I own rental properties and have a management company. Dave is right, it’s not passive. There’s a massive amount of work, problems and headaches that go into it.

Real estate investors losing money is music to my ears. They are a major reason why the real estate market is the way that it is now.

being a homeowner is enough to tell you that owning real estate is not passive. there are constant issues and hurdles like insurance, wear/tear, HOA nonsense, warranty issues, etc. now imagine it happening miles away. i have a paid off rental and there are times where i want to list it and get it over with

Love how Dave provides a different perspective than others.

As an owner of a residential rental property using a property management company, I'm with Dave on this, it's not that passive. I get email from the management company all the time about approving works to the unit that needs to be done.

If you’re an engineer, spend your time wisely and put all your time and effort into becoming a better engineer. Then take that extra money you make from being a rockstar engineer and put it into an S&P 500 index fund(or mutual fund). Do what you know best and invest the money into something truly passive. If you’re making really good money with your calling in life, it makes zero sense for you to be fielding calls from AC repairmen and trying to collect checks from tenants. That’s a very poor use of your valuable time.

Agree, rentals are not passive income, however they can provide a solid return. We have a lake cottage (purchased with cash) that we rent out as a short term rental (Vrbo/Airbnb), it easily provides a 20% return (after expenses) but does require a lot of hands on, anything but passive. But even with the additional effort required in managing the property I still prefer a short term rental over a long term rental. We have 30-40 different guests (I.e renters) each year, but I find there is less damage experienced from these short term rentals than what occurs with a long term rental that has a new renter every year or two.

I know a franchise owner that told me how he once owned the whole building and his tenants would always come to him over some utility issue. It was like having a second job on top of already running his franchise. Other nightmare stories are when bad tenants are destructive and expect you, the owner, to fix their problem they caused.

Great advice! I own 2 rental properties in Queens NYC. NYC is unique. Paying all Cash for it is impossible. Taking on some debt is reasonable to a degree. Property values ALWAYS go up, up, up!! Avg home value in Queens NY is 7 percent over a 10 year period. Alot of people buy rental properties knowing that they will make money even if the tenants don't pay their rent. The rent is a bonus. Key is to make sure YOU have enough income to cover the expenses in case a tenant doesn't pay rent! We bought one 2 family home for 780k with only 150k down. It was a struggle but luckily the tenants always paid and we had enough income to cover expenses. What happened was the rents steadily increased over the years to the point that we were able to pay off the house in 12 years. Plus, the value went up to 1.4 million!

“what is ur masters in” “mechanical engineering” “what career are you pursuing after this” “mechanical engineering” 😂😂😂😂😂

It’s definitely not passive income. Not only do you have to concern yourself with the tenants but also keep a watchful eye on predatory property management companies. They bill you for repairs that should be charged to the tenant, over bill you for services they supposedly performed, or double bill you for services that they contracted out because they couldn’t fix the issue. Scammers!

Try a REIT! No one will be calling you telling you the roof is leaking or the toilet won't flush. Look at 10 year returns with a 5 star rating from Morning Star. Unlike real estate you own and manage yourself, with a REIT you can exit with a phone call.

Finally someone credible says it, relying on other people money to make you money is not passive not to mention the maintenance you have to have in order to keep your rental legally open!!!

Passive=mutual/index funds. R/E=Active when the water heater goes out, you the owner are on the hook. Works like this: Example; $1000 rent, tenant pays the prop mgmt. 10% goes to commissions to manage the unit, another 60-100 for taxes, mortgage payment-300 (If not fully paid off) you might net about $500 that's if there are no maintenance issues. Bottom line is if your not at least earning 12-15% ROI then owning rentals may not be the way to go unless the rentals are paid off having no mortgage. An index fund won't be calling you at 10 PM due to a leaky faucet.

I graduated with a mechanical engineering degree. You really have to choose which job you want to do. Real Estate and hospitality or Engineering. I was a nuke for eight years and used the money to change gears into Real Estate and Hospitality with my own company. Trust me I was this guy in college. I wanted to buy the whole town and rent but without getting the engineering experience and income and homeowner experience I would have never been successful. Just be patient and give your engineering income a job, building yourself and your business.

Yup. AC leaked into the furnace after going out ruining the furnace as well. When you're living there, you notice and care. Renters don't. Ate up the profits for the year. Took hours and hours of calls on top of the money and that's with a property management company. Just count on spending a couple of hours a week per property but not spread out nicely, clumping together in weeks that you already had booked.

Dave is right. I don’t want my investments calling me at 2am.

Things only break when I’m out of town. That’s a landlords vacation. I used to sleep really well when it rained, now I think drainpipes and shingles

Absolutely, owing multiple rental properties is definately not passive. But.......If you are willing to work and willing to learn, it can be rewarding.

Everybody, including people with great careers, are falling for these online gurus...Be an awesome engineer and accumulate wealth slow and you will be a bigger and more wealthy millionaire in the long run.

After finally making decent money through the stock market in passive income, I now cannot understand why people throw so much money into real estate just to continue to work hard instead of actually earning passive income. It’s like people refuse to believe real estate is a job just like anything else where the top people get paid the most. I am very glad I chose stocks instead of real estate investing. Best financial decision I’ve ever made.

My wife and I own a few properties and I can attest - it’s not a get rich quick and does require a lot of attention. Some renters are self sufficient and the unit has no major issues. Others have problems monthly. You make your money on the equity earned and if you can make a little extra each month while you own it, that’s the cherry on top. We bought our first vacation rental this year and the jury is still out on if it’s a good investment from a monthly standpoint. Some of these vacation rentals are highly seasonal but earn good equity and can be profitable - just takes a lot of time, not to mention property management companies take 20% cut.

It depends on what you consider to be passive income. I own rentals and manage them myself and consider it passive. On average I probably work around an hour a week on them. There’s months that will go by without me needing to do anything at all but then a tenant might move out and I’ll work two or three weeks on it screening new tenants and getting it ready for them. I would never pay a management company because the work load doesn’t change much plus you have to manage the management company so it honestly ends up being the same amount of time except you get less money.

Appreciate the advice Dave! I’m one of those people who wants to do this but needs to be realistic with the risk.

It’s a lot of aggravation for maybe a 7% net cash flow. You can do almost as well and diversify with a few good REITs.

If he truly wants passive income from real estate then he should be investing in REIT’s.

Rental is really either the most active passive income, or most passive active income. It is kinda annoying when you have decent amount of portfolio, doesn’t take much to guarantee you deal with tenant at least once a month on some kind incident

As a renter I can tell it's not. We always have issues In our home. The landlord sends her son to work in the property. He came and finally fixed our out let's. Only think he messed up as the light switch right the outlet he fixed stated making electric noises and now we can't us it. We have to us a lamp. The coin washer machine is always braking down and the other tenet's had a leak in her roof. I always something wrong. In order to have tents she has to offer utilities included. People in California can't afford to rent unless you included the utilities. She can't add a way to know who's using what amount of utilities because of the way the building is built so she has to add utilities included.

I prefer to buy real estate stocks with high dividends then buying actually real estate

I agree, it is NOT passive, maybe it is sometimes or most of the time if lucky...but I have 1 rental property for 2 years now, and let me tell you the problems come AT THE WORST TIMES. It also needs to be addressed RIGHT AWAY NO QUESTIONS ASKED. That being said, I enjoy fixing stuff so I think it is fun.

All I do is receive money each month. If tenants leave all I gotta do is email the property manger a few times. I don’t understand why people are saying its a headache. I worked very hard laborious jobs and now all I do is send emails and receive money each month. Doing absolutely nothing. Easy work.

The ad that came on right after this video was exactly what Dave was saying not to do. Some get rich quick sleazeball

Real estate and passive do not belong in the same sentence. SO TRUE! It's is a full time headache.

Here’s the problem with real estate. You can sit down at the kitchen table and run the numbers and everything works out great on paper. But then you have to depend on humans other than yourself to be part of the equation and we all know how flawed humans can be.

I own a lot of rental property. i don't know if passive income is the right term . Its financial freedom I'm not exchanging 50 hours a week to earn my money. It come every month with out me being there everyday. Im in the business 25 years . i'm constantly pulling out money of paid for properties t by more in cash.

Dave gives great advice. I wish he soften his approach. It might make the caller feel embarrassed they given brought up the topic.

i am a landlord , the houses were in really bad shape at the time so i fixed them up slowly ( after spending hundreds of thousands of dollars ) - that was soooo stressful ..yikes- anyways, because i was getting calls at least once or twice a month for something such as water leaks, no heat, no hot water, windows dont open, cabinets not opening , light switch not working, appliance dont work , etc ...now i get 1 call a year at most. the money comes in automatically . with the market in rental being in demand right now, my tenants dont want to leave ..i guess for right now its somewhat passive income.

In Canada real estate is taxed as passive income when held in a corporation. I have invested in real estate and from a working point of view you are so right...it isn't passive. If you want passive real estate income buy a REIT.

I somewhat agree with Ramsey. I have never owned physical real estate I’m only in difference indications but I will say that there is nothing wrong with reasonably leveraging rentals that cash flow on day one and building up a portfolio as an alternative to just an index fund if that’s what he wants. That will yield more money and create financial independence earlier. I appreciate Ramsey for giving him a taste of reality and how it’s not just simply mailbox money.

I used to fix cars now I fix household appliances and about 60% of my business is rental cabins it can be passive income if you pay a property management company 40% of ur income

The appreciation is passive

Dave is right. The only low hassle real estate is the payed off home, that’s imputed income

Compared to mutual funds, Dave keeps saying he loves real estate but never once he gave a reason why.

Most people don’t make enough to pay cash for real estate. Or it would take them forever to save up and buy a property.

This video won my subscription! Real estate can be stressful work! 🏠🤯

This is all dependent on the type of property you invest in and tenant selection. Choosing the right property minimises a lot of these issues and has great returns. Choose the wrong property and it’s a nightmare.

4:40 - obviously you weren’t as great with numbers as you claim to be back then, Dave. Truth is, you got greedy and you suffered the consequences. If you can get an underpriced well taken care property and rent it… why not? Not saying go and by a 30 unit rental unit, but a single home house that requires no work is a good investment, don’t @ me. Waiting to buy an investment property until you can pay cash for it is a great way to miss a good opportunity. Just be smart about it.

Wooo-hooo , I’m an Accountant and yes I’m a multi-millionaire. Blessed because I came from a very poor refugee family. My first $1M networth was age at age 27 and yes it’s due to realestates.

Dave is talking about Robert G Allen. He's a real piece of work.

I needed to hear this. I think a lot of us think: I want to be rich young so I can do and buy all these awesome things while I’m young. Probably because of films with the young rich man. In real life I have to remember that the people who can become that either have a dad who gave it to them or a person started very young or you get lucky. I’m 30 so the very young thing is out the window. I haven’t gotten lucky and my dad’s not rich. So I gotta let go of that vision and be realistic.

lets be real, if you follow dave to a T you will be okay in life, but it takes discipline. if you want to make money and change your life that's up to you, these guys ain't going to approve the risks you want to take. How many people got rich by not taking risks?

Read that Dave over leveraged on those 30 day loans back in the 80’s. Did he buy Carlton Sheets program?

A Masters Degree is a complete waste of time. Not worth the money. Rental properties are full of headaches.

Ok let me explain to you one time- Royalties, dividends and rental income are all called passive incomes, literally in accounting. Its not “Passive” because you dont have to work for it or you become inactive.

Real Estate is passive income. You don’t manage the property yourself. It’s not different then the brokerage running your mutual funds, you need to stay on top of them, know what they are putting your money into, fire bad ones, dump bad mutual funds. I don’t think Dave understands what passive income actually is

Property managers do a great amount of work to make It a bit more passive. But if you do your calculations right, there are reserves for problems that arise and money fixes most problems. I love investing in RE, wouldn't trade it for anything else.

I think people have the wrong idea about passive income in general. The only passive income is dividends.

I don’t know enough about real estate to ever consider investing in it. But everything I hear about it just makes it sound like such a headache to manage. My parents tried the landlord gig and it was never worth the trouble for them.

I've owned properties for 21 years, and I spend 2 hours/week on my rentals. And I have lived in other countries for 12-17 months while owning these rentals. Managing a manager or a tenant is the most passive part time job you'll ever have. Those repairs Dave talked about? If you have a manger, it takes 2 minutes to reply and say "yes, spend the money to fix that." Is real estate 100% passive? No. Passive enough to enjoy your life and do whatever you want? Yes. - Internet idiot Coach Carson

The woman sitting next to Dave is absolutely gorgeous 😍😍😍

Having different streams of income is the best thing to do especially with the current economic situations

Buy in good, more expensive neighborhoods. Single family homes. Be very picky about renters Minimum requirements like credit score and criminal background So far haven’t had issues.

What's your master's in? Mechanical Engineering What career are you pursuing? Mechanical Engineering Checks out

Once again I highly disagree…. Real estate is better than mutual funds.

Real estate is also about to CRASH!

Renting is a lot of work. The quiet renter who just pays his rent is a rarity.

Being a landlord sounds tough!

Dave forgot about lease-options or seller financing (rent to own) in real estate, where the responsibility of property-upkeep is given to the Tennant.

1:47 Lol shots fired at Ben Mallah

Even if you have good renters for a decade, you have to put any 'profit' you make into an account to pay for repairs, taxes, upgrades, and other piddly stuff. The only time you profit from being a landlord is if the property is paid off, or you sell it.

The work you do in real estate is the reason that you can get a better return than passive investing. Returns on investments come from three sources: time, risk, and work. Cash investments and bonds give you time only, mutual funds give you time and risk, real estate gives you time and risk and work.

It’s weird but my spidey sense tingles every time I hear someone say “the fact that”.

No dude DO NOT GET MARRIED!!!!!!

Owning property that has commercial tenants. Requires you, the Landlord to affirm said NNN Absolute Lease Agreement to the NOI; which is ten to fifteen percent of the tenant's net annually. Most franchisees or corporate owners don't want to pay that way, in barring debt. The end results they save money, carry cost, write down taxes. But when you're listening to these broken CRE brokers trying to make their 3% commission fee (Good Luck). My way you can eliminate the two to three bumps in rent and raise your credit rating. Don't listen to me I'm just a (Trillion USD) dollars away from goals..... The Roof & Structure of the building are your due diligence consideration.

Like "flipping" homes. You are just giving yourself a job.

I looked at this as a way to help the needy and the poor, I wanted to be a good human being, by setting really low rental rates and etc. My wife did time in the Army then the Marines. She wanted me to start finding properties and repairing them to rent out for her retirement. She became a contractor afterwards and had a very good income. I'll be honest I'm just some broke bumb that repairs pistols and revolvers for a living. Dave is telling you the truth. People even when given the opportunity to be reasonable are typically just inconsiderate thiefs.They damage things, don't tell you, or blame you. They get childish and want to skip out of town on everything. I've had to go and redo massive amounts of drywall, electrical outlets, plumbing, I've had people attempt to sabotage the main breaker box and burn down the homes. Shes spoken to so many lawyers for me on a regular basis, and the time I've had to help her with evictions and court orders for payment on repairs have been terrible. However, she does insist on staying in this. Shes much more of a war hawk than I'll ever be. Woman will literally sit there and let grapes rot into fine wine before she gives up on anything. Its always the landlords fault, just isn't the truth. Some people are just hard up and can't get paid enough, mostly they're a pack of immature, irresponsible jackasses.

Don't be scared of real estate investing but do treat it like any other business and not like investing in truly passive investments. Is there more work and systems to put in place? Yes, but the returns should be higher so all depends on what type of return you're willing to have.

Could always buy a multiplex so you live for free (or at least close to), still own real estate but also earn income from rent

If he's looking for more of a passive income setup, Airbnb is the right one for him, which can be systemized needing less management from owners. However, this is how having a business works though. You gotta be all in or if not, better not start a business at all.

Yeah, it’s technically a hybrid between an investment and a business.

i'm glad i went 100% in stocks 20 years ago. even just keeping up my own home property is almost a full time job and i'm paying maybe 15k/year maint on a 800k rural property doing most of it myself and with a teenager. much of the work flat out sucks, and would never be worth it if it wasn't for teaching the kid character....

Dave Ramsey went to the Tom Vu seminar.

"Owning real estate is hard work and terrible". Says the people that won't sell their rental properties and real estate investments.🤣

We run vacation rentals. Five of them. It’s our passion but it is a lot of work. Rewards come with it.

a good career is the best investment, not listing to BS shows

Dave seems to be implying with his examples that real estate is not profitable while saying it's not passive. The scenarios provided don't require a whole lot of work.

Finally someone is talking about this “passive” income nonsense .

Real estate that is not my cup of tea. I preferred R.E.T , total stock market index fund, and high yield dividend ETF.

Every time he talks about buying real-estate for cash, he uses the other extreme no money down. There is a big in-between. Put 20% down on good deal . I.e. death and devorce they are motivated sellers who want to the money quick and move on.

Finally someone says it

Uncle Dave

There's no way that real estate could be considered passive. My family lived in the same location for 10 years, our landlord was a great guy but ever so often fuses would blow or water would go out and he was the only one authorized to come look at that stuff, whenever he wouldn't it'd be apparent, and it's not like these were issues that we'd plan to happen.

I have some rental properties and I’d say they’re passive income. They put money in my pocket every single month. I would suggest buying as many properties as possible. I don’t think that the WEF is lying when they say ‘you will own nothing and be happy’

Carlton Sheets has entered the chat

Renters don't make you rich. Renters pay off the mortgage... It's a long hold... Still the best way to accumulate wealth without being a SME at something.

i wonder how Dave feels about Robert Kyosaki and how he buys real estate 🤔

Love Ya , Uncle Dave

It's per se passive from a taxable income standpoint unless you are a real estate professional.

The caller HAD to call back let Dave know that he went ahead got master after Dave said hold off on it, now calling about buying income property…why are you calling for advice, when he didn’t listen previously! Are you calling just to say, I told you so!

Absolutely correct If you want a passive investment invest in the Dividend Aristocrats