Brought to you by the EveryDollar app, start budgeting for free today. Anna or Anna is with us in Los Angeles. Hi, how are you? Hello, how are you?
I'm doing great. Good. How can we help? So I've been working for some time now and I thought I did an okay job for building up my personal wealth, but I also like to hear your opinions about how I'm doing this far.
Okay. How are you doing? Coming about it. Yeah.
So I've been in the real estate business for many years. Personally, I have four rental properties and the year and the income is about 50,000 given or more or less. The total mortgage balance I have about is a million. And one thing, I don't know what I was thinking, but I did take out a whole equity line, the purpose of purchasing other properties.
So so far, I've been paying it off the highest that was close to 600,000, but based on my calculation that's back in 2019 and I should be able to pay that off completely off by next year, middle of next year. And then you'll still have a million dollars out on the rentals. Correct. Okay.
And you make what a year? That's the wild card. So I mean, real estate. So that's the last year is about 200.
Okay. That's probably your average year, right? Yes. Yeah.
All right. Good for you. And so what's your plan? Just staying at the rest of your life?
I mean, what's your plan? Sounds like you keep buying rentals with more debt. Yeah. And that's my question.
Although I have these rental properties, but I always feel I have this piece of rock inside of me. I feel very heavy. Yep. It's a million dollar rock.
Yeah. It's right there on your stomach. Yeah. So should I get rid of some of the properties?
So to get rid of this feeling, I'm not sure what to do. I would develop a game plan to have them all paid off within a certain period of time. There's nothing panicked here because there's no desperate situation. But what you're experiencing is you're finally measuring risk.
And most of us, I grew up in the real estate business. So I understand when you get in the real estate business, one of the things they do is they take a hammer and they break your risk meter. We don't even know how to measure risk once we're in that business because we just I mean, it's just like we go getting a mortgage to buy an investment property is like, that's the only way to do it in our minds. You can't do it.
You can't do it otherwise. We're just people in real estate business really believe that. It's just not true. But we believe it to be true.
So but what you're starting to feel the weight of the risk that you've taken on that no one in your world talks about, but you're starting to feel it. And that's how you ended up talking to us. So yeah, what are these properties worth total? Are you owe me on them?
What are they worth total? Total. I would say about five million. Good for you.
Okay. So that's a great equity position. I mean, obviously you're in a 20% loan to value ratio, which is phenomenal. It's not a big risk position, but there is a million dollars worth of problems there.
So what I would do is say, I'm going to pay off that million with my income and with the sale strategically of one or a couple of these properties over the next five years. Okay. And it might be you can sell one of them and be clear and clear the rest of them. And that'd be pretty cool.
And then from there, you pay cash for all of your additions to your portfolio. You don't use home equity loans ever again. You don't borrow again to do that because you've got great cash flow when you have no mortgages. And that's going to be the way to go.
Yeah. It's going to be a really great position out there. Seriously. So you wouldn't sell.
Why not sell one of the houses and knock it out that way? Yeah, I was saying. Okay. I'll pick out one of those properties.
Okay. All right. All right. And or the income.
If it takes you two years to do this instead of a month, that's okay. There's nothing on fire. Yeah. But you do want to aim at having a debt-free portfolio and aim at and stick with the promise to yourself that any additions to the portfolio we're doing with cash flow as soon as we get first and foremost, get to debt-free, then when we add something later, we're going to do that without borrowing money to do that.
And folks, I understand that the get-rich-quick real estate world and borrow all you can on real estate out there is out there. It's always been out there. And I understand it's real hot again. That tic-tac has made it really a big thing again.
And you guys get on there. There's all these goobers on there that have no life history that, you know, they're 14 years old and they're pumping houses and I get these figured. It's a bunch of crap. You don't.
I mean, when I was 22 years old out of college, I started buying houses, nothing down. I bought $4 million worth. I had a $1 million net worth by the time I was 24 years old. I made $250,000 cash, taxable income, doing flips in 1984.
That's $20,000 a month in 1984 and you don't put that in today's dollars. That's a half million dollars a year. Okay? Now, I don't know what neighborhood you grew up in, but the neighborhood I grew up in, we call that rich.
It was fun. I was having a blast until I found out about risk and the banks called our notes and we spent the next two and a half years of our life losing everything we own. We were sued, we were foreclosed on, and with a brand new baby, a toddler in a marriage hanging on by a thread. Because my poor wife thought she had married Sir Galliad, turns out it was Goober.
And there we were, bankrupt. And at 28 years old, I got the opportunity to start completely over because I followed the exact same crap you people are seeing on Instagram and TikTok. And you're all walking around acting like you're smart. You're not.
You're straight up freaking stupid, quit doing it. I walked it and don't tell me, you know what? Listen, a man with an experience is not the mercy of a man with an opinion. This is ridiculous, you guys.
I've walked the exact path that some of you are signing up for right now. Now not her. She's got a different situation. She's moving away from the debt.
But this zero down, nothing down, I'm going to get rich in real estate, is absolute bull crap. Broke people shouldn't buy real estate. It makes them broker. That's why they call them brokers.
This is the Ramsey Show.