How to Win in Real Estate | Dave Ramsey's Greatest Hits
Summary
TLDRIn this episode of Dave Ramsey's Greatest Hits, host Rachel Cruz revisits the popular topic of real estate, sharing Dave's wisdom on buying homes. Dave emphasizes the importance of being debt-free and having an emergency fund before purchasing property. He advises against buying a house if it's not affordable and stresses the value of a 15-year fixed-rate mortgage with payments no more than a quarter of one's take-home pay. The show also highlights the necessity of professional real estate agents in the buying and selling process to avoid costly mistakes. Dave's approach to real estate is rooted in financial prudence and the avoidance of debt, promoting a path to homeownership that ensures financial stability and peace of mind.
Takeaways
- 🏠 Dave Ramsey emphasizes the importance of being financially ready before buying a house, advising against purchasing when broke.
- 💰 He suggests having an emergency fund in place and saving for a substantial down payment, ideally 20% to avoid private mortgage insurance (PMI).
- 📈 Ramsey recommends a 15-year fixed-rate mortgage and warns against buying a house with a payment exceeding a quarter of your take-home pay.
- 🚫 He advises against buying a house solely based on emotion, as it can lead to financial stress and poor decisions.
- 🔄 Ramsey shares his personal experience in the real estate business, highlighting the importance of professional help in buying or selling property.
- 📊 He provides a mortgage calculator on his website to help listeners make informed decisions about their home buying process.
- 🏢 Ramsey criticizes mega banks for their customer service and advises against doing business with them, especially when it comes to debt.
- 🤔 He addresses the question of whether it's wiser to pay off a mortgage or rent and save for a house, leaning towards the latter if done correctly.
- 📖 Ramsey references the Bible in his financial advice, stating that debt is generally viewed negatively in religious texts.
- 💪 He encourages financial independence and debt-free living, sharing stories of wealthy individuals who have built their wealth without borrowing.
- 📝 Ramsey provides a step-by-step guide in his book 'The Total Money Makeover' for those looking to improve their financial situation.
Q & A
What is the main topic of discussion in this episode of Dave Ramsey's Greatest Hits?
-The main topic is real estate, focusing on advice and experiences related to buying, selling, and owning property.
What is Dave Ramsey's stance on buying a house when you're broke?
-Dave Ramsey advises against buying a house when you're broke, as it can lead to financial problems and he believes it's a curse, not a blessing.
What does Dave Ramsey recommend as the ideal down payment for a house?
-He recommends putting down 20% to avoid private mortgage insurance (PMI), which can save money in the long run.
What is the maximum length of mortgage that Dave Ramsey suggests not to exceed?
-He suggests not to exceed a 15-year mortgage, as it can lead to unnecessary financial strain.
What should be the relationship between the mortgage payment and your take-home pay, according to Dave Ramsey?
-The mortgage payment should not be more than a fourth of your take-home pay.
Why does Dave Ramsey discourage buying a house based on emotion?
-Emotions can lead to impulsive decisions, which are not ideal when making such a significant financial commitment as buying a house.
What is the importance of having a high octane real estate agent, as mentioned by Dave Ramsey?
-A high octane real estate agent, who is experienced and sells a high volume of properties, can help you make informed decisions and avoid costly mistakes in the buying or selling process.
What does Dave Ramsey suggest doing if you're considering buying a house but are not financially ready?
-He suggests getting out of debt, establishing an emergency fund, and saving for a down payment before considering buying a house.
What is the biblical perspective on debt according to Dave Ramsey?
-From a biblical standpoint, Dave Ramsey believes that debt is generally viewed negatively, as it is associated with being a fool or a slave.
Why does Dave Ramsey recommend paying cash for everything, if possible?
-He believes that paying cash prevents the loss of financial freedom and peace that comes with being debt-free, and it aligns with his biblical beliefs against borrowing money.
What advice does Dave Ramsey give to someone who is considering renting versus buying a house?
-He suggests considering factors like the cost of renting versus owning, the potential for future life changes, and the importance of not rushing into a purchase that could lead to financial strain.
Outlines
🏠 Real Estate Wisdom from Dave Ramsey
Host Rachel Cruz introduces the topic of real estate, highlighting its significance due to the large financial decisions involved. She shares her personal love for real estate, having grown up in the business and starting her career young. The segment emphasizes the importance of financial readiness before buying a house, avoiding debt, and the value of a 15-year mortgage to prevent financial strain. The advice is rooted in the belief that owning a home should be a blessing, not a curse, and that financial stability is crucial for a successful real estate purchase.
💰 Financial Advice for Homeownership
The paragraph discusses the financial implications of buying a house, especially the importance of not purchasing a home on a mortgage longer than 15 years. It advises against letting emotions drive the decision to buy a house and recommends using Dave Ramsey's mortgage calculator for planning. The host also touches on the potential need to move further from the city for affordability and the value of a high-quality real estate agent in the home buying process. The emphasis is on making informed decisions and avoiding the pitfalls of emotional or impulsive choices.
📈 Debt-Free Living vs. Mortgage
This section compares the financial wisdom of paying off a mortgage versus renting and saving for a house. It suggests that saving up to pay cash for a house is the wiser choice, aligning with biblical teachings on debt. The host shares personal anecdotes and the story of a wealthy individual who never borrowed money, emphasizing the freedom and peace that come with being debt-free. The advice is to avoid debt whenever possible, even when it comes to purchasing a home.
🤔 Renting vs. Buying: A Personal Dilemma
The host addresses a caller's dilemma between renting and buying a home, considering factors like financial stability, current living situation, and future plans. The advice given is to avoid rushing into homeownership and to consider the potential changes in life circumstances, such as marriage and starting a family. The host encourages the caller to think carefully about the type of property they can afford and resell, and to avoid buying a property that would be difficult to part with later.
🚫 Avoiding the Trap of Homeownership
The host warns against the common mistake of buying a house that one cannot afford or that does not have the potential for resale. The advice is to ensure that the property is a good investment and not just an emotional purchase. The host also shares personal experiences and the importance of not letting excitement cloud judgment when buying real estate. The emphasis is on making smart decisions and avoiding the pitfalls of impulsive buying.
🛠️ The Importance of Professional Help in Real Estate
The host stresses the importance of seeking professional help when buying or selling a house, as it is a significant financial transaction that requires expertise. The advice is to avoid the DIY approach and to hire a professional real estate agent with a proven track record. The host also criticizes mega banks for their customer service and encourages people to avoid them, suggesting that they are more interested in profits from debt than in helping their customers.
📉 Climbing Out of Debt for Homeownership
The host advises a caller on how to approach homeownership while dealing with debt and poor credit. The recommendation is to first focus on becoming debt-free, which includes selling high-interest assets like a car and paying off loans. The host suggests practical steps like getting a cheaper car and living independently to save for an emergency fund and a down payment. The advice is to prioritize financial stability and responsible spending before considering a home purchase.
🚗 The Controversial Topic of Cars and Finances
The host teases the next episode, which will focus on cars as a top-dollar asset and the necessity for most people. The segment hints at controversial advice regarding car ownership and its impact on personal finances, promising a discussion that aligns with Dave Ramsey's financial philosophy.
Mindmap
Keywords
💡Real Estate
💡Debt-Free
💡Emergency Fund
💡Down Payment
💡Mortgage
💡Private Mortgage Insurance (PMI)
💡Homeownership
💡Financial Stability
💡Real Estate Agent
💡Credit Score
Highlights
The show is revisiting the most popular real estate clips from the last decade.
Host Rachel Cruz shares her love for real estate, having grown up in the business and started as an agent at 18.
Dave Ramsey emphasizes the importance of not buying a house until you're financially ready, warning against the common misconception that homeownership solves financial problems.
Ramsey advises against buying a house when broke, as it can lead to a cycle of debt and financial stress.
The advice given is to establish an emergency fund and save for a down payment, specifically mentioning 'baby step 3B'.
Ramsey recommends putting down at least 20% to avoid private mortgage insurance (PMI) and suggests a 15-year mortgage for affordability.
The show discusses the importance of emotional maturity in the home buying process, advising against impulsive decisions.
Ramsey provides a free mortgage calculator on his website to help listeners make informed decisions about their home purchases.
The conversation touches on the potential need to move further out of the city to afford a home, especially in a hot market.
The value of hiring a high-quality real estate agent is emphasized to avoid costly mistakes in the buying or selling process.
Ramsey shares a personal anecdote about a wealthy individual who never borrowed money, reinforcing the idea that debt is unwise.
The show addresses the biblical perspective on debt, suggesting that it is generally viewed negatively in religious texts.
Ramsey's advice is to save up and pay cash for a house, aligning with his overall philosophy of avoiding debt.
A listener's question about whether to rent or buy is answered, with Ramsey suggesting patience and careful planning.
Ramsey warns against the dangers of 'house fever,' which can lead to overpaying or making poor decisions in the excitement of buying a home.
The importance of not DIY-ing real estate transactions is stressed, as mistakes can be costly.
Ramsey provides a detailed plan for a listener with a low credit score and debt, advising on steps to improve their financial situation.
The conversation highlights the importance of having a good credit score or no credit score at all when applying for a mortgage.
Ramsey encourages the listener to sell their car and pay off debts to improve their financial standing and qualify for a house.
Transcripts
[Music]
hey guys I'm your host Rachel Cruz here
and welcome to Dave Ramsey's Greatest
Hits where we're looking back at the
best moments from the last 10 years of
the ramsy show on video one of the most
common topics were asked about on the
show is real estate and it's probably
because real estate decisions come with
a lot of zeros at the end of them so
this episode we're looking at the most
popular real estate clips from the last
decade and guys Dave loves real estate
so trust me there is some gold in
here if you didn't know I have had two
great loves in my life doing what I do
here and the real estate business I love
real estate mom and dad were in the real
estate business when I was growing up
and 3 weeks after I turned 18 years old
I sat for and past my real estate
license a few weeks later I sold my
first house as a real estate
agent what that tells you is somebody
out there had a lack of judgment they
bought a house from an 18-year-old
but but even then I knew how to sell
apparently at some level so you know
I've always loved real estate I I love
the business I love the people in the
business it's a it's a unique group of
individuals real estate business is the
only business where people put Glamour
Shots on their business card I mean it
it these are drama queens they have a
blast real estate people are fun that
when they're at an event that it's a fun
group to talk to because they're
enthusiastic they're fired up they
they're it's just cool and so I always
enjoy sending great real estate agents
Across America and our ELP program you
know sending you to them to find your
next home or to you know get your house
listed and get it sold for the proper
amount of money not giving it away
especially in a hot market like this and
so I I just love the business
and then you know some folks in that
business don't like me because I tell
people not to buy a
house until you're
ready cuz when people buy a house when
they're broke it makes them broker it's
why they call them mortgage brokers
broker and broker when you buy a house
you're broke you're not ready it's a
curse it's not a blessing I want your
home to be a blessing but we've passed
this piece of misinformation around in
our culture that says everyone ought to
buy a house and if you buy a house it's
going to make all your financial
problems go away the only way the little
man can get ahead is buy a house he
can't afford it's just a bunch of
crap you shouldn't buy a house when
you're
broke so I want everybody to get a house
cuz I want everybody to get out of being
broke but when you buy a house and
you're broke all kinds of crap loot
turns loose in your life when you're in
debt you don't have any money you use
your last dime for your down payment but
you buy house buy house buy house buy
house got to buy house got to buy house
got to buy house got to buy house if you
don't buy house oh renting you're just
throwing your money away buy house buy
house buy house buy house buy house oh
the payment's the same as the rent so
buy house buy house buy house buy house
buy house and everybody goes and buys a
house they can't afford and if enough
broke people buy houses you can crash
the economy y'all know
that that was a reference to 2008 that
was a 2008 joke are y'all with me here
if enough broke people buy a house you
can crash the economy with this wrong
philosophy of everybody needs a house
everybody should get a house because I
want everybody to get away from being
broke so they can afford a house so get
out of thatb get your emergency fund in
place but if you buy a house and you
don't do that Murphy will move in your
spare bedroom if you're in debt you buy
a house broke he'll move in your spare
bedroom you know who Murphy is if it can
go wrong it will he'll bring his three
cousins broke desperate and stupid with
him and your hot water he go out the
next week and your roof will leak 3 days
later and then the heat and air will go
down down oh and the sewer will stop up
or the septic tank will back up I mean
you're going to find out the joys of
home ownership when you move in a house
broke you are asking for trouble you're
begging for it so get yourself straight
get out of debt get the emergency fund
in place and then start saving for your
down payment that we call that baby step
3B because you're after baby step three
and you haven't yet started baby step
four with your retirement savings
because you're going to save up for your
down payment on your house then when you
get ready to buy a house want to put as
much down as you can put down if you put
down 20% it's be ideal because you can
avoid PMI private mortgage insurance
which is merely foreclosure insurance
that if you get foreclosed on it pays
the mortgage company if they lose money
on you if you put down 20% you don't
have to buy PMI which is useless to you
it's a favor you do the insur you do for
the mortgage company because you didn't
put down enough down payment if you put
down 20% you avoid that it's about $75 a
month per 100,000
borrowed it's 150 bucks a month for
$200,000 mortgage for your PMI so i'
like for you to put down more than that
I don't yell at you if you don't but I
will yell at you if you violate this
next one never buy a house on more than
a 15-year mortgage absolutely crazy
don't do that don't do
it don't buy a house on more than a
15-year mortgage and never buy a house
on a 15-year fixed rate where the
payment is more than a fourth of your
take-home
pay now you got to keep in mind interest
rates are what
3% you know the most of the time
interest rates have been 10 12% in my
working
lifetime but for the last decade or so
we've had these ridiculously wonderfully
low interest
rates and so you know if you can't
afford to do it right now you're not
going to be able to afford to do it
right ever so right is you know 15 to
20% down hopefully a 15-year fix for the
payments no more than a fourth of your
take-home pay so if you're in the market
to buy a house you don't buy your
largest purchase in the scope of your
lifetime On
Emotion yeah that's the last thing you
need to impulse is something this
size adults devise a plan and follow it
children do what feels good be a grownup
if you're going to be a grown-up and buy
a house be a grownup emotionally slow
down do it
right and jump on Dave ramsey.com we got
a free completely free mortgage
calculator there you want to do your
mortgage calculations it's right there
we just revamped the thing it's slick
it's the best one out there a matter of
fact it's trending is one of the best
mortgage calculators on Google right now
so just go to dve ramsey.com click on
the mortgage calculator and you can
figure out what you can do with the
private mortgage insurance on a $200,000
home how much it saves
you a few other things to keep in mind
in the home buying process in a hot
Market you may need to move further out
of the city in order to get a price you
can afford so you may be training home
ownership for a
commute closer to the city in most
markets the more expensive it gets now
certain distance from the city that
starts to become a neighborhood issue
but I'm saying if you move 30 minutes
out of town the county over those are
sometimes called bedroom communities
then that puts you in a place to do the
right kind of stuff if you'll get a high
octane real estate agent they will help
you you with your selection they'll
represent you as a buyer agent or if
you're getting ready to sell a house get
a real estate agent in your corner that
knows what they're doing this is someone
that has a lot of volume they sell 50
200 houses a year not 50200 houses in
their lifetime so do this right I mean
if you make a 5% mistake on a $200,000
transaction that's a $10,000 ouchie
because you were so smart you could do
it yourself you don't work on your
$20,000 car by yourself why would you
work on your $200,000 house by yourself
it's kind of
dumb thanks for joining us America this
is the Dave Ramsey Show open phones at
8825 5225 you can follow me on Twitter
Dave Ramsey about 700,000 of you do
Andrew says if there are two people both
serious about money and the first is
paying off a mortgage and the second is
renting and saving cash for a house
which is more
wise well if we were going to assume
exactly the same sets of income and
exactly the same set of H size of house
to
purchase um the other thing we'd have to
assume to answer the question correctly
with math would be that the rent was low
very low and very
reasonable
um
and it'll change the the numbers
dramatically depending on the ratio of
house you're going to buy to the
income that you have an example would be
let's say you wanted to uh buy a
$100,000 house and you made
$100,000 and you were newly married and
you lived in a garage apartment out back
of some rich old lady's house for 250
bucks and so you saved $50,000 a year
for two years and you bought a house for
$100,000
cash I think we would call that very
wise versus buying a house at the
immediately and paying it off over two
or three or in that case five years
maybe now here's why we would call that
wise the way I answer questions is what
would I do if I were in your shoes so
it's a little bit twisted to jump into
this scenario Andrew um it would be do
you take it's we haven't bought a house
yet do we take out a mortgage
or do we rent cheap and save up and pay
cash that's an Apples to Apples
comparison you can't say someone's
already bought a house and then paying
that off versus saving up to pay cash is
not Apples to Apples because them
selling the house you know might or
might not be the right thing to do in
other words I very seldom tell somebody
to sell a house once they're in it as
long as it's something they can afford
and instead just crank their way through
it and pay it off but but if someone
calls me and says hey should I save up
and pay cash before I buy my house or
should I by by renting cheap and piling
up a big pile of cash or should I just
buy now and pay it off as fast as I can
I would tell you save up and pay cash
for it I would call that the wiser the
way I know that the way I decided that
was again what would Dave Ramsey do now
the way I make my decisions on almost
anything if I can figure out what the
Bible says about it I do
that and the Bible does not say anything
good ever about debt
there's not one time it's mentioned
positively in the Bible every time Deb's
mentioned you're a fool you're a
slave it's a bad idea it's a curse every
time that debt is brought up that's what
it says now that's God speaking as far
as I'm concerned because I'm a
Christian and so I believe that God is
speaking there now I don't believe that
he's saying that you're going to go to
hell if you get a master card or a
mortgage it's not a Salvation issue as a
matter of fact I'm positive scripture
does not say that I also do not even
think that it's a sin some people say
dead is a sin I don't find that in the
Bible I just think it pretty much says
you're
stupid so biblically speaking dead is
stupid it's not a sin not a Salvation
issue now the only reason I let my foot
off the gas on that when someone's
buying a home here on the air is to get
a mortgage you know a lot lot of people
aren't going to wait they're not going
to do the other stuff we talk about
anyway and so I I just try to slow them
down and keep them as as tight as I can
and then turn and get the house paid off
as soon as possible I however personally
never borrow money for anything in any
circumstance you cannot make me afraid
or happy or greedy enough to borrow
money to go into a
deal there's nothing I want that bad
ever
I want to be debt free more than there's
anything on the planet I want and so I
will never trade that because it's given
me that much
Freedom it's giving me that much peace
and I'm convinced it's one of the
reasons I've become wealthy is I don't
have any stinking
payments and you don't have any payments
you know what you have
money all the money is not going out the
door when when all you do is make money
and pay payments you're broke you've
lost control of your your most powerful
wealth building tool which is your
income and the borrower is slave to the
lender so to answer your question Andrew
if we were looking at two say young
couples as an example that don't own a
home and they're at the they're at the
starting line who's wiser who's going to
end up ahead at the finish
line if they're sitting there one's
going to go buy a house now and the
other's going to rent very inexpensively
and save up and pay cash for a home very
very quickly not over 30 years but over
three or four five years they're going
to save up C and pay cash for their
first home and get started I'm going to
tell you that I think the debt-free
couple is going to when they cross the
finish line have more
money and that's because I believe in
God and I believe he says don't borrow
money and he wouldn't say that if
borrowing money
worked now that sounds pretty basic but
but here's the deal there's tons of math
to back that up and we can we can
approach this academically we can
approach it spiritually and I can show
you and I can walk you through a
bazillion ways but dude if you never I
talked to a guy last night I was Shar
and I went to a Christmas party last
night and I talked to a guy last night
that was worth almost a billion dollars
several hundred million
dollars and he comes up to me at this
party and starts telling me his story
because he knew you know what I do on
the radio and I had never met him before
and he starts telling me I have never
borrowed a dime in my life I've never
had a car payment I've never had a house
payment I started from nothing my
parents were dirt farmers I had nothing
and I I I took a job as a teacher making
$5,800 a year in 1962 or whatever it was
and I took that money and I saved and I
paid cash for our first little house and
I saved and I paid cash for our first
little piece of dirt and I built a house
on that with cash and I sold that house
and he you know and then I did this and
then I did that and and he just over the
years has built his wealth out of his
cash flow and it's grown
exponentially and I meet more of those
than I do people who leveraged their way
into wealth borrowed their way into
wealth there's very few of
those occasionally I run into one but
almost none so that's it that's what it
comes down to the borrower is slave to
the lender and so I'm going to tell you
if I can talk you into paying cash for
everything I'm going to
try
now Wells Fargo is running an ad right
now that everybody's tweeting me with
this you know this goober on there
saying don't listen to the debt
Boogeyman the dead is not a boogeyman
and of course that's aimed at me because
I'm telling people de stupid never
borrow money never borrow money and I
also tell people never to go do business
with mega Banks like Wells
Fargo I mean why would you do business
with a bank like Wells
Fargo or Bank of
America or
chase I mean that you're a number they
don't care about
you they really don't and truthfully
most of the best Bankers in the business
and I'm not against Bankers why would
you do business with a mega Bank they're
horrible the customer service is
horrendous it's you know and then they
run ads like that you know it's like
Discover card what is Discover card it's
got the Freedom
Card that's so stupid that's like
government service
a Freedom credit card that's an
oxymoron you know DMV service line if
the DMV had a line that said fast lane
for you to get your get your paperwork
done fast you know we all know what that
would mean it would be a lie and so we
we know that's not going to
happen so think think think you know of
course A banks is going to tell you
borrowing money is a good idea it's
where they make all their
money is on bar on debt that's how they
make everything of course that's what
they're going to say think
people why would you do business with
Wells Fargo anyway it's just dumb this
is the Dave Ramsey Show Jason is in
Miami hi Jason welcome to the Dave
Ramsey Show hey Dave how are you better
than I deserve what's up awesome hey I
have a quick question uh whether I
should rent or buy according to my
current financial situation uh so I'm 25
years old and have about $85,000 in cash
in the bank and I do live at home still
um but I definitely want to decide
whether to rent or Buy in the next six
months good uh get out of my parents
house okay um so I was wondering what
you would do in my situation very good
what do you do for a living I own a
photography business and an online
e-commerce store and then I also uh have
some income property uh two income
properties in Georgia excellent
excellent are they both paid for yep
both paid for and they produce about uh
five about 550 um in cash each so it's
about $1,000 a month that I receive
excellent so what is your income these
days it's about 90,000 why' to go and
you're 25 years old you got 80 grand in
the
bank yep ding ding well done well done
are you seeing uh a young lady at this
time no I'm single okay and that's my
concern which is it'll be one income
essentially M uh so I guess I'm worried
about whether I should buy something or
rent and then figure out later on in
life whether I should buy I just think
renting is essentially throwing away
money especially in Miami where it's so
high to rent but it's also expensive to
buy too so I would be buying an older
smaller apartment uh which would be 20%
down and homeowners association every
month M so I can't really afford a home
per se MH well you can you just have to
think about how you did it um but it's
um you're pretty industrious young guy
you got a lot of stuff going on very
well done very well done well I mean I'm
with you you move out within 6 months
and uh get yourself established um in in
terms of paying your own bills and those
kinds of things and it's okay if you
rent I don't want you renting as a way
of life but there's people get in such a
hurry to buy well renting sometimes is
just patience and so if you rented for 6
months and during that time you piled up
some more
money and you had a real strong down
payment it caused you to buy a different
property that was a better property well
that would have been a good thing but I
don't want you renting for six
years right exactly and like what I what
I thought about is if I do buy a small
apartment um you know small apartment
essentially if I do outgrow it in three
four years can I just rent that out and
then that covers my mortgage and then I
decide what to do later yeah you could
you could get it paid off and then keep
it like you've got those those other
properties that are paid off and they're
moneymaking machines when they're paid
off baby so I just don't know if I
should just buy the apartment and then
you know it's okay here here's the thing
or if I should just if as long as you
don't buy something that can never be
sold because it sucks so bad right you
know it just it doesn't matter you sell
it if you don't like it in two years
right MH so my son Daniel bought a home
um and uh a year and a half later met
the young lady of his dreams and and um
6 months or 8 months later they were
married and we were actually talking
about it this weekend and she likes the
house that he bought just fine but it's
always going to be his house that he
bought and so at some point they will
change houses just because the old joke
is is that you didn't know you bought
the wrong house until you marry the girl
and she tells
you right that's the old joke now that
Allison wasn't doing that to Daniel but
uh but and your girl you know your
girlfriend of the future might not do
that to you but no matter what you buy
you're going to change a phase of life
when you do get married and have kids
and you're probably going to move again
so it's okay it's okay it's if you buy a
nice little condo there get you
something going in the Miami area and
it's as long as it's something that's
that can be resold that you don't get
yourself stuck in something U then just
sell it when when your life changes a
little bit but it's okay to it's okay to
rent for 6 months and even before you do
that
it's hard to
believe it has been 40 years since I
passed that real estate
test I did take it in 27 minutes I did
get a 94 but nowadays real estate tests
are a lot harder I was 18 years
old and I sold a house two weeks
later now let me just help you with this
if you buy a house from an 18-year-old 3
weeks after he got his real estate
license you're not smart
I appreciate my old high school buddy
letting me sell him my house we were
both just out of high school oh my gosh
me and my disco clothes oh and I had
hair oh can you imagine I was driving a
two-door car showing houses oh my
goodness real estate business I love the
real estate business I grew up in the
business obviously the reason I got my
license at that age Mom and Dad owned a
company and um I I wanted to be a real
estate
I went and got my real estate and and
finance degree as a matter of fact my
degree in finance as a specialization in
real estate and sold real estate all the
way through college even in those High
interest rate days and even though I was
was as green as a gourd and didn't know
what I was doing I I sure thought I
would knew what I was doing and I
convinced a few people I did know what I
was doing but and I got some houses sold
so I did the job but man oh man oh man
what a business I love the business I
love real estate love helping you guys
buy houses and and you know we've got
2,000 or so endorsed local providers
Across America now that we endorse and
when you get ready to buy a
house these days it's a complicated
process it was complicated way back then
but it's really complicated now and
there's all this bad information because
you know everything on the internet's
not true right I mean you know because
Zillow says it's worth something doesn't
mean it's worth that you know the tax
assessor well the tax value who cares
tax value has absolutely nothing to do
with market value it's supposed to but
it doesn't you can't use that as your
gauge so you have to learn this is the
most expensive thing most people ever
buy a
house and you know it's an emotional
process you get excited I was out this
morning riding around I was looking at
some properties and some buildings on
some properties getting learning some
things and I just got real estate fever
this morning it happened to me again
it's happened happen to me like a
bazillion times in my life you ever get
the fever you get house fever when you
get house fever you get
stupid you're willing to pay too much
you're excited you've got to focus a and
you're willing to buy a house when
you're not supposed to buy a house
you're not ready to buy a house you're
going to sell a house the wrong way oh
man you can get in a real mess so let me
give you a couple things you need to do
if you're thinking about buying a house
and I want you to own real estate owning
a home and paying it off is one of the
data points of an everyday millionaire
so we want you to do that but we don't
want the house to own you so here's your
rule of thumb okay number one you don't
buy a house unless you're out of debt
and you have your emergency
fund now everybody's going to tell you
you need to run by a house but
everybody's broke and you don't want to
listen to them it's not a popular thing
to be move a little slower with more
maturity and more wisdom but who gives a
crap this is not a popularity contest
this is you your family trying to build
wealth and build stability and
sustainability don't buy a house until
you're debt-free and you have your
emergency fund and then you save up your
down payment and that's what we do ding
ding just like that and then when you do
buy a house I love the 100% Down plan I
love it when I talk to a young couple
these uh man these killer Millennials
that I get to talk to they're incredible
and they say you know we we got married
we were 23 years old and uh we lived in
a garage apartment and we were making
$110,000 a year and we save $50,000 a
year for four years and we were 28 we
paid cash for a $200,000 house I love
the 100% Down
plan and people are doing it by the way
I recommend that but if you're not going
to do that here's the
most you should borrow and it's the only
thing I don't yell at you for borrowing
but I I would prefer you didn't borrow
or that you borrow less less less less
and get it paid off as soon as possible
but the most you should borrow is a home
on a 15
year fixed rate where the payment is no
more than a fourth of your take-home pay
so don't buy home until you're debt free
have your emergency fund plus a down
payment and on a 15-year fixed rate
where the payments no more than a fourth
of your take-home pay and when you pick
a real estate do not do real estate
DIY this is not DIY okay this is a 2
2003 $150,000
transaction you don't work on your car
and that's a $11,000
transaction you don't open up the back
of your computer and try to fix that and
that's a $500
transaction and yet you somehow think
you're just going to Waddle up and not
get in a bad deal buying a house or
selling a house you make a mistake
selling a $200,000 house if you if you
make a 10% mistake that's
$20,000
think about that I mean if you make a 1%
mistake it's
$2,000 count out 10 20 $100 Uncle
Benjamin Franklin's right in front of
you on the table right now in your mind
that's
1% and if you're a novice if you've
bought and sold 10 houses you're a
novice you are likely to make a 1%
mistake at a minimum without a pro in
your corner see you put a pro in your
corner it's that simple you don't do
this without a pro now everybody's got a
real estate license is not a pro your
Aunt Sally who got her license three
weeks ago is not a pro she's a sweet
Aunt Sally but she's a novice and you
don't put her in charge of your largest
asset cuz she's your Aunt Sally well a
Sally you get her feelings hurt well so
what she's likely to screw it up more
than you are if you did it by
yourself cuz she's an enthus II Astic
ignoramus no no no no no no well I know
this guy at church oh good lord you
don't pick anything else out that way
you don't you know when you need to get
a mechanic you don't go well my Uncle
Henry got a tool box last week and so
I'm going let him work on the car
no you look at their Yelp ratings you
talk to them you find out if they're a
pro how long you've been working on cars
and 26 years okay I got an ASC
certification okay we'll let you get
your butt under the hood but other than
that
no I bought you know was at a holiday in
express last night and I bought a tool
box on the sale serious when they're
going broke no you're not a mechanic no
you're not a real estate agent yet you
got a license but just because the State
Certified you doesn't mean anything
listen you want someone that's a pro you
want someone if you're buying a house or
selling a house that's doing uh 50 to
300 transactions a
year if if they've not done 50
transactions in their entire High
freaking life
no no no no no no no no I'm going to
sell it myself that's stupid you're not
going to make any money on that again if
you make a 2% error all of a sudden you
didn't save anything well I'm saving a
6% commission no you're not because
likely the person buying it is going to
bring their agent up and you're going to
pay that agent 3% now you're only saving
3% but you've been on the market twice
as long and you undersold the property
and you didn't know what the uh what you
were signing for with the home
inspection and what you tied yourself
into to do repairs that you didn't
intend to do oh and you miscalculated
the closing costs you ate up any
possible savings because you don't know
what the flip you're doing stop that
stop it so you get a pro that's why we
vet these Pros for you the entree the
entree well they are entree leadership
they go through Entre leadership but the
Endor local providers for Real Estate
they're the best of the best they're
high octane high protein in your area
and if you get ready to buy a house or
sell a house you need a
pro somebody really knows their stuff
and we vetted them for you thanks for
joining us America L is in Midland Texas
hi ly how are you I'm good how are you
today better than I deserve what's
up uh my wife and I live with my in-laws
and we want to buy a house but I'm not
sure how to go about doing it cuz we
have four credit and a little bit of
debt what's wrong was your
credit well I've got about a 560 and
I've never really done anything to build
credit the only thing I've got going for
me is our car payment yeah you've not
only not built credit you've not paid
things on time what what is behind or
not
paid well I we've been paying it on time
but when I started I had no credit and
so I've just been building it with the
car and we paid
20.6%
interest and I had a l but I paid it off
uh cuz I'd taken a loan to down pay the
car how much do you owe on this
ridiculous
car 10,000 good Lord at 20% interest yes
sir you are getting screwed okay yes sir
uh my wife wouldn't let me negotiate the
price so your wife wouldn't let you
that's what I said
but that's not how we do stuff at my
house um the uh uh ye how old are you
I'm 29 okay and what's your income
sir I make about 45,000 a year depending
on
overtime okay does your wife work
outside the home no sir she's a state
home mom how many children do you have
two okay all right um and is this the
only debt you've
got uh I think we've got about 12,000
total in debt there was a bed that she
got that we're she pays monthly on and
she's got a loan from one of those
little loan places that I told her not
to renew
again okay all right the two of you are
going to have to sit down together and
your first goal needs to be to get out
of debt
completely and uh when you have no
accounts open about 6 months to a year
later you'll have no credit score which
is what you're going to want to do
because you've got a bunch of ripoff
Dance Company crap and you guys have
been buying stuff you shouldn't be
buying you're getting killed man
everything you all are buying is a high
interest rate they're killing you
they're beating the snot out of you all
in the name of you buying stuff you
don't need to buy so you can get a house
later so uh what I would do if I woke up
in your shoes is I would sell this car
and get rid of this debt and get me a
beater um and then I would get these
other two loans paid off as soon as
possible is the car worth what you owe
on
it um just a little more than what it's
good well you can still get out of it
I'd get out of it while the getting's
good and just get you a beater have you
got another car I have a pickup but I
use it for work and that's the only
vehicle that she's got to get around CU
I may go to work and be gone three days
or something so we need to get her we
need to get her she lives with her
parents right yes sir her dad's car is
crap and her mom
works all the time okay then we need to
get her about $1,000
car her getting around as a stay-at-home
mom is getting in the way of you all
buying a
house okay okay that's the way I'm
looking at it now I'm not sure you're
going to do any of this stuff but this
is what I would do if I woke up in your
shoes I would sell that car I get those
other two loans paid off and I would get
me a little place to rent and get out of
Mom and Dad's basement and get the
Dignity of of standing on your own two
feet then I'd start saving aggressive ly
for an emergency fund of 3 to 6 months
of expenses and then I'd start saving my
down payment and um that's going to take
you a little while I have 401k in stock
purchase through the company I work in I
would stop adding to that until you get
this mess cleaned up okay and do you
have any money in the stock
purchase uh yes sir between my 401k and
stock purchase I have about 15,000
almost $116,000 in there how much is in
the stock
purchase um a little over $55,000 I put
10% of every check for year in there
good I'd pull that money out tomorrow
that's not got a penalty on it your 401k
has a penalty on it and stop putting
money in your 401k use that money to pay
off the two loans and to get her a
little car cuz you're selling that
car now you're 100% debt free as soon as
you pull those things off you could be
Deb free in a week if you get with
it that feels pretty good now now you
get on a written budget and you start
working together on a written budget and
your first goal is to get out of the
house your second goal is to save an
emergency fund of three to six months of
expenses and your third goal is to uh is
to save your down payment on your house
it's going to take you about a year and
a half to save up and during that time
your credit score will disappear so
there's only two worlds you want to be
in for getting a home as far as a credit
score goes a very high credit score or
zero credit score
and a zero credit score comes from
having absolutely no accounts of any
kind outstanding or open they're all
paid off and they're all closed you have
any bad debt
outstanding um there's medical bills but
the people that I talk to said they
don't really go off of that in their
years people that you talk to are idiots
of course they go off of that if they
report that as bad debt on your credit
bureau that's what's keeping your credit
score down okay so you got to go get
those medical bills and get them paid
off too when you cash this 5,000 out you
don't want to have anybody on the planet
that you owe any money to ever at all
and six months later you'll have to a
year you'll have no credit
score and then you can qualify for a
house but if you walk around this 560
paying 20% on this car living with your
mother-in-law dude you're getting killed
every time I turn around in this
conversation you hearing me yes sir I
think you can do this but it's you guys
it's time for y'all to take this dog by
the ears and make it make it bark okay
you can do this hold on I'm going to
send you a copy of the book The Total
Money Makeover and it'll show you guys
exactly what to do step by step to cause
this to happen but I gave you some
pretty clear instructions there if
you'll follow them exactly this will
work if you deviate from them then you
probably got bad advice
today all right guys our next episode is
about another top dollar asset that is a
necessity for most of us the car and
I'll warn you some of what you're going
to hear is controversial but it's Dave
we're dealing with so what do you expect
and as always share this video with a
friend who needs to hear it and thanks
for watching I'll see you next
time
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