Dave Ramsey: How I Lost EVERYTHING Flipping Houses

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[xlerb]

"Run it like a business, not a get rich quick scheme". Solid advice for any activity, not just real estate :)

[bethanyboothe]

Dave has made hundreds of millions of dollars and STILL remembers the details of the deals that went wrong FORTY years ago! The failures hurt!

[nonawolf]

In the housing crash of 2008, I had to relocate for work. Not wanting to sell my place at a loss, I decided to rent it until the market rebounded. Even though I was clearing about $500 a month, I never slept well... there was always some looming threat that hung over me like a dark cloud. Burst pipes, HVAC going out, noise complaints, renters who are always late with the payment... it sucked. One guys even snuck in a 100 lb rottweiler in spite of the "no pets" agreement. That dog destroyed my wood floors. Another guy threatened to sue me because he dropped a jar on his foot and broke his own toe. (He thought I should pay his medical bills since it happened on my property)
One of the happiest days of my life was when the housing market rebounded and I sold my unit.

[AllynHin]

As I listen to Dave tell his experiences from back then, how he made a lot of money and then lost everything, the one thing that I come away with has nothing to do with the financial side of things. The one thing that I appreciate is that his wife stuck with him. He is a lucky man to have found that woman that early in his life.

[mikeshaw]

Totally agree with Dave. I was a landlord some properties for several years. You can not count on rents and you will have unexpected expenses that eat away at profits.

[FTGEli]

I laugh every time Dave says 'Tic Tac' 😄

[Gooselip]

Did my first flip in 2018 made 50, 000 haven't found another perfect deal since but I'm waiting patiently

[formula]

My dad had 6 rental units, and he did not like confrontation, so if the renter didn't pay, my dad would just set up a payment plan with the renter, and the deadbeat renters took advantage of his humbleness....he eventually got tired of it all, and sold the buildings and the land to an Autozone, who leveled the houses and built a store on the dad did make more than a million dollars on that transaction.

[al-bsure]

Thanks for being so transparent! Everyone sees success but rarely know the failures! Love this

[Blitcliffe]

Great video Dave, I'd suggest making the most of the recession and inflation. Recessions are an inherent part of the economic cycle, therefore you can only plan and prepare for them. After graduating, I fell into a rut because my first job out of college was as an aerial acrobat on cruise ships. I currently run my own company, serve as a vice president for a significant corporation, own three rental properties, make stock and company investments, and have increased my net worth by $500k over the previous 28 months.

[gloriaalex]

At least Dave learned from his mistakes and turned the ship around. Some people never recover. I know a working-class couple who filed for bankruptcy around the same time he did. A lot of medical debt + really bad decisions resulted in car repo, utilities cut off, foreclosure, then Section 8 & food stamps. The husband died broke, left his widow with nothing but bills, and she's still struggling to this very day.

[xpandergt]

I was a wholesaler right around the time the market fell out in 08. I was getting calls from so many destressed and upside down owners and landlords, it wasn't funny,

[joechang]

my first house was in a new area of the heights outside of Portland. I bought the plot in 98? for just under 100K, its on a hill. From ground level, the view is partially blocked by trees on the downside. I picked a 2400 sq ft design out of a catalog. The builder quoted 200K ($83/sqft excluding lot, and I am paying interest as he bills). I think this was appropriate for that design on flat land, not on a slope. Furthermore, I ask him to push the house back on the plot, a raise above ground level a little to enable a better view.
This added a lot of extra building material that he did not factor in. He (the builder) also told me I could have had an architect customize the plan. Basically get the Autocad file from the design owner. Because my plot was on a bend in the road, a customized design with a flare on the downhill side plus large windows would have improved a very good view to an awesome view, but this was my first house and first custom construction.
In any case, the builder was under water because his margin was low (6K) and the extra material from raising the house. This also meant adding a floor below the main floor was highly feasible as much material was already there and it would have an ok view.
I sold it shortly after for 390K minus commissions. I asked the builder if he wanted extra money because of the changes I asked for. He said no, but he did want his wife, a young hot realtor, who at the time did not have clout to get listings in the fashionable neighborhoods, and letting her list it would help her build portfolio for future listings.
I think Zillow has it for just under 1M now, but much of this was in recent years, not the first several years after I sold.
Note: many of the lots were custom built for the (house) owner. Some builders bought lots and built houses to be sold. An adjacent lot (110K) was such. It was a new builder. He built a 3600 sqft (typical for neigborhood) mcmansion (most were proper luxury homes). I am inclined to say his cost was lower than mine, I had marble in all bathrooms and lots of granite in the kitchen with HW floors. At the time, $100 per sqft was adequate for luxury construction, and $60 for low cost, so I was middle. I am guessing his cost excluding interest was less than 400K. He listed for 550K initially and gradually lowered and was at 475K after almost a year?

[zachjones]

I learned my lesson with $50. I brought $500 at the age of 18 to a storage unit auction. I bought a unit for $50. The unit had a dresser, bicycle, a dryer, and a handful of clothes. My next issue I realized was how the hell I was going to sell everything. After all the time I put in, I figured I would be making like $1/hour. I quit that business right away. lol

[Rokka]

Thanks for addressing this Dave. My parents went through the same issue and the tenants refused to pay the rent. We eventually sold the property after the eventual eviction of the tenants. Like you said, there is the people factor to consider and that can ruin the real estate investment. Tenants are not always reliable.

[DontAtMek]

Dave: You don’t get rich off leverage.
Nobody: “how did you get rich Dave?”
Dave: umm not leverage.
Nobody: can you elaborate?
Dave: No.

[TrainerAQ]

One thing I hate is having to start over. Ive done it so many times to advance in life. But it sucks when you think it's finally over, then you get in a wreck because of a drunk idiot, lose your car and then realize you are right back where you started. You can break a leg, lose a job. All these things lead to having to start over. I hate it. But the worst part is you have no control over this. It just happens.

[genxmurse]

Also with the eviction moratorium that was passed during the pandemic, that was extremely hurtful to the property owners. The banks, (like the tenants) were completely off the hook. Yet, they were still foreclosing on the poor landlords who couldn't pay the mortgage, due to tenants living for free.
I'm never getting a mortgage again!

[elisabethpusta]

Thanks you for sharing your failures and showing us that when we fail we can get back up again and be successful! Thank you for the hope Dave!! And the cold hard facts and truth and guidance! May God bless you always!!! ❤

[Dividendflywheel]

Personal finance is “Personal” finance. Find a mentor that works for you. There are different paths to wealth. Dave Ramsey had a painful personal experience using debt. So he adopted the debt free path. The guy is now worth over $500 million (probably closer to $800 million) debt free. When you get to Dave Ramsey or Ben Mallah’s age you will “know” the path you believe in. Ultimately when you use other people’s money…. (you are in bondage). Dave used his sweat and money to build his current wealth. I lost 2 properties to foreclosure (because I borrowed money). So Dave’s plan make’s sense to me.