Real estate is supposed to make you rich, not raise your blood pressure — unless you're Dave Ramsey hearing a caller explain her mobile home park "investment."
Andrea from Missoula, Montana called into "The Ramsey Show" with what sounded like a simple question: Can she use profits from one business to pay off the debt in another? Turns out, the businesses in question were a trio of Airbnbs and a mobile home park. The Airbnbs were doing great — bringing in $150,000 a year. The mobile home park? Well, let's just say things went downhill faster than a trailer in a windstorm.
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Ramsey, who owns hundreds of millions of dollars in real estate himself, wasn't impressed. "You've got a really bad deal," he told her, flat out. "Mobile home parks generally aren't that bad. They generally are cash money." But Andrea's wasn't printing cash — it was draining it.
Despite pouring $200,000 to $300,000 in upgrades into the park, the numbers just didn't add up. "You don't have a $650,000 mortgage on a mobile home park that makes 60 grand," Ramsey said. "That does not make sense. It literally should be making 300."
And then he drove the point home:
"That thing ought to be cash flowing like a bandit."
Andrea explained there were only 13 mobile homes on the property, along with a four-bedroom house. Some of the units had below-market rents because it was low-income housing, and she was reinvesting profits into improvements. But Ramsey wasn't buying the math. "You're not charging," he said. "It's a trailer — of course it's lower income housing."
And that's when Ramsey launched into full-on coach mode.
"If you did not already own this mobile home park," he told her, "and you had the chance to buy it today with $650,000 in debt to make $60K a year, would you buy it again?" His answer: a hard no.
He didn't mince words about the investment either. "If you really are $650,000 in debt on depreciating, losing-value mobile homes and you're only cash flowing 60 — you got a really bad deal. And you need to get out of it if you can. It just sucks as an investment."