Dave Ramsey got his real estate license at 18 years old, invested in Real Estate in his early 20’s, amassed a $4 million dollar portfolio with a net worth of about $1 million dollars by the age of 26…and then lost it all and filed for bankruptcy. Add me on Snapchat/Instagram: GPStephan
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Here’s what you need to know. Dave Ramsey got his real estate license at the age of 18 and began investing in Real Estate in the early 1980’s…he’d buy foreclosures, fix them up, and sell them. So what do most investors do when they finance real estate flips? They take out SHORT TERM LOANS to save money.
Loose lending practices in the early 80’s made this an attractive option for quick flip real estate investors…buy a property, immediately fix it up, and flip it within 45-90 days. By the time the deal is done, the loan is paid off. This is how Dave made a substantial amount of money, rather quickly, in his 20’s - and much of his one-million net worth was speculated from high appraised real estate values.
But here’s where things went wrong…by the mid 1980’s, real estate values were artificially high, fueled by tax codes which made real estate a favorable method of tax avoidance. See, many wealthy investors chose to dump all of their money in real estate rather than other assets, which inflated values way beyond where they should be….that was, until, the Tax Reform Act of 1986.
This changed everything and real estate values came dropping down as demand for real estate dwindled. At that point, his largest lender was acquired by a bigger bank, who began looking more closely at Dave Ramsey’s loans and determined they were too risky for them to continue renewing these 90-day terms. The bank demanded that he pay off his loan within the 90 days that was originally agreed upon, with no further extensions to given.
He had invested in a market that was inflated by investors seeking tax deductions, on short term 90-day loans, expecting to flip the property for a profit.
This is the BIGGEST difference between Dave Ramsey is this: I take advantage of long term, 30-year fixed rate loans that don’t change. My interest rate doesn’t go up, banks can’t just call it due anytime they feel like it, and the price is the price no matter what happens. When the numbers work, doing this is very safe and as long as the property makes money, your worst case scenario is usually just breaking even and then having a paid off home in 30 years.
If Dave Ramsey had a 30-year fixed rate loan, as long as the properties cash flowed, he could’ve just held them…and if he held properties that he bought in the 1980’s, chances are he’d have a TON of money by now. Not only that, but if he took out 30-year loans, not only would he have very, very valuable real estate in 2018 - but they’d be ENTIRELY PAID OFF!
For business inquiries or paid one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
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32 thoughts on “Bankrupt by 28: why dave ramsey lost millions in real estate”
  1. Avataaar/Circle Created with python_avatars Sherry Brooks says:

    My portfoliio of $750k is down to $492k, How can I profit from the present market" , I mean I've heard of people making upto $250k in couple weeks during this crash and I'd like to know how.

  2. Avataaar/Circle Created with python_avatars Er win says:

    Oh 90 days term, That’s why when the bank change their mind
    That’s how he bankcrupt

    I was just wondering and commented in his life story video
    Then got the answer here

    Btw since i’m from the future,
    Here a gift from me
    HE FINALLY DO SOME SHOW WITH DAVE RAMSEY, HIMSELF !!
    What a cool story 🙂

  3. Avataaar/Circle Created with python_avatars kory gill says:

    About Dave that is

  4. Avataaar/Circle Created with python_avatars kory gill says:

    Inform Ryan of this

  5. Avataaar/Circle Created with python_avatars kory gill says:

    Graham really intelligently researched!!

  6. Avataaar/Circle Created with python_avatars philipvlogs says:

    I have to say Graham, as a property millionaire from the UK, with a very similar story to yourself, I completely disagree with your advice in this video. Whilst I agree with the majority of your content, the only way to sustainably build a portfolio is by using the BRRR strategy which (usually) involves short-term bridging finance. For example, say we have $500k to start with, and we have a house at $100,000. I would pay $25,000 downpayment for the house. The $40,000 of work is paid on a credit card. Then I refinance at a $200,000 valuation onto a conventional, interest-only 30-year BTL mortgage, get all of my equity back, plus an additional $20,000. So essentially a free house + $20k extra that is netting me $1000 per month after all costs. with 500k capital, it means you can do this 20 times at once and grow a portfolio by about 80 houses per year! I hope you see my point here that short-term finance does work in a lot of circumstances and is something that definitely worked for us over the years.

  7. Avataaar/Circle Created with python_avatars Hershey Skwertz says:

    Save this video and come back from time to time to explain to people why Dave is so anti debt. He kind of continues with this false idea that if people were to mortgage their rentals a bank will call the lendees notes and destroy them for life not informing us that in 1986 the tax reform changed the game.

  8. Avataaar/Circle Created with python_avatars Daniel Medina says:

    Your businesses will make you rich but your investments will make you wealthy. We all deserve to be rich and have financial freedom. I pray everyone here becomes extremely successful.

  9. Avataaar/Circle Created with python_avatars Don Le says:

    The man got greedy.

  10. Avataaar/Circle Created with python_avatars The Four F-Words! says:

    Well, I just learned something. 90 day loans! Dave was dumb!

  11. Avataaar/Circle Created with python_avatars Rich Smith says:

    I do agree with your approach to real estate. The one big risk you didn’t talk about is long periods where you are unable to find stable renters. OR, having renters that refuse to pay their rent and you are forced to go through the eviction process. That was especially problematic during the pandemic. It was impossible to get deadbeats out of your rental. While no rent came in, mortgage companies still wanted to be paid. After going through such a nightmare, I’ve given up being a landlord. To me, the benefits no longer out weigh the risk.

  12. Avataaar/Circle Created with python_avatars Mike Anderson says:

    Thus Dave Ramsey does not talk much about real estate but has a great radio voice and some good advise despite his lack of knowledge in some area's. As for Graham I do believe the bank can call the loan.

  13. Avataaar/Circle Created with python_avatars Dalton Dasilva says:

    It’s funny how Dave doesn’t address the fact that his loans were on a 90 days terms lol. I love his philosophy about getting out of debt but I have to admit that some of his views on investment are outdated.

  14. Avataaar/Circle Created with python_avatars johnathan vale says:

    "Hey, lets just ruin this man's career"
    Said everyone at the time

  15. Avataaar/Circle Created with python_avatars Tyler Mundy says:

    Good stuff!

  16. Avataaar/Circle Created with python_avatars L A says:

    90 day loans is like gambling. To think, Dave Ramsey now portrays himself as the Oracle of financial wisdom.

  17. Avataaar/Circle Created with python_avatars L A says:

    90 day loans is playing with fire in any market / economy!

  18. Avataaar/Circle Created with python_avatars Miguel Rosales says:

    @Stephan it was never a net worth of $1M when his liability was $3M @0.16

  19. Avataaar/Circle Created with python_avatars Kwame Baah Tadier says:

    He got his debt obligations forgiven so now he's out here telling people it's a scam to have student loans forgiven. What a piece of 💩 that guy is

  20. Avataaar/Circle Created with python_avatars Mychael Williams - Los Angeles Real Estate Agent says:

    I’ve listened to Dave’s story probably 50 times, but this is the first time anyone has explained how the bank was able to call his notes. I never understood how that happened and you made it make so much sense. He took out 90 day notes!?!! As you said, that was very stupid. Lol

  21. Avataaar/Circle Created with python_avatars Weak eye dominant says:

    The issue is if the economy nose dives and muliple tenants stop paying rent you are still in a lot of trouble. If you miss payments banks can also recall those 30 year loans

  22. Avataaar/Circle Created with python_avatars Thomas Tries says:

    I always did wonder how the bank could just decide to make all his loans due causing his bankruptcy. Now it all makes sense.

  23. Avataaar/Circle Created with python_avatars 00vortech says:

    I'm sorry but you go BK why the F should anybody listen to you in the first place ? My the right decisions IN THE FIRST PLACE !!!!!

  24. Avataaar/Circle Created with python_avatars FuZZbaLLbee says:

    How about we do the same now.

  25. Avataaar/Circle Created with python_avatars Ben Weiser says:

    This explains so much about Dave Ramsey’s advice and politics. Go figure.

  26. Avataaar/Circle Created with python_avatars Parth says:

    Ah I'll pretend I understood everything

  27. Avataaar/Circle Created with python_avatars Roy Patterson says:

    A man who worked with Dave at the radio station he first worked at. He told me the whole bankrupt story was a scam. Never really happened.

  28. Avataaar/Circle Created with python_avatars T Chen says:

    Dave’s method works for almost everybody. Every single little man can become rich and live a decent life if he follow Dave’s method. But, the downside is, it’s not “Optimal” for everyone.

  29. Avataaar/Circle Created with python_avatars Tim V TV says:

    FOR THE ALGORITH

  30. Avataaar/Circle Created with python_avatars Vorr Degard says:

    So he made risky investment or gambling with luck

  31. Avataaar/Circle Created with python_avatars NeverClever NorWitty says:

    Good video, but at the same time Graham we all benefit from hindsight. You know what the average 30 year fixed rates were in the mid 80s? 12-18%! So, yes, it was risky to do short term call loans, but properties probably had trouble cash flowing with long term loans back then. It should also be noted that in the US 30 year notes generally cannot be called early, but this is not the case for all countries, plus HELOCs in the US can have different provisions.

  32. Avataaar/Circle Created with python_avatars Food Dude says:

    Yep and Dave is only worth 200 million

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