I’ve been following your advice for about a year. I’m almost out of debt, and I live on a budget, but looking toward the future it seems like it will be very difficult to save up for a down payment on a home. I live in Chicago, and property prices are very expensive. I have a friend in Georgia who suggested I buy a less expensive property there, then fix it up and flip it to make the money I would need for a down payment. What do you think of this idea?
When you take on the kind of work you’re talking about, you need to oversee what’s happening every step of the way. You’re working out details, keeping an eye on the crew, and having to handle a dozen other issues tied to the project. Plus, you can’t just walk up to a house or see it online, buy it, and expect to come out ahead in the deal.
People who flip houses for a living professionally eyeball dozens, sometimes hundreds, of properties to buy just one. It’s not an easy way to make money, and it’s definitely not something I’d recommend doing from a distance. In short, I wouldn’t do it, Erik. Fixing and flipping properties is a hands-on business, and trying to do it from 700 miles away would be a nightmare.
Just keep on working the budget and save as much as you can. I’d consider getting a part-time job for a while to add to the down payment fund before I’d try to fix and flip a house that far away.
Dave Ramsey is CEO of Ramsey Solutions, host of The Dave Ramsey Show, and a best-selling author, including “The Total Money Makeover.” Follow Dave at DaveRamsey.com and on Twitter @DaveRamsey