A debt-free couple wanted their first real estate move to be the right one.
Kat from Pittsburgh called “The Ramsey Show,” saying she and her husband were married and had no debt. They also built up roughly $70,000 to $80,000 in liquid savings while earning about $70,000 to $75,000 a year combined.
With rent and utilities costing about $850 to $900 a month, they were weighing whether to buy a duplex as a first home. They also considered buying a smaller house, renovating it and later renting or flipping it.
“You’ve lost your butt on it,” personal finance expert Dave Ramsey said.
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The Duplex Advantage Came With A Trade-Off
Ramsey said duplexes could work for a first property, but the arrangement came with its own challenges.
“The beautiful thing about a duplex is your renter lives next door,” he said. “The problem with a duplex is your renter lives next door.”
Resale was another drawback, Ramsey said, because duplexes usually attracted investors looking for deals. Single-family homes often appealed to buyers willing to pay more for a place to live, while duplex owners also had to manage the personal and emotional boundaries of living next to a renter.
A duplex in a strong neighborhood could still be worthwhile, Ramsey said, though single-family homes typically appreciated faster.
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Crypto Shifted The Conversation
Co-host George Kamel then asked how much cryptocurrency the couple owned. Kat said she personally held just under $10,000 and had not yet merged finances with her husband after their wedding.
Ramsey said Kat and her husband seemed more comfortable with risk than he was after losing everything in real estate decades earlier.
Before rebuilding his wealth, Ramsey recalled borrowing heavily to flip homes in the early 1980s and making profits on nearly every deal. The problems started when banks demanded repayment on the loans at the same time. He said he sold properties quickly and lost everything.
“I don’t like losing money,” Ramsey said. “It’s too hard to make.”
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The Strategy Ramsey Said Changed Everything
Kamel told the couple to start with a primary home before looking at investment properties. Ramsey said that became his strategy after going broke. He paid off his house, saved cash and bought his first rental outright.
“You know what happens with a rental that you have zero debt on?” Ramsey asked. “It cash flows like a bandit.”
That debt-free approach also changed how he handled renters during difficult periods. Without mortgage payments, landlords could better absorb the strain of COVID-19 eviction moratoriums, according to Ramsey.
“It takes a little longer,” he said. “But you can be gentle when you don’t have any payments.”
The debate over duplexes versus single-family homes highlights a …
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