I follow your advice and live on a budget, but it’s really hard to save up for a down payment on a house because property is so expensive here in New York. My family in Indiana says I should buy a cheap property there, then fix it up and sell it to get the money I need. I’m not sure how I feel about this idea. What do you think?
I think you’d be smart to back away from their idea. Your family loves you and wants to help, but this is a bad plan. Fixing and flipping properties is a hands-on business. There’s no way I’d try something like that from 700 miles away. It would be a nightmare!
When you take on that kind of work you need to oversee every single step of the process. You’re also keeping an eye on the help you hire to make sure they’re doing things right. Think about this, too. You can’t just find a house and expect to get a good deal. Professionals who flip houses for a living often look at dozens of different properties to buy just one. It’s not an easy way to make money, and it’s not something I would advise doing from a distance.
I know it can take a while to save up cash for a down payment on a home. But don’t let a case of house fever push you into making a bad financial decision. Have you considered getting a part-time job for a while to bring in some extra cash?
A house should be a blessing, not a burden. Trust me, waiting a while and saving up is a lot smarter than fixing and flipping houses three states away!
I got laid off a couple of months ago, and I’m behind on the payments for a rental property. I found a full-time job recently, but it doesn’t provide enough income to cover my other bills and the mortgage on this property. The other day, I received an offer from someone who is willing to buy it for what’s owed on the property. I’m not sure that’s the best thing, because I owe $70,000 and it’s worth around $150,000. What do you think?
You’ve got one thing right. You definitely need to get rid of the rental property. I’m not sure I’d jump at the offer you just received, but if I were in your shoes I’d slash the price way below value and sell the place.
Right now you’re broke, and you’re still trying to play real estate investor. That’s not a good plan. I’d put a price tag of $100,000 on it, so you can move it fast and still see some equity in the deal. But sell it today!
By doing this, you’ll have a nice chunk of cash in your pocket, and you can get something of a financial fresh start — one that includes living on a written, monthly budget and staying out of debt!
* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.