A house on the lake

Wednesday, Jul 11 in Real estate | Comments (7)

Question: Mike wonders if he can buy a house on the lake. He has $4 million saved, brings home $15,000 a month and his house is paid for. The house he wants costs somewhere in the $1 million to $1.5 million range. Dave thinks it's a no-brainer.

Dave Ramsey's answer: Dude, I'd buy that house by Friday! You've done a PHENOMENAL job saving money, your house is paid for and your wife has stuck by you while you save money. Buy that house with cash!

Listen to the call

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must be nice! that really is a great job of saveing

# Posted by aaron | 11/25/07 8:22 AM

I am Dept free and everything I own is paid for
by cash .I am currently renting a farm in Gordonsville ,Tn and my landlord asked me if i wanted to rent to own itI dont have any money to put down on it and she told me that she would use the rent that i paid last year for my down payment.my rent is 350.00 a month for a 31 acre farm and she wants 70,000 for it.i never owned any realestate before ,I always rented and i really want the place but i dont know anything about realestate. and i can't get a loan to pay for it cause i dont have a co-signer or and colateral.what should i do to Protect my self?

# Posted by paul harmon | 1/13/08 1:17 AM

Find the value of it then buy it. Buy it quick.
You have nothing to loose.Farm land will be the
most valuable asset in the future and right now.Many of us would kill for this type of oportunity.
Food prices are going through the roof! and they will continue to do so,you have a chance for self reliance on the cheap my friend.As long as the land is arable you have a potential goldmine. Keep in mind gold mines do require WORK.

# Posted by wayne carson | 2/1/08 1:12 AM

Interesting. Buy the house with cash. Now you've lost the potential those dollars could have been producing in interest. You have also decreased your assets by $800,000. (Your house and your cash are both listed as assets on your balance sheet.) This is bad advice Dave. You can do better than that. At least help him invest that $800,000 and get the cash flow to pay a mortgage for the lake house. Then you're velocitizing your money, get savings on the interest you pay on a mortgage, and you have an additional asset. Brain on!

# Posted by sow | 2/13/08 4:47 PM

sow, by money potentially earned through interest
one would have to assume he could lose money to.
or at least not make enough to cover his interest on the house. plus realestate is a good investment, and could earn him money by renting it out for weekends or whatever
if he chose to. I am also sure he will enjoy his new home
more without a payment attached.

# Posted by aaron | 4/18/08 2:50 AM

paul, If your landlord is not in a big hurry to ssell
keep renting and save for a good down payment.
You can not beat 350.00 a month, if it is halfway
decent. when you do buy see what land go's for
in your area. if the land is usuable at all and the house is not falling apart it sounds like a good deal.
If the house and land are worth more than the 70000
you should not have much trouble getting a loan.
even if your credit is not very good.

# Posted by aaron | 4/18/08 3:17 AM

Aaron,
I'm not saying to not buy the property. However, paying for it with cash an put him at greater risk. What if the value decreases (pretty common these days)? What if he needs that money? Equity kept outside of real estate is the safest position to be in. You are in control, not the bank.

# Posted by sow | 4/24/08 1:33 PM

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