Should I Buy Another Airbnb or Diversify?

Summary

Podcast Summary: Should I Buy Another Airbnb or Diversify?

Podcast: Ramsey Everyday Millionaires
Hosts: Dave Ramsey, Dr. John Delony (with input from guest, James)
Air Date: March 11, 2026

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Episode Overview

This episode centers on a listener call-in from James in Rhode Island, a successful Airbnb operator, who seeks advice on whether to expand his portfolio by purchasing another Airbnb property or diversify his investment approach. The conversation explores the hidden risks and workload behind short-term rental investing, the pitfalls of over-leveraging, and the allure and realities of “scaling” an Airbnb business. The hosts offer candid guidance based on personal experience—sharing cautionary lessons from past financial crises, and insight into sustainable, low-risk approaches to wealth building.

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Key Discussion Points & Insights

1. James’ Situation: Ambitious But Overextended?

• James (00:20):
  • 40 years old, fiancée, toddler
  • Owns three successful Airbnbs (projected $127,000 annual gross, 62% margin)
  • Day job in hospitality sales ($100–120k/year); fiancée is a psychologist ($110k/year)
  • Considers buying a fourth Airbnb in a historic building but would require 40% down
  • Wonders: Is another Airbnb “too high risk”?

2. Dave Ramsey’s Initial Cautions (01:28–03:22)

• Hard Truths on Airbnb:
  • “The Airbnb business is basically the hotel business. It’s a very high labor, intense, a lot of hassle. So the money that you’re earning on those Airbnbs, you’re working your heinie off to get that money...” (Dave, 01:42)
  • Risks include:
    1. Buying property with someone not married to (“Very dangerous.”)
    2. Going into debt for high-risk assets
    3. Relying on third-party platform (Airbnb)
    4. Personal workload (“You have to do all the freaking work and you’re getting ready to add 25% of the workload…” Dave, 04:07)
• Regulatory Dangers:
  • Increasing crackdowns by HOAs, cities: “Many HOAs, many neighborhoods, many entire municipalities are passing zoning to stop it because they’re disruptive to the neighborhood.” (Dave, 02:37)
  • Even commercial zoning can be abruptly changed due to tenant or city action.
  • “You’re doing some things I don’t want to do and I don’t recommend people do things I don’t want to do.” (Dave, 03:52)

3. The Illusion of Scaling & Hidden Risks (05:22–07:19)

• Scaling Doesn’t Always Mean Efficiency:
  • “If it works for 4 Airbnbs, but not 5 or not 10, then maybe we shouldn’t do 4.” (Dave, 06:15)
  • Real estate investing needs to be scalable, not just repeatable. You remain “maintenance man” as you add units.
  • “You just have to keep absorbing more work and more work and more work, and pretty soon you’re going to go, ‘I want to quit my job and be Mr. Airbnb.’” (John, 06:30)
• External Platform & Tech Vulnerability:
  • One change in Airbnb’s or Apple’s policy can wipe out income: “Apple decides they’re not gonna support the app anymore…that little move right there cost us about $20 million two years ago.” (Dave, 06:45)

4. Lessons from the Financial Crisis: Not All Upside (07:22–08:16)

• Recency Bias & Complacency:
  • “There seems to be a lot of folks who have entered into 2010 to 2025, and it’s been seemingly mostly upside... There’s the assumption that’s just going to keep going that way.” (John, 07:26)
  • “You have to be prepared for when this thing goes south a little bit or when the roller coaster…goes down, and, man, people don’t...don’t have the psychology for it right now.” (John, 07:51)
• The Risk of Leverage:
  • “If you’ve got your thing based on the Airbnb income of 4 and suddenly they don’t rent for 4 months, you’re in bankruptcy.” (Dave, 08:04)
  • But if you own the properties outright? “You’re annoyed.” (John, 08:13); you just rent long-term instead.

5. How Dave Approaches Real Estate Now

• No debt. All real estate owned outright.
  • “100% of our real estate is paid for. I don’t borrow money to buy real estate.” (Dave, 05:21)
• Focus on “low hassle” properties.
  • “I love real estate, but I have low hassle real estate. I don’t, I don’t own a single Airbnb. And we’ve got enough residential. I easily could do that. But we don’t want to screw with it. It’s just too dad gum much work for the money.” (Dave, 04:37)

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Notable Quotes & Memorable Moments

• On Being Overworked:
  • “Why don’t you pick up golf too? Oh my God. You know, I mean, you ain’t got time to do nothing.” (Dave, 02:37)
• On the Downside of Leverage:
  • “I went broke in the real estate business in my 20s, if you haven’t heard the story. And the way I did that was I borrowed too much money and the banks called our notes because we were in a high-risk scenario.” (Dave, 01:32)
• On Platform Risk:
  • “Apple decides they’re not gonna support the app anymore...that little move right there cost us about $20 million two years ago.” (Dave, 06:45)
• On Dream vs. Nightmare:
  • “I want to support that, but I believe in being a nightmare killer, not a dream killer.” (Dave, 08:16)

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Timestamps by Segment

• [00:20] — James introduces his situation
• [01:28–02:25] — Dave outlines the risks of the Airbnb business model
• [02:37–03:22] — Dave discusses regulatory threats and personal workload
• [04:06–05:21] — Dave enumerates reasons why he avoids borrowing and Airbnb model
• [06:15–06:32] — Discussion of scalability and workload
• [06:45] — Example of tech/platform vulnerability costing millions
• [07:26–07:51] — John discusses “recency bias” and underestimating downturns
• [08:04–08:16] — Ramsey on leverage risk vs. owning outright, “nightmare killer” philosophy

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Conclusion

This episode serves as a cautionary tale for short-term rental investors riding the current Airbnb boom. Dave Ramsey urges listeners to critically examine their real estate ambitions—factoring in hard work, leverage risk, platform reliance, scalability limits, and economic cycles. The hosts reiterate their preference for debt-free, hassle-minimized real estate and encourage listeners to weigh not just the dream, but the potential nightmare.

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Ideal Audience Takeaway:
Ambition is key to wealth, but sustainable success in real estate comes from discipline, prudent risk management, and a long-term perspective—not from chasing every apparent opportunity or ignoring downside possibilities.

Transcript

[A]

Foreign. This episode is brought to you by Smartvestor. Connect with an investing pro near [e-mail] Smartvestor James is in Rhode Island. Hi, James, how are you?

[B]

Good, Dave. How are you guys doing?

[A]

Better than I deserve. What's up?

[B]

All right, so I'm 40 year old guy. I got a fiance and a baby who turned two in July. And my fiance and I, we have three Airbnbs that are doing really well. Four years into it, last year we grossed about 102,000. This year we're, we're forecasting to do about 127,000 gross on the three Airbnbs with a 62% profit margin. Day job is hospitality sales. I make about 100, 120,000 a year. She is a psychologist. He makes about 110. So our issue is there are these micro lofts and another one is available, but it's in a super historic old building. And I'm thinking about getting a fourth Airbnb, but the banks are telling me that I got to put 40% down. They're going for about two and a quarter. So I want to hear your take. If I should get another profitable Airbnb and have it under the same roof as all my other ones, or is that considered maybe too high risk?

[A]

Okay, well, I not sure you called the right show. I'm not sure you know, what we do. But the. So I own several hundred million dollars in real estate. Okay. I love real estate as an investment. I went broke in the real estate business in my 20s, if you haven't heard the story. And the way I did that was I borrowed too much money and the banks called our notes because we were in a high risk scenario. The Airbnb business is basically the hotel business. It's a very high labor, intense, a lot of hassle. So the money that you're earning on those Airbnbs, you're working your heinie off to get that money and you're probably working.

[B]

I am.

[A]

You're working some other people's hiney off because it's a lot of hassle.

[B]

I'm the maintenance man, I'm the housekeeper, I'm the guy checking them in. Yep.

[A]

Yeah. I mean, and you have a two

[B]

year old away, so. Yep.

[A]

Yeah. Why don't you pick up golf too? Oh my God. You know, I mean, you ain't got time to do nothing. So I don't know that you have the bandwidth to add another one on your personal number one. Number two, the risk with Airbnb Is, as you probably know, and I don't know where it stands in Providence, Rhode island, but many HOAs, many neighborhoods, many entire municipalities are passing zoning to stop it because they're disruptive to the neighborhood. And so I know a lot of people that have lost the ability to run an Airbnb on a property they bought for an Airbnb. And in a historic setting, that's very possible.

[B]

Right. It's any unique building. It's the oldest mall in America where there's retail on the first floor, on the second and third floor was repurposed to Airbnb. So it is in a commercial zone.

[A]

Okay, so that means the risk of them rezoning it and keeping you from

[B]

doing it is less to my understanding. Yes.

[C]

Or it's going to take one new tenant downstairs that's a big tenant that says, I don't want people living upstairs.

[B]

Well, we're all on the board.

[A]

They're already got residential in there. It's just a matter of whether it's nightly rental residential because it's a hotel in a sense. So I don't know. You're doing some things I don't want to do and I don't recommend people do things I don't want to do. So number one thing you're doing is you're buying property with, with someone you're not married to. Very dangerous. Number two, you're going in debt to do it. Very dangerous. Number three, you have a high risk business model that's dependent upon someone else called Airbnb. Very dangerous. Number four, you have to do all the freaking work and you're getting ready to add 25% of the workload, going from three to four and you have a two year old. Very dangerous. So that's what I meant by I don't know if you've been around as much. And I'm not trying to be mean to you. I just think, I think that all you have seen in this is the upside. You've not considered any of the downsides. And that's the way I was in my 20s and it's what caused me to go broke. And so now I'm always looking. I'm not negative thinker. I buy. I mean, like I said, I own hundreds of millions of dollars of real estate. I love real estate, but I have low hassle real estate. I don't, I don't own a single Airbnb. And we've got enough residential. I easily could do that. But we don't want to screw with it. It's just too dad gum much work for the money. Too much drama for the money. And so we'd rather make the money, you know, a little slower and with a lot less hassle factor. And we don't borrow money. 100% of our real estate is paid for. I don't borrow money to buy real estate. So I'm a fan of the category of real estate. But after that, I've kind of given you some things to think about. So until you've thought through all of those things and make sure that you've decided how you're going to own what ownership vehicle you're going to own this in with someone that you're not married to. Oh, real dangerous. You know, that, that you get yourself in all kinds of messes here. And I think that's what the bank is smelling, and that's why they're wanting a huge downstroke. But, you know, a good way to look at any business opportunity too, James, is to scale it in your mind. And if it doesn't scale, then don't grow it. Meaning if it works for 40 Airbnbs, we might do 4. If it works for 4, but not 5 or not 10, then maybe we shouldn't do 4.

[C]

Why is that?

[A]

Well, because it's going to. The, the, the idea is not scalable to where you get out of being the maintenance man.

[C]

You, you just have to keep absorbing.

[A]

Yeah.

[C]

More work and more work and more

[A]

work, and pretty soon you're going to go, I want to quit my job and be Mr. Airbnb. Right. And that's not that your one Airbnb

[C]

app change or one Airbnb municipality change or you're one.

[A]

Yeah. Apple decides they're not gonna support the app anymore. That's right. With 13 point whatever. Oh, my crap. You know, I mean all kinds of people. I mean, that little move right there cost us about $20 million two years ago. So, you know, just cause Apple decided to cough and so, you know, all that stuff. So these are things you can't anticipate and you leave yourself vulnerable to it when you're just living right on the wire, when you're around the edge. And then you just keep adding to it, keep adding to the plate till the food falls off, you know, and that's, that's what I heard here is a really super busy guy. Well, ambitious guy.

[C]

You said this. And man, this has become increasingly. I, I felt it heavier and heavier. I have a very real lived experience being in the workforce during 2008, 2009 and there seems to be a lot of folks who have entered into 2010 to 2025, and it's been seemingly mostly upside. It's just been win after win after

[A]

win after win, plus or minus covet and.

[C]

Yeah, plus or minus covet. And there's the assumption that's just going to keep going that way. And there's no. Man, it's tough to tell somebody, hey, you have to be prepared for when this thing goes south a little bit or when the roller coaster takes a. You know, goes down and, man, people don't. Don't have the psychology for it right now.

[A]

Yeah. I mean, if you've got your thing based on the Airbnb income of 4 and suddenly they don't rent for 4 months, you're in bankruptcy.

[C]

Whereas if you own them all in cash, you're annoyed.

[A]

Exactly. You're. Well, you put renters in. Yeah. And you get out of the Airbnb business and you move on, you know, and that's. It's not a big deal. Right. You know, but, yeah, this is. It's a problem. Yeah. So, no, I'm. I like James because he's ambitious and he's going after it, he's going for it. I want to support that, but I believe in being a nightmare killer, not a dream killer.