Should We Buy a Bigger Home if We Use It as a Rental? (Hour 3)
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Should we buy a bigger home if we use it as a rental?
Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, this is The Ramsey Show, where we help you win in your life, specifically your money, your relationships, and your work. 888-825-5225 is the phone number. It's toll free. It's your call, your life. We're here to help. I'm Ken Coleman. Dr. John Deloney joins me this hour. 888-825-5225. Let's go to Phoenix, Arizona to start this hour. David is there. David, how can we help?
Hey, my wife and I are starting to consider more seriously buying a home. And I was just wondering, we were looking at getting a house with additional dwelling unit to use as like an Airbnb. I was wondering, would it make sense to maybe spend a little bit more on a house if it can provide some income?
No.
How can we afford to go back to school?
I especially wouldn't plan on it. I wouldn't factor that into my purchase price.
Yeah, I'm having some fun with the quick no, but John and I were just talking about this. In fact, we shared this on the show last week. I forget, James, I may have been George on Friday of last week, but we showed some data out there where the VRBO, the Airbnb, that industry is contracting pretty seriously right now on what people are able to charge because there's more supply than there is demand. And so this is too speculative for you to say, all right, I'm going to take on more debt in return for the opportunity to get a little extra on the rent that helps pay things off. I just think it's too speculative. I think if it's me, John, I don't know what you think about this from a marriage standpoint, but I don't want to move into a new house and then have tenants.
Yeah. If you do, fine. I just sure wouldn't take a mortgage out on it with the assumption that the only way we make this mortgage is by people renting out parts of our house. It also, like Ken says, let's say in this phase of your life, y'all want to do that. and then a family of three moves down beneath you in your basement, and you're all excited, and then your wife comes home and says, I'm pregnant with twins, and your whole life changes, and you don't want these people in your basement, and you can't afford for them not to be in your basement. The whole thing is a domino that just, you can't see what happens two years and three years and five years down the road.
Should I go to law school?
So I wouldn't do it. I wouldn't do it. I wouldn't build that in.
Okay. Make sense? Yeah.
It's, I think, We've used it to vacation in the past and thought it seemed like a decent idea. Um, and I, I was thinking it from the standpoint of it would allow us to, uh, have more space as a family. Uh, so we don't have any kids right now. If we lived upstairs, um, and then rented out the basement for a few years and then decided to have, uh, have kids, we can then, you know, get rid of that additional income and have the more space. Sure.
I think I see you rent for a little bit longer and then buy the house y'all want to buy.
I like that. Or, hey, if you want to come up with some extra income to go do these trips that you want to do, find a way to do that.
What advice is there for dating while paying off debt?
On paper, it makes total sense, as John said. But bottom line is you're assuming some risk that is unnecessary. This is like just going, I think I want some more risk in my life. And I just don't think it's necessary to accomplish what you want to accomplish. It doesn't make sense to me. It's too much risk.
The other thing about you, David, and your wife, y'all are probably pretty good. You probably took care of the property. Y'all really gracious of your host family. Y'all were honorable tenants and you paid your bills. And y'all are not everybody. Y'all are not everybody. The landscape is littered with folks who have accepted people into their homes and they live very differently than the rest of us. So be it.
Yeah, a lot of opportunities for this thing to turn sour when it makes sense on paper.
How do I convince my parents to take Financial Peace University?
But then the emotion and everything.
If you want to get your own, like I got a buddy who he's got a second property paid for and he Airbnbs it out. Knock your lights out.
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Chapters
8 chapters
1
Should we buy a bigger home if we use it as a rental?
0:33–1:27
2
How can we afford to go back to school?
1:27–2:54
3
Should I go to law school?
2:54–3:43
4
What advice is there for dating while paying off debt?
3:43–4:36
5
How do I convince my parents to take Financial Peace University?
4:36–5:23
6
What should I do if my pay is inconsistent working for family?
5:23–5:57
7
How can we manage financial stress in our family?
5:57–6:57
8
What are the best strategies for dealing with family business dynamics?
6:57–37:56