Real Estate Journey: Lessons from Success and Failure

Real estate success requires understanding the people factor, not just chasing quick profits.

### Dave Ramsey's Real Estate Journey: From Rookie Mistakes to Expert Insights
* 🏠 Dave Ramsey recounts his early real estate ventures, starting with a HUD repo purchased for **$842 profit** and a subsequent **$14,000 loss** on a **$7,000 property**.
* 📉 Despite these setbacks, Ramsey continued to flip properties, eventually owning over **2,000 pieces of real estate** and making **$250,000 in 1984**.
* 💰 Ramsey's bankruptcy in 1988 wiped out a **$4 million real estate portfolio**, leading to valuable lessons on **dealing with contractors, tenants, and market fluctuations**.
* 🧠 He emphasizes the importance of **buying properties at 70% of their value minus repairs**, running real estate as a business, and **avoiding get-rich-quick schemes**.
* 🔍 Ramsey warns against common misconceptions, such as **renters always paying on time** and real estate being a **"poor man's game."**
* 💼 He stresses the need for a strong "**bullcrap meter**" in the real estate industry and shares insights on the **people factors** involved in successful property management.
* 📊 Despite his early failures, Ramsey's journey from "**zero to hero to zero**" provided him with a **lifetime of learning** and a **sensitive radar for real estate scams**.
* 🎓 Ramsey's experience highlights the importance of **learning from mistakes**, **adapting strategies**, and approaching real estate with a **realistic and cautious mindset**.

foreign. So, I did my first flip in 1983, the year before I was born. So, that would be 30 years ago, right? Or 40 years ago? 40. 40 years. 40 years ago. 40 years ago, yeah. The first flip I did, I was so stupid that I thought that everything that was a foreclosure was a good buy, that if it said foreclosure, that it must be cheap. I equated foreclosure with cheap, which sometimes is true. I think most people do. But I bought a HUD repo. They used to put them in the newspaper, and you would bid on them. FHA Reef, FHA foreclosures, HUD repo out of the news. You had a newspaper as a bid process. I turned in the bid. I talked a banker into financing 100% of it because I had a real estate degree. I was a real estate guy. I knew all about real estate, and I was 23 years old, so I was a freaking genius, okay? And so, I bought this house. I knew everything about the house before I bought it. I'd gone through it with a

fine tooth comb. Okay, the um, in those days, they used uh, we we used uh, copper pipes for the water supply. And the cut, the house had been sitting empty, and so the copper pipes had frozen and split. And so, it was pretty much a sprinkler system underneath uh, and you had to go through and redo the copper pipes. And I knew how to do that because I'd done renovations work in high school, working for my dad in the real estate business. So, I crawled around on my little back under there with a little torch and fixed all of the spliced all these pipes, fixed all the pipes uh, put new carpet in it, went in on the weekends, and Sharon and I repainted it. Okay, and I kept all of my receipts for what I spent and paid myself zero labor. How stupid I was. And we put the house on the market, and it sold in five weeks. So, I'm a huge success, net net net net. When I got done, I added up what we had in it, what we paid for the closing costs, what we paid

on the closing cost on the resale. What actual after every dollar is recorded. What actual net profit did I make? 842 dollars. You're an overnight success. I'm now on game on. Can't nobody tell you obviously good at this, which means that I probably paid myself what a dollar an hour labor. Well, you know, I didn't get paid for the labor. The 842 was with this free labor I had. I had slave labor. Me? Yeah, you and my wife. And my wife. Yeah, so we're in there. So that was job one. Okay, the next one. I will. I bought and I thought, well, I'm not buying any houses in bad neighborhoods because I don't know anything about all that stuff. I'll get in trouble. But this guy called me up and he had a house and he sold it to me for seven thousand dollars. And I ran the in what I thought was the estimate. And I had three contractors look at it and give us bids. And the first contractor wanted a fifteen hundred dollar deposit up front.

never saw him again. Right, went to his trailer and knocked on the door in the trailer park, trying to get my fifteen. I wonder what I didn't get shot. By the way, he had already left and gone to Kalamazoo or wherever it is contractors go when they take your fifteen hundred dollars because you're an idiot and you give it to them up front. Yeah, and so then I started on the second contractor, the third contractor, the fourth contractor, and uh, when I finished with that property, I had already done a whole bunch of other deals by then, uh, like uh, 60 or 80 more deals. Oh my gosh. By the time I finished that property, I ended up only losing fourteen thousand dollars on a house I paid seven thousand for four and a half years later. Oh my gosh. This is how dumb I am. So if that wait, if that, that's another house had been your first house, I would have been out of business. Yeah, I would have been Nate. Yeah, you would have.

been like I'm never doing this. My wife would have been going, Yeah. Instead, I managed to delay the pain on that one, meanwhile doing a whole bunch of others, and I made a lot of money. Yeah, I made a lot of money. I ended up in my life. I have owned over 2,000 pieces of real estate. I flipped real estate as my job for four years. I was using 90-day notes to fix them and flip them. I made, and I started buying property at 70 cents on the dollar minus repairs. Wow. So, a hundred-thousand-dollar property, I buy it for 70 minus the repairs. That was the formula, and that means I bought a lot of foreclosures, a lot of estates. I did some historic rehabs. We've done a bazillion deals. I can walk around Nashville. I did that house, that house, that house, that house. 30, 40 years later, I want to take that tour, and uh, yeah, you don't want to be in that neighborhood probably, but um, okay, some of those neighborhoods are now

gentrified, but um, gotcha. They've come back a long way from seven thousand dollars. Now it's 260 to live on that street, and it's a great property. Not really. Still in Dodge City. The shoot up down the street. It's Dodge City. I don't care whether it's gentrified or not. So anyway, the uh, you're killing me here, but yeah, so this is my real estate career. So when I get aggravated at the idiots on Tic Tac, it's because I was one of them. Yeah, okay. I was doing the exact same stuff, and I can smell neophyte beginner a mile away. Yeah, because I was. I was. I was 23. I was going to get rich in real estate. I made 842 dollars, minus the cost of my labor. I lost 14,000, and then I went on to make money and make money, and I started figuring it out that I had to, you know, I had to, I had to be tough with contractors. I had to get with good ones, and I had to

have been tough on schedules. You had to be finished, and then you put the house on the market aggressively, and you flip it. You don't keep it ever, and uh, you know, not like her. We're not in the rental business. And then, then I ended up buying a bunch of property. I buy packages of houses, about 10 or 20 at once, and they were rental portfolio. And I lost every bit of that when I went bankrupt in uh, in 1988. Five years later, I have now owned, had four million dollars worth of real estate when we went in. That's a fast one in a bankruptcy. That's a whirlwind day. It was. I worked all the time, and I was really, really good at doing deals, but I'm saying to go for from Zero to Hero or hero to zero and back. Zero to Hero to zero, that's a PhD in d u m b is what that is, yeah. And so, but I got a lifetime of learning there, and it led me to have a bullcrap meter that is very sensitive to real estate people and uh, so you know.

when you guys are talking about right now because real estate's real hot, right? It's a popular fad topic again. Everybody wants to do a real estate deal. Everybody wants to do a flip. Everybody wants to own real estate, and your renters will pay your rent. Rentals will pay the payment. You don't worry about it. It says people who've never had renters. That's a dumb butt statement. Okay, let me tell you. Let me teach you some words. Chapter 13. Bankruptcy. For I will pay you when by God I want to. Okay? And let me tell you what you can do with a tenant who's in a bankruptcy. Nothing. Wow. You have a stay on you, which is an injunction. A federal court has looked at you like a dog and said stay. And as a creditor, if you even call your tenant, you can be held in contempt of court. Wow. You cannot talk to them. You cannot do anything except everything they wish as far as repairs while they pay zero rent because you stay, dog stay. Yeah, you learn this when you've had a

couple of them, so when renters are always, they're going to pay the payment, and it's a free house, and I'm, you know, I have a jet airplane, and you're just an idiot, you're just an idiot on TikTok, that's what you are, it's unbelievable. Well, here, so real estate is great, but there's a people factor with the contractors, there's a people factor with the renters, there's a people factor when I overestimate how much money I'm gonna make, I underestimate the contractor, the time it's going to take to run it. I think it's going to sell faster than it is because I'm always a glass-half-full guy, and right before that's when you get your freaking nose bloodied. Slow down, people pay cash for the stuff and run it like a business, not like a get-rich-quick scheme. It's your only hope of making money in real estate. That is not a poor man's game. I think that's

the part that anybody can take away from this is it would be one thing, Dave, I feel like if you were sitting here going, I tried that real estate thing, and this is what happens, and it was just like this negative story. But then you go on and figure out the best way to do this, the smarter way to do it, the way that actually works, and that's what you're teaching. It's not like you're saying, Stay away from real estate, never do it. There's just a right and a wrong way to do it. I was 24 years old; I had a million-dollar net worth in 1984, and I made $250,000 that year. That's $20,000 bucks a month in 1984. Okay, in 1988, my taxable income was $6,000. Wow. All I did was sell property and bankruptcy. This is the Ramsay show.

Dave Ramsey: How I Lost EVERYTHING Flipping Houses

The Ramsey Show Highlights

I did my first real estate flip 40 years ago, mistakenly believing that all foreclosures were good buys.

I bought a HUD repo, managed to get 100% financing, and used my renovation skills to fix the house's frozen and split copper pipes.

The house sold in five weeks, making me feel like a huge success, despite not paying myself for labor.

The speaker made a net profit of $842 from their first real estate deal, relying on free labor from themselves and their wife.

They then purchased a house for $7,000, but lost $14,000 on the investment over four and a half years due to unreliable contractors.

Despite the initial setbacks, the speaker went on to complete 60 to 80 more deals, highlighting the challenges and learning experiences in their real estate journey.

The speaker has owned over 2,000 pieces of real estate and flipped properties for four years using a formula of buying at 70 cents on the dollar minus repairs.

They have completed numerous deals, including foreclosures and historic rehabs, and have witnessed the gentrification of neighborhoods over the years.

The speaker reflects on their own journey and struggles in the real estate business, emphasizing the importance of being tough with contractors and learning from mistakes.

The Rollercoaster of Real Estate Investing

The speaker's real estate journey involved aggressively flipping houses, buying rental property packages, and experiencing bankruptcy in 1988.

Despite the setbacks, they eventually owned $4 million in real estate five years later.

The speaker emphasizes the challenges of being a landlord, particularly dealing with tenants in bankruptcy, and shares their sensitive "bullcrap meter" for real estate dealings.

Real estate can be lucrative, but it involves significant people factors, from contractors to renters.

Overestimating profits and underestimating costs and time can lead to financial setbacks.

Running a real estate business with a cash-focused approach and a long-term perspective is crucial for success.