The One Real Estate Investment Dave Ramsey Says Will Make You Poorer
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You might have heard the old chestnut of financial wisdom that real estate investing can open the door to future wealth. Many experts will tell you that looking into a real estate investment trust (REIT), flipping properties, or even becoming a landlord can be great ways to make money, albeit with varying degrees of difficulty. The key is finding the approach that best suits your talents, financial situation and long-term goals.
However, not all real estate investments are created equal. And unsurprisingly, Dave Ramsey, author and financial expert, has opinions about which forms of investing are a little — or a lot — less equal than others. His take? There’s one investment that will make you poorer and should be avoided at all costs: mobile homes.
Mobile Homes Go Down in Value
Ramsey likens purchasing a mobile home to buying a car you sleep in, because it decreases in value, or depreciates, over time. He’s quick to note that his aversion to purchasing a mobile home isn’t about class — it’s about common sense.
“They go down in value. When you put your money in things that go down in value, it makes you poorer,” he said. “You don’t go buy a $55,000 mobile home and then look up 10 years later and it’s worth $10,000 and wonder why you’re broke. Buy something that goes up in value.”
Why People Might Believe It’s a Good Deal
Of course, people still plunk down money on mobile homes because they believe they’ll gain something of value. However, Ramsey says that this belief is an illusion — that the only part of a mobile home purchase that might be worth anything in the long run is the land it’s parked on.
“The problem with a mobile home is that they set it on a piece of dirt and the piece of dirt goes up in value faster than the mobile home goes down,” he said. “So it gives you the illusion that you made money. You didn’t. The dirt just saved you from your stupidity.”
Is Renting Better Than Buying a Mobile Home?
Ramsey certainly thinks so. He argues that if you rent a property, you’re at least only paying rent for your dwelling and not sinking money into a depreciating asset. Technically, he’s right. If you’re looking to own a property, you’re better off purchasing something that will increase in value over time.
However, while a mobile home will depreciate in value, it isn’t necessarily a total financial loss. If you’ve purchased or inherited one, you can still sell it and recover some money — something you can’t do with a rental.
