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Finance guru Dave Ramsey is warning would-be real estate investors that owning and renting out real estate is not necessarily easy money.
Moreover, he slammed so-called experts who claim real estate investing can be “passive income,” insisting there’s nothing passive about it.
Many other real estate experts agree with him.
Ramsey slams people who are making false promises on TikTok
“People who say ‘passive income’ on real estate are morons,” Ramsey recently said on his radio show. “There’s nothing passive about owning real estate. It’s active.”
Ramsey then made the bold statement that anyone who tells you that real estate investing is “passive income” is “somebody trying to sell you a get-rich-quick seminar on TikTok.”
Real estate agent and investor Miltiadis Kastanis of Compass agrees, pointing out that some TikTok users make investing in real estate look way easier than it is.
“Social media thrives on simplifying or sensationalizing for views,” he says. “Many influencers are in the business of content, not real estate. They may add fluff or gloss over the challenges because their main goal is audience growth and monetization. Real estate is rewarding, but it’s rarely as easy as it looks on TikTok.”
Real estate agent and investor Ron Myers, of Ron Buys Florida Homes, concurs.
“They make it look like you can just buy a house, throw it on Airbnb, and cash checks,” he says. “What they don’t show is the 2 a.m. plumbing emergencies or the additional repairs that come up during rehab. Everyone loves the idea of ‘mailbox money,’ but few understand the grind behind it.”
That’s why it’s important to educate yourself the right way.
“Before you even look at a property, understand what it takes to be a landlord,” says real estate investor Fred Loguidice, the founder of Sell My House Fast Long Island. “Talk to other investors or take a property management course. Don’t just listen to a TikTokker who sells the dream without showing the reality of the work.”
Ramsey issues a real estate reality check about being a landlord
Ramsey issued an important warning to his listeners as he finished the segment: “Do not go into it, folks, with rose-colored glasses thinking it’s going to be easy.”
Myers adds that if one of his real estate clients thinks rentals will be a simple way to make money, he tells them straight up, “This isn’t HGTV—this is real life. Toilets break, tenants stop paying, and you’ll lose money if you’re not prepared. If you want easy, this isn’t it.”
According to Loguidice, landlord responsibilities are extensive and often arise without warning.
“You are the CEO of your property,” he says. “This includes everything from finding and screening tenants, drafting and managing leases, handling maintenance requests at all hours of the day and night, collecting rent, and managing the property’s finances.”
In fact, G. Brian Davis, the founder of SparkRental, says he eventually sold his 15 rental properties because of all the work and upkeep they required.
“I spent many years as a landlord,” he shares. “There was always something going on: a vacancy and turnover, a repair issue, an emergency problem, a troublesome tenant. That’s why I sold my rentals and only invest passively nowadays through private partnerships, syndications, and secured notes.”
Passive income is a matter of perspective, according to experts
Ramsey suggests that, for him, if passive income is the goal, mutual funds is the way to go.
“They send me a statement in my inbox,” he says
But if your heart is set on real estate, Seamus Nally, CEO of TurboTenant, explains there’s one way to make money in your sleep: Offload the responsibility.
“It’s certainly possible to get passive income from investment properties, but only if you outsource—and pay for—the actual work of managing them,” Nally says.
That’s what real estate adviser and investor Corinne Smith, of Legacy Homes, does.
“I have a property manager that manages all of my properties,” she says. “I really don’t need to do much except for yearly maintenance, which I usually hire out to either my team or a licensed contractor.”
While real estate investor Martin Orefice doesn’t use a property manager, he admits his rental property income “is actually starting to feel passive”—but emphasizes that it took nearly a decade to get to this point.
“My secret is finding good tenants and doing everything I can to keep them in my units,” says Orefice, the founder of Rent to Own Labs. “I’m finally in a place where I can enjoy the extra income with minimal work on my end.”