payment on a property.
My loan payment would be $1,400 a month, but I could easily rent the place for $1,800 a month. What are your thoughts?
Colin
Found a rental property
Dear Colin,
No offense, but I can tell you’ve never been a landlord before. Bringing in nearly $1,800 a month, while paying out $1,400 may seem like a nice place to be. But you’ve left one very important factor out of your equation—risk.
Rental properties just sit there empty sometimes. And this happens to all rental properties. You’ll also have repairs to contend with, renters who don’t pay and other expenses.
See what I’m saying? You won’t be able to count on an easy $400 in your pocket every month.
Now, I love real estate.
I understand the excitement and allure. But what you’re really saying is you want to cash out part of your retirement, get hit with a penalty and take on debt, all to buy an investment property. This is not a good plan.
My advice is to save up. Then, once you’ve found a rental property that’s small and decent, pay in cash. Then you can see if the landlord game is really for you.
— Dave
