I'm $1,800,00 In Debt

Summary

---

The Ramsey Show Highlights: “I'm $1,800,000 In Debt”

Host: Dave Ramsey (Ramsey Network)
Guest Experts: Chris Hogan, Unknown Financial Expert
Caller: Ryan
Date: October 13, 2025

---

Episode Overview

In this episode, Dave Ramsey and Chris Hogan are joined by a caller, Ryan, who finds himself $1.8 million in debt with a $4.4 million real estate portfolio. Ryan’s case opens a candid discussion about the pitfalls of over-leveraged real estate investing, the importance of cash flow and ROI, and options for resetting a property-heavy investment strategy. The advice centers around optimizing for returns, getting out of bad debt, and deciding whether real estate or mutual funds are a smarter long-term play.

---

Key Discussion Points & Insights

1. Ryan’s Situation: Overleveraged and Underperforming Properties

[00:06-01:45]

• Ryan’s Portfolio:
  • $1.8 million in debt
  • $4.4 million conservative portfolio value (mainly commercial properties)
  • Rental income ranges widely: $5,000 to $19,000/month due to commercial lease gaps
• Past Win:
  • Profitable early deal: bought a building for $426k, sold for $1.6 million, then used a 1031 exchange on new properties

2. The Core Problem: Poor Rate of Return

[01:41-01:54 | 03:10-03:57]

• Dave’s Direct Critique:
  • “Your rate of return on that portfolio sucks.” — Dave Ramsey [01:41]
  • Ryan admits return is low (approx. 3.8% ROI)
  • Dave calculates, “You should be making a half million dollars on that” [03:39]
• Underlying Issue:
  • Properties not cash flowing to justify value and debt
  • Poor acquisition strategy: overpaying and overleveraged

3. The Psychology of Chasing Wins

[02:29-02:57]

• Dave’s Analogy:
  • “You’re still the guy that hit the slot machine once, and so you keep putting quarters in a stupid thing...” — Dave Ramsey [02:30]
  • Ryan acknowledges chasing past successes but believes he’s had more than one

4. The Right Real Estate Metrics

[04:06-04:46 | 07:10-07:52]

• Optimal Returns — Dave & Chris:

  • Residential: 8-10% cash-on-cash ROI
  • Commercial: 10-12% cash-on-cash ROI
  • Full IRR (including appreciation & depreciation): 15-20%+
  • “If I put a half million dollars in a house... we want an 8 to 10% cash on cash after all expenses are paid.” — Chris Hogan [07:12]

• Problem with Ryan’s Portfolio:

  • Debt outpacing rents; rents not “commensurate with values and debt service” [04:48]

5. Actionable Solutions: Clean Up, Optimize, or Get Out

[04:46-06:52 | 06:54-08:18]

• Sell Off Poor Performers:

  • “Shed yourself of the properties that are not giving you a return.” — Dave Ramsey [03:57]
  • Build up a model portfolio with only high-performing properties

• Reset Option:

  • “If you did 100% slate clean and dropped it all in mutual funds, you’d make more money…” — Chris Hogan [06:18]
  • Example: $2M in mutual funds → $200k/year, zero hassle

• Preferred Path:

  • Cherry-pick portfolio over 3 years
  • “Get rid of the properties that aren’t cash flowing but have equities and then get out of the debt business.” — Chris Hogan [06:37]
  • Use profits to pay off remaining debt, aiming for total debt freedom

6. Mindset Cautions & Forward-Looking Advice

[05:52-06:02]

• On Debt Addiction:

  • “I don’t think you’re going to do that because I think you like borrowing money.” — Chris Hogan [05:52]
  • Dave & Chris urge Ryan to prioritize freedom and discipline over chasing the next big deal

• Life Perspective:

  • Recognize the impact of decisions on family and long-term security

7. Final Benchmarks: ROI Reiterated

[07:10-08:18]

• Dave and Chris repeat:
  • 8-10% cash-on-cash for residential
  • 10-12%+ for commercial
  • Internal rates of return (IRR) should hit 15-20% for residential, 20%+ for commercial
  • Otherwise, go for mutual funds

---

Memorable Quotes & Moments

• Dave Ramsey [01:41]:
  “Your rate of return on that portfolio sucks.”
• Dave Ramsey [02:30]:
  “You’re still the guy that hit the slot machine once, and so you keep putting quarters in a stupid thing.”
• Chris Hogan [04:46]:
  “But you’ve just been buying crap.”
• Dave Ramsey [03:39]:
  “You should be making a half million dollars on that [portfolio]…”
• Chris Hogan [06:18]:
  “If you did 100% slate clean and dropped it all in mutual funds, you’d make more money than you’re making now.”
• Chris Hogan [07:12]:
  “We want an 8 to 10% cash on cash after all expenses paid.”

---

Noteworthy Timestamps

• [00:06-01:45] Ryan outlines debt, property value, and rental income
• [01:41] Dave’s critique of ROI
• [02:29-02:57] The ‘slot machine’ analogy and Ryan’s mindset
• [03:39-03:57] Dave’s return expectation and diagnosis
• [04:46-05:07] “You’ve just been buying crap.” — Solutions begin
• [06:18] Mutual funds as alternative
• [07:10-07:41] Reiterating proper real estate return metrics
• [08:00-08:18] Summary benchmark: why settle for less ROI?

---

Conclusion

Dave Ramsey, Chris Hogan, and additional experts make it clear: Success in real estate requires disciplined, metrics-based investing, not just expansion for its own sake. Ryan is advised to clean up his portfolio, eliminate underperforming assets, and refuse to settle for poor ROI—whether that means restructuring his holdings or moving into hands-off investments like mutual funds. The episode serves as a wakeup call for listeners tempted by leverage and “big wins,” emphasizing long-term strategy over short-term excitement.

---

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Ryan]

Right Now, I got 1.8 million in debt. That rental portfolio is worth 4.4. That's a conservative estimate off of what realtors would tell me they would list for currently, that portfolio puts out approximately, at a low end, $5,000 a month. At a high end, $19,000 a month. Because we're heavily invested in commercial. So right now with, you know, post Covid, we're. We're a little behind on the commercial leases.

[Chris Hogan]

Okay.

[Ryan]

Just trying to think of, like, what. But. So I had a home run early on. I sold a building that I bought for 426. I sold that building for 1.6, and then I did a 1031 exchange on two of the buildings.

[Chris Hogan]

Okay.

[Ryan]

That I currently hold.

[Chris Hogan]

Okay.

[Dave Ramsey]

How can we help?

[Ryan]

Well, I don't know.

[Chris Hogan]

What are you asking?

[Ryan]

Well, I'm not sure, you know, I'm not sure. I guess I. I have 1.8 million in debt. I have a portfolio of 4.4.

[Dave Ramsey]

And your rate of return on that portfolio sucks.

[Ryan]

Yeah, it's not great.

[Dave Ramsey]

No, it's horrible.

Do you want to get out of debt, Ryan? Do you want to get out of debt?

[Narrator]

Meet everydollar budgeters, Christy and Steve, they used to fight about money.

[Christy]

I'm the spender.

[Steve]

I'm definitely the saver.

[Narrator]

Now that they budget with every dollar, they're on the same page.

[Steve]

Money is definitely one thing we do not ever fight about.

[Christy]

Having the budget gave me the permission to spend.

[Steve]

Knowing that the money is in each category, it just allowed us to work together better.

[Narrator]

Now that's what we call a win. Win.

[Christy]

Now we just have to pick paint colors.

[Narrator]

We can't help you with that. Every dollar. Create your free account today.

[Dave Ramsey]

Do you want to get out of debt, Ryan? Do you want to get out of debt?

[Ryan]

I do. I do.

[Chris Hogan]

Okay. Now, you're still.

[Dave Ramsey]

You're still the guy that hit the slot machine once, and so you keep putting quarters in a stupid thing. You had that one hit and did that 1031 made bank, and ever since then, you've been putting quarters back in the machine, trying to do it again. And none of the rest of them did that?

[Ryan]

Well, no, I. Yes, yes. More or less, Yes, I will agree with you. But I have. I. I have hit more than one.

[Dave Ramsey]

How old are you?

[Ryan]

I'm 38 years old.

[Dave Ramsey]

Where do you want to be when you're 58? You want 10x this or you want. What do you want?

[Ryan]

Yeah, I want to. I want to 10x this, man. I want to.

[Dave Ramsey]

Okay?

[Ryan]

I want to pay off my home that is worth a million dollars. But I have a $360 note.

[Dave Ramsey]

Okay, but I'm just telling you, I don't want to 10x your portfolio, your rate of return is awful. Sir, when you tell me you're getting an NOI of 60,000 to $19,000 on an asset base this high, your rate of return, your ROI, straight up mathematics. It's horrible.

[Ryan]

3.8. It's 3.8.

[Dave Ramsey]

I know, but when you make $60,000 as a return on 3.8, I mean, that's horrendously bad. You should be making a half million dollars on that.

[Ryan]

Correct?

[Dave Ramsey]

Yeah, absolutely, I'm correct.

[Ryan]

Yeah, yeah, no, I know.

[Dave Ramsey]

So you've got to figure out why these properties are not giving ROI and shed yourself of the properties that are not giving you a return.

[Chris Hogan]

And.

[Dave Ramsey]

And build a model portfolio where you're getting in real estate, you need a cash on cash in residential of 8 to 10, net NOI, net operating income, 8 to 10% cash on cash annually. Okay? And in addition to that, the thing needs to be going up in value. And in addition to that, you need to be taking the tax depreciations that the depreciation schedules with. The IRS allows. All of those things together give you north of 15 to 20% on a commercial, you ought to be making 10 to 12 cash on cash. Ours does that. And it's not rocket surgery to do.

[Chris Hogan]

It, but you've just been buying crap.

[Dave Ramsey]

Man, and you didn't think anything about the debt aspect. And so the debt on some of these is eating your lunch because the rents are not commensurate with the values and with the debt service you're carrying. And that's what's destroying your roi.

[Chris Hogan]

So you need to get down inside of that and figure out which of these things you want to and create.

[Dave Ramsey]

An ideal portfolio that's going to be 8 to 10 on residential and 10 to 12 on commercial, cash on cash. And in properties that are going up in value, those are the ones you.

[Chris Hogan]

Want to expand owning, and the others you want to get rid of. And so there's the playbook right there, and you adjust it, and that's what's going on. But you've fallen backward into this thinking.

[Dave Ramsey]

That all real estate's good, all real estate's not good. Some of it sucks, and you've got some that sucks. And some of it's leverage too high.

[Chris Hogan]

Some of it, you got too much.

[Dave Ramsey]

Debt on and it's pulling you down.

[Chris Hogan]

And so yeah, if I'm you, that's what I'm looking for.

[Dave Ramsey]

And in the process of doing that.

[Chris Hogan]

Over the next five years, I'm going to sell off enough of it and use enough of my income to became, become 100% debt free.

[Dave Ramsey]

That's where I would be going.

[Chris Hogan]

But I don't think you're going to do that because I think you like borrowing money. So I'm not sure where you're going to end up.

[Dave Ramsey]

Exactly.

[Chris Hogan]

I hope you make it. Hope you do for your sake in this case.

[Unknown Financial Expert]

Would you? I mean, because he's got enough. If we take him face value 4.4 million he said conservative and all that property, 1.8 million debt. Would you get out of the rental game altogether and have him invest that? He's a young guy, he's like 37.

[Chris Hogan]

Yeah. I mean he'd be better off.

[Unknown Financial Expert]

That's what I think.

[Chris Hogan]

If you just, if you did 100% slate clean and dropped it all mutual funds, you make more money. You're making now that's where my head was going. Yeah, because you got $2 million in mutual funds in and you're making $200,000 a year. Right. You know, and that.

[Dave Ramsey]

And you're not doing anything to do that.

[Chris Hogan]

You don't have to collect rent, you.

[Dave Ramsey]

Don'T have to replace water heaters, roof.

[Chris Hogan]

Doesn'T leak, you know, all that.

[Unknown Financial Expert]

It's a really healthy reset for a guy his age with kids.

[Chris Hogan]

Not sure I would go that far. Instead I'd probably cherry pick it and take about three years and clean up most of it. Clean it all up in about a three year period of time. But clean it up by getting rid of the properties that aren't cash flowing but have equities and then get out of the debt business.

[Dave Ramsey]

Because that's what's part of what's bringing you down here.

[Chris Hogan]

The other part is you're, you're still trying to replicate that one deal.

[Unknown Financial Expert]

So hit those numbers again for people because too many people watching tiktoks and reels. So what is the ROI you're looking for on commercial versus residential, that stuff that you own or else you say it's not worth having.

[Chris Hogan]

I pay cash.

[Dave Ramsey]

Right.

[Chris Hogan]

And so I want to make, if I put a half million dollars in a house. We don't buy houses anymore. But when we were buy, I got a bunch of them still. I got rid of all of them. But on the houses that we own, the residential single families that we own. We look at what we paid for it, what it's worth in the market, and we want an 8 to 10% cash on cash after all expenses are paid. Rent minus expenses is net operating income. We want to see a cash on cash of 8 to 10%.

[Dave Ramsey]

If you get that and you have appreciation in value and you take the.

[Chris Hogan]

Depreciation, those three things together are called the internal rate of return, the IRR.

[Dave Ramsey]

And those will be north of 15.

[Chris Hogan]

17% on your residentials, which is a lot better return than a mutual fund. But it's a lot more hassle then on our commercial stuff, we're making anywhere from 10 to 14% cash on cash. And so we're seeing most of our IRRs, our internal rates, return up in the 20s on those. So we're making serious money on those commercials because commercial property does that, but.

[Dave Ramsey]

It'S a lot bigger property and again.

[Chris Hogan]

It'S a lot more cash tied up in them.

[Dave Ramsey]

So those are the processes you've got to go through to get there. You got to just decide what you're doing.

[Chris Hogan]

Because if I can't make 8 to 10, when I can make 12 on a mutual fund.

[Dave Ramsey]

Right. Why am I going through all this hassle?

[Chris Hogan]

Exactly.

[Dave Ramsey]

Create your free every dollar budget today. The simplest way to budget for your life.