This is the Ramsey Call of the Day, part of the Ramsey Network. Joseph is in Seattle. Hi, Joseph. Welcome to the Ramsey Show.
Hey, Dave. Appreciate you taking my call today. Sure. What's up?
Well, I'm finishing up the baby steps and super excited to start building wealth. I would love to get into real estate investing, but I have no experience with real estate investing. I'm wondering if it would make more sense for me at this point, rather than directly investing in real estate, to invest in some high dividend reach that would be paying like 10, 11% dividend or to get deeper into actual physical real estate. Hey, the one's fine.
I mean, the reach in the old days underperformed growth stock mutual funds. These days, there's plenty of reach that are performing as well. And like you said, 10, 11, 12%, it's not unusual on a reach, especially in the market where real estate's doing what it's doing. For those of you who don't know, it's a real estate investment trust.
It's basically a mutual fund for real estate is how it functions. And so, and that way you can put in, you know, a few thousand dollars versus needing $50 or $100,000 to be in the real estate world. So what do you make? I make about $550 a year.
Whoa! What do you do for a living? I'm an economist. Good for you.
Good for you. It's working out for you. I'm proud of you. Well done.
Well done. Great. Well, thank you. Appreciate what I'm going to do.
You're a debt-free house and everything then? You should finish the baby steps? Yeah. So, well, we're just actually just got a pretty good change in my common structure this last year.
And so, that's put this in a range of finishing, maybe that's in that couple of years. Okay. So, thinking forward to the next step. Gotcha.
Okay. So, when you're out of debt with your home and you make $550 a year, you ought to be able to save up a couple hundred thousand pretty quick. Yeah. Yeah.
It works. I don't have the experience with taking care of real estate, dealing with the property management. I know there's a lot of understanding of markets that have to go in to find the right location. And there's a lot of learning to go into there.
As much as I love learning, I also want to get that real estate investment going. Yeah. Well, I think what you're identifying is there's some holes in your knowledge gap. And you fill in that knowledge gap where you start dropping a couple hundred grand on something.
So, probably would start with some reach. And then just go, okay, I'm going to go learn three neighborhoods this year or three areas of Seattle. If you're thinking about residential, I'm going to start talking to any viewing property managers. Learn how this works.
I'm going to learn how to talk to some people that have property and start looking at best practices on landlording. And start reading some books on the subject and start filling in your knowledge gap. If you really want to put money in it, you need to know more. And that will lower the fear that we hear in your voice right now.
Yeah. And when it comes to this, I want you to have a pay for house, which you should be able to do fairly quickly. And then I want you to be paying cash. And I know that's going to move a lot slower than the courses you hear about out there from real estate gurus.
But after going bankrupt, you started building back a real estate portfolio in cash. And the amount of financial piece that gives you and return that gives you is absolutely incredible. Well, my rates of return are ridiculous. I don't even debt.
And so the real estate makes money like crazy when you buy it that way. It's a little slower to get started. It's not get rich quick. But the guys that are doing the nothing down real estate and they're screaming and yelling about, you know, debt is, you know, people who tell people, cash is horrible.
Don't be in the cash business. They're having a fit out there flopping around on the floor, foaming at the mouth and carrying on. The guys are doing that stuff. Basically, if you follow that, I defy you to find someone that 10 years later is not broke.
When you do nothing down real estate, I was in a nothing down real estate club. 100% of the people that were in that club are no longer in real estate. Or they paid it off and got out of the nothing down world. Yeah.
I'm going to use debt. Debt is my friend. Debt is my friend. Debt is my friend.
Debt is my friend. Debt is my friend. Debt is my friend. Debt is my friend.
Debt is my friend. Debt is the people who are crazy. Well, that's because you're selling a course on nothing down real estate. Get rich quick.
Crap. And it's not going to get rich quick. It's get rich. You'll get rich.
I got rich. I had a million dollar net worth at 25 years old, 26 years old. I made $200,000. I lost it all because of debt.
So the guy that wrote the book, Nothing Down. Robert Allen. Went chapter 11. Okay.
So this just tells, you know, and not matter, Robert. You know, he believed that stuff. But it's just, you know, so you have to decide which of these paths you're going to follow. And I defy you to find someone that has followed to get rich quick.
Nothing down real estate. The cash is bad idea that those guys, I defy you to find someone that's followed that strategy and 20 years later still owns a bunch of real estate. They just don't. There's a correlation between you getting rich slow and then keeping that wealth.
Rich quick and then losing it all. Exactly. Exactly. And if someone has to flop around the phone with them out to get you to do their stuff, then- Run, run the other way.
They'll doth protest too loudly, young man. You know? It should be right there. Seriously.
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