He's 21 And Can't Afford His $500,000 House

Summary

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Episode Overview

Theme:
In this episode of The Ramsey Show Highlights, 21-year-old Braden calls in for advice after inheriting a costly real estate nightmare—he’s underwater on a rental property saddled with a $519,000 mortgage that he cannot afford. Dave Ramsey and co-host Rachel Cruze dissect the steps that led to this predicament, highlight the dangers of get-rich-quick real estate schemes, and provide a candid, step-by-step plan to help Braden escape a looming financial disaster.

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Key Discussion Points & Insights

1. How Braden Got Into Trouble (00:06-01:38)

• Braden’s Background: At 21, Braden took over a house through connections with a house-flipping company, not fully understanding the financial implications. The company paid the down payment, but the mortgage—and later, the debt—were left for Braden to handle.

• Debt Details: The house is now worth less than what is owed ($519,000 mortgage vs. ~$500,000 market value). Braden is 60 days behind on payments, the property is rented out under his mother’s Airbnb account, and he’s losing $1,500 a month.

• Bad Mentor Relationships: Dave is incredulous about Braden’s so-called “mentor,” noting the risk of trusting unqualified or self-interested friends.

  “Friends like that, who needs enemies?” — Dave Ramsey (01:30)

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2. Assessing the Financial Damage (01:38-02:16)

• Mortgage Structure: The mortgage is a conventional loan, fully in Braden’s name.
• Delinquency: Braden admits he’s prioritizing credit card debt payments over the mortgage, further complicating his cash flow, while the rental income does not cover expenses.
• Failed Sales Attempt: Braden tried listing the house at $540,000 without success, reaffirming that he overpaid.

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3. Exploring Options: Foreclosure, Short Sale, or Other? (02:18-04:26)

• Foreclosure Risks: Dave warns that giving the house back to the bank would result in foreclosure and legal troubles.

  “If you give it back to them, they’re going to foreclose on you and sue your—. You understand that, right?” — Dave Ramsey (00:50)

• Short Sale Guidance:

  • Definition: Selling the property for less than the mortgage balance with the lender’s approval.
  • Execution: Braden knows a local agent specializing in short sales, but is told the process is easier without tenants.
  • Tenant Problem: Current lease runs until March; tenants are under an agreement through Braden’s mother’s Airbnb profile, potentially threatening her business reputation if things get ugly.
  • Dave’s Advice: Notify tenants of impending foreclosure, offer leniency on lease breakage, and start short sale negotiations—don’t delay for the lease to expire.

• Rachel Cruze’s Input:
  Rachel highlights that in real estate circles, trusted agents (like Ramsey-endorsed advisors) are essential, and Braden should lean on his network.

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4. “Stacked Stupid On Top Of Stupid” — Tough Love & Lessons Learned (03:23-07:39)

• Dave’s Candid Feedback: The situation is a classic case of compounding mistakes: bad partnerships, getting into debt with nothing down, and falling for social media-hyped “get rich quick” real estate myths.

  "Man, y’all just stacked stupid on top of stupid, didn’t you?... I’m sorry. I’ve done worse. That’s why I just feel bad for you." — Dave Ramsey (03:23)

• Advice for Moving Forward:

  • Remove Tenants: Begin the process of notifying/relocating renters, even if it’s before lease end, to facilitate house tours during the short sale process.

  • Ramsey Trusted Agent: If Braden’s original agent won’t help with tenants in place, find a new one who will.

  • Short Sale Terms: Prioritize a deal “without recourse” to ensure the bank can’t pursue Braden or the co-signer for the difference between the sale price and the loan balance.

    “Remember this phrase: without recourse. Because that means they don’t come after you for the difference.” — Dave Ramsey (04:42)

• Co-signer Fallout:

  • The loan was co-signed by a friend of Braden’s former boss, now also facing financial risk.

  • Dave and Rachel stress never to co-sign or accept a co-signer due to the dire consequences when things go wrong.

    “You co-sign for a 21-year-old who’s overpaying for a piece of property, and you’re shocked you get stung?” — Dave Ramsey (05:39)

• Core Ramsey Principles Reiterated:

  • Never co-sign on loans.

  • Never buy property with nothing down.

  • Don’t rely on debt or partnerships for real estate investments.

  • Avoid “get rich quick” mentalities, especially in real estate.

    “The borrower [is] slave to the lender. And boy, don’t you feel that right now, man.” — Dave Ramsey (06:30)

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5. Encouragement & Final Advice (07:39-07:58)

• Rachel’s Closing Words:
  Rachel acknowledges Braden’s initiative and ambition but encourages him (and the audience) to stick to sound, time-tested financial strategies instead of shortcuts.

  "You’re a go-getter... but this real estate world, there’s so many traps. Remember these principles, and it’s going to be a more boring ride, but a safer ride for you.” — Rachel Cruze (07:39)

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Notable Quotes & Memorable Moments

• “Friends like that, who needs enemies?”
  — Dave Ramsey (01:30)
• “Man, y’all just stacked stupid on top of stupid, didn’t you? ... Every time I bring something up, there’s another hook in it.”
  — Dave Ramsey (03:23)
• “Never cosign. Never accept a cosign. Never buy a piece of property with nothing down. Don’t borrow up to your eyeballs and expect a piece of real estate to work.”
  — Dave Ramsey (06:00)
• “Don’t get in the Airbnb business either, Braden. Don’t follow your mom’s footsteps.”
  — Rachel Cruze (06:25)
• “The only ship that won’t sail is a partnership.”
  — Dave Ramsey (06:30)
• “You’re a go-getter... but real estate’s full of traps. Stick to these principles.”
  — Rachel Cruze (07:39)

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Timestamps for Important Segments

• 00:06-01:38 — Braden explains how he ended up with a $519k rental property at 21.
• 01:57-02:16 — Braden discloses he’s already delinquent and losing money each month.
• 02:18-03:00 — Short sale as a potential solution discussed.
• 03:23-04:26 — Dave and Rachel provide candid critique and next steps.
• 05:11-06:25 — Discussion about co-signers, irresponsible borrowing, and lessons learned.
• 07:39-07:58 — Final encouragement and principles for moving forward.

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Summary

Braden’s call is a cautionary tale about the dangers of over-leveraging, trusting inexpert mentors, and chasing quick-money real estate ventures. Dave and Rachel’s direct, practical advice not only offers Braden a path out via short sale but also delivers essential lessons on responsible investing, the value of patience, and the dangers of financial shortcuts. Anyone considering real estate investment—especially young or impressionable listeners—should take this episode's lessons to heart.

Transcript

[Dave Ramsey]

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[Braden]

I was given a rental property that's been nothing but a headache, and I'm just wondering if I should allow the bank to take it.

[Dave Ramsey]

I'm sorry, how do you. How are you given a rental property that has a mortgage?

[Braden]

I worked for a company that did flips, and they kind of gave me it. I was young, and I didn't know what I was doing, and so I just basically took over the debt. They covered the down payment, and it's racked up some credit card debt as well.

[Dave Ramsey]

Okay, so what is owed on the house?

[Braden]

519,000.

[Dave Ramsey]

But you did not get the mortgage?

[Braden]

The mortgage is in my name. It was. The down payment was.

[Dave Ramsey]

Oh. So if you give it back to them, they're going to foreclose on you and sue your. But you understand that, right?

[Braden]

Yes, sir.

[Dave Ramsey]

That. That would not be a good plan, sir. What's the house worth?

[Braden]

I. I had it listed at 540 and it wouldn't sell, so I would guess 500,000. I. I overpaid for it.

[Dave Ramsey]

Who do you know? Shock. And how old are you?

[Braden]

I am 21.

[Dave Ramsey]

Oh, God. So these flippers are these TikTok morons, aren't they?

[Braden]

Yeah. He was like my mentor, and I called him one of my best friends at one point, but he was just a little older than I was.

[Dave Ramsey]

Yeah, friends like that, who needs enemies? Okay. Oh, man. I'm sorry, sir?

[Braden]

Yeah.

[Dave Ramsey]

Who do you owe the money to? What kind of a mortgage is it? Fha. Virginia Conventional Bank Loan. What is it a.

[Braden]

It's a conventional mortgage.

[Dave Ramsey]

Okay.

[Rachel Cruze]

Are you able to make the house payment? Braden? Are you able to stay current on it?

[Braden]

I am not. So I'm actually like 60 days delinquent right now. I am self employed. I made $25,000 last month, and so I put that into a credit card payments instead of paying the. So it's a rental property right now. So I've renders in it with renters in it. I lose 1500amonth.

[Dave Ramsey]

Yeah.

[Braden]

Okay.

[Dave Ramsey]

Okay. So your only way out, because you owe more on it than it's worth, net. Net, is to do what's called a short sale. Have you ever heard that phrase?

[Braden]

Yes, sir. I work in real estate. I know a lot about it. I talked to a lot of people who have suggested that.

[Dave Ramsey]

Okay. Do you actually know how to execute a short sale, sir?

[Braden]

Yes, I know someone who. That's all they do. They're an agent here in town.

[Dave Ramsey]

Okay. All right. Would they be willing to help you?

[Braden]

Yes, but they said not with tenants in place, and my tenants lease is until March.

[Dave Ramsey]

Well, I think you call your tenants up and say, hey, guys, the house is getting foreclosed on, so you may.

[Rachel Cruze]

Want to find a new place.

[Dave Ramsey]

You may want to find a new place.

[Rachel Cruze]

It's only three months.

[Braden]

It was. Yeah, the. The biggest issue is it was leased through my mom's Airbnb account, and so I was afraid it was going to hit that and destroy her Airbnb business as well.

[Dave Ramsey]

Yeah, man, y' all just stacked stupid on top of stupid, didn't you? Man, I'll tell you, I'm sorry. I've done. I've done worse. That's what I'm just feel bad for you. It's like every. Because every time I bring something up, there's another hook in it. Right. So, yeah. So if I'm in your shoes, I quit paying the payments, and I run the renters off.

[Braden]

Okay.

[Dave Ramsey]

Okay. As best I can. I mean, league. I mean, just by telling them, hey, guys, it's gonna get foreclosed on, you may want to look for a place to live, and they'll probably up and leave. Well, and I'll let you out of the lease because I don't want you to get hurt. If you want to go. If you want to go early, I'll understand. Yeah. All right. And then quit paying the payments and then start the short sale. I. If your friend won't help you while the tenants are in place, go to Ramsey Solutions.com and get a Ramsey trusted agent that knows how to do short sales, and they'll help you. Okay. The tenants don't have to be gone for you to begin to negotiate a short sale. It just makes it easier to show the house. Well.

[Rachel Cruze]

And if you're in that world, Braden, you should have. You should know a lot of people. You said a lot of people have suggested this. I'm sure there's a lot of realtors that you know that you know. I mean, a Ramsey trusted agent I would feel good about just because I know the type of people they are. But. Yeah, I mean, finding someone should be relatively easy.

[Dave Ramsey]

So, basically, the short sale is you get an offer on the property that is net lower than the actual balance, and you submit that to the mortgage company, and they realize, having done an appraisal, that they're not going to get any more than that after they foreclose on you. So they take that, and you are looking for. And you remember this phrase, without recourse yes, sir. Because that means they don't come after another. They don't come after you for the difference.

[Braden]

Okay? Yes. And another thing on top of that is my. The old boss, he paid his best friend to cosign for me, so he's kind of scared and going downhill with me. So he's kind of pressured me into paying the payments previously, but I've just told him I'm done.

[Dave Ramsey]

Yeah, well, tell him. Talk to your old boss.

[Braden]

Yeah.

[Dave Ramsey]

Who set this up? You didn't talk him into doing it.

[Rachel Cruze]

The other guy did, and he did it. That's the stupid thing about co signing.

[Dave Ramsey]

He. Yeah.

[Rachel Cruze]

Sucks for him.

[Dave Ramsey]

So let me ask you this, okay? You co sign for a 21 year old who's overpaying for a piece of property, and then you're shocked that you get stung. Okay. I'm saying, put together by a bunch of flippers. Yeah. This is a good way to get screwed. And so, yeah. Yeah. I'm so sorry you're going through this. The great news is, is that when you're the other side of it, you will have learned several lessons. If you learn them and you need to write them out. I'll tell you what. Some of them are never cosign. Never accept a cosign. Never buy a piece of property with nothing down. Don't borrow up to your eyeballs and expect a piece of real estate to work. It doesn't work. It doesn't cash flow. There's no possible way this nothing down TikTok crap work works. It's.

[Rachel Cruze]

Don't get in the Airbnb business either, Braden. Don't follow your mom's footsteps.

[Dave Ramsey]

Yeah, and quit looking for all the get rich quick stuff. Every one of these things is in the get rich quick stuff. But right now, okay, I don't need partners. I don't need co signers, and I don't need favors from friends who aren't really friends who help me buy something that I overpay for and over borrow on and trap me in. And so, you know, I. One of my lessons is I never cosign. That's one of the things I learned when I was just a little bit older than you, and I went broke. And one of the lessons I learned is I don't have. The only ship that won't sail is a partnership. I'm not in partners with anybody, period. One of the lessons I learned is I don't borrow money anymore, period. The borrower slave to the lender. And boy, don't you feel that right now, man. Gosh, I'm so sorry, Braden, but a short sale is your way out. Cleaning out the tenants is part of that program. It's not necessarily started, but I would start it. I would get it on the market and get an offer that you can take to the mortgage company and have them accept a reduced payout on the mortgage. A call to short sale without recourse. If they don't say without recourse, they're going to sue you for the difference as if they had foreclosed on you.

[Rachel Cruze]

And Brayden, you're. You're a go getter. You're doing stuff at 21, but this real estate, the real estate world, there's so many traps. What we just laid out earlier in the call, what Dave was saying. So remember those, okay? It's going to be really easy to get sucked into a deal that feels so great. Remember these principles, and it's going to be a more boring ride, but a safer ride for you.

[Dave Ramsey]

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