For all of us who've taken Dave Ramsey's financial advice over the years, we now have a rare chance to see if this financial guru has made a good real estate deal. Dave Ramsey's advice has helped many fans reach financial freedom, freedom that maybe led to a career in real estate investing. For those people, Ramsey's the real deal.
But let's see if a huge real estate transaction he made in 2008 will be a boom or a bust. In Ramsey's defense, even if he loses money on this deal, it doesn't matter too much because he can afford it.
Ramsey stands to make significantly more than what he paid for a Tennessee mansion, maybe millions more. Here's why this asking price of over $15 million might not be a stretch.
Ramsey, a follower of his own advice, paid, in 2008, just over $1.5 million for a lot in Franklin, Tennessee, to build a home, and he paid in cash. (Ramsey always advises to get rid of debt and to not get in debt in the first place if you can help it by first saving and using cash to buy everything.)
Buying in cash makes the purchase of this luxury property less of a risk. Other factors that point to this home probably not losing value include:
- The view. This mansion makes Ramsey “King of the Hill,” as the grounds overlook all the surrounding countryside.
- The neighborhood. Country singer Leann Rimes lived right next door for a while.
- The acreage: The lot Ramsey bought is 14.4 acres.
The risk factor
The money. The $1.5 million that Ramsey paid was for only the lot. He next had to build the 13,515-square-foot estate, and we don't know how much he spent doing that since he used cash for the build. In October 2019, the house and land were valued at $4.9 million, but this house is a unicorn. There's nothing else like it. So you can't value it the way you'd typically value a house using neighborhood comps.
The house that Ramsey built sits on about 14 acres at 1,150 feet elevation with two buffer lots. This six-bedroom, nine-bathroom home (one bathroom has 18 showerheads) is in a gated neighborhood. There is also 6,000 square feet of outdoor space, such as covered porches, storage places, and garages that can fit eight cars (or toys).
Luxe finishes that Ramsey loves, which other buyers may or may not, include a circular motor court with a fountain, water features throughout, an infinity pool, and many entertainment spaces.
Since there are no comps for this unique home, the next best valuation method is the cost approach. This method factors how much it would cost to build an equivalent property. It also considers the land's worth. And in this case, the grounds and view are spectacular.
With this particular deal, the house comes furnished. But because there are no photographs of the furnishings available, one wonders if it's worth it. No available pictures is typically a red flag.
About Dave Ramsey
Dave Ramsey is probably most famous for the method of paying off debt he marketed and named the “snowball method," criticized by some because it doesn't make the most sense financially since it ignores interest rates. The snowball method does make the most sense psychologically, though, and if that means more people can be successful using it, then it works.
The debt snowball method is designed to get people on the path of ridding themselves of debt. They do so by paying off their smallest debt first, no matter the interest rate. Once that debt is paid, borrowers take the money they were spending on that small debt and apply it to the next biggest debt owed. The theory is that once one debt is paid off, the reward people feel should spur them on to pay off their other debts with the goal of becoming debt-free. The feeling of accomplishment keeps building like a snowball.
The Millionacres bottom line
Dave Ramsey bought an expensive lot and built an expensive house on it. We might never know whether he makes money on the transaction. But if this home sells for the asking price of over $15 million, we can assume Ramsey did well.