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Sell or Rent? Reacting to Dave Ramsey

We are currently living through a unique real estate market. 

Those who are relocating to a new location or another home have legitimate questions:

Should I sell and realize these profits and get the equity out of this house? Or should I keep it as a rental as a future investment?

A caller had a question for Dave Ramsey on a recent show. Watch for my complete reaction to his advice:

Thinking about buying investment real estate

If you are willing to buy a single-family residence to rent out, you will need to self-manage that property. Your next move is to rent that out. Nobody is going to manage the property for you, where the numbers make sense as an investment.

As an example, let’s say you have a $400 cash flow a month (meaning you could rent it out for $2,400, and your mortgage is only $2,000), that does not mean you are making $400 a month.  You should be putting 2% to 3% back in the home every year for routine maintenance, which will cut into that money. Second, if you hire someone to manage the property for $200 a month, who will do a thorough job managing property for just $200 a month? 

If you plan on getting into single-family investment properties, it only makes sense to self-manage the properties you rent out. Ideally, the property would be within a five-mile radius and at most 30 minutes of driving distance from where you live, so you can drive by, check it out, do your walkthroughs, and be available when any issues arise.

You will have the most success owning a single-family investment property as an active manager and owner. Part-time will never be the way if you are dependent on investment real estate.