He's 21 And Can't Afford His $500,000 House

Brought to you by the Every Dollar app. Start budgeting for free today. >> I was given a rental property that's been nothing but a headache and I'm just wondering if I should allow the bank to take it. >> I'm sorry. How do you How are you given a rental property that has a mortgage? >> Um, I worked for a company that did flips and they kind of gave me it. I was young and I didn't know what I was doing. Um, and so I just basically took over the debt. They cover the down payment and it's racked up some credit card debt as well. >> Okay. Uh so what is owed on the house? >> 519,000. >> But you did not get the mortgage. >> The mortgage is in my name. It was uh the down payment was to me. >> Oh. So if you give it back to them, they're going to foreclose on you and sue your butt. You understand that, right? >> Yes, sir. Well, that that would not be a good plan. Sir, what's the house worth? >> I I had it listed at 540 and it wouldn't sell, so I would guess 500,000. I I overpaid for it. >> Who do you Yeah. Shock. And um How old are you? >> I am 21. >> Oh god. >> So these flippers are these Tik Tok morons, aren't they? Um, yeah, he was like my mentor and and I called him one of my best friends at one point, but uh he was just a little older than I was. >> Yeah, friends like that. Who needs enemies? Okay. Oh, man. I'm sorry, sir. Um, >> yeah. >> Who do you owe the money to? What kind of a mortgage is it? FHA, VA, conventional, bank loan? What is it? >> It's a It's a conventional mortgage. >> Okay. Are you able to make the house payment, Braden? Are you able to stay current on it? >> I am not. So, I'm actually like 60 days delinquent right now. Um, I am self-employed. I made $25,000 last month and so I put that into a credit card payments instead of uh paying the So, it's a rental property right now. So, I have renters in it. Um, with renters in it, I lose 1,500 a month. >> Yeah. Okay. Um Okay. So, your only way out because you owe more on it than it's worth net net is to do what's called a short sale. Have you ever heard that phrase? >> Yes, sir. I as I work in real estate, I I know a lot about I I've talked to a lot of people who have suggested that. >> Okay. Do you actually know how to execute a short sale, sir? >> Yes, I know someone who that's all they do. They're an agent here in town. >> Okay. All right. Would they be willing to help you? >> Yes, but they said not with tenants in place. And my tenants lease is until March. >> Mhm. Well, I think you call your tenants up and say, "Hey guys, the house is getting foreclosed on." So, >> you may want to find a new place. >> You may want to find a new place. >> It's only three months. >> It was >> Yeah. The the biggest issue is it was leased through my mom's Airbnb account and so I was afraid it was going to hit that and destroy her Airbnb business as well. >> Yeah, man. Y'all just stacked stupid on top of stupid, didn't you? Man, I tell you, I'm sorry. I've done I've done worse. That's what I'm just feel bad for you. >> It's like every because every time I bring something up, there's another hook in it, right? So, um >> Yeah. So, uh, if I'm in your shoes, I quit paying the payments and I run the renters off. >> Okay. >> Okay. As best I can. I mean, leg I mean, just by telling them, "Hey guys, it's going to get foreclosed on. You may want to look for a place to live." And they'll probably up and leave. Well, and I'll let you out of the lease because I don't want you to get hurt if you want to go. If you want to go early, I'll understand. >> Yeah. >> All right. And then quit paying the payments and then start the short sale. I um if your friend won't help you while the tenants are in place, uh go to ramseysolutions.com and get a Ramsey trusted agent that knows how to do short sales and they'll help you. >> Okay? The tenants don't have to be gone for you to uh begin to negotiate a short sale. It just makes it easier to show the house. >> Well, and if you're in that world, Braden, you should have you should know a lot of people. You said a lot of people have suggested this. I'm sure there's a lot of realers that you know that you know, I mean, a Ramsey trusted agent I would feel good about just cuz I know the type of people they are. >> Yeah. But fi Yeah, I mean finding someone should be relatively easy. >> So, and basically the short sale is is you get an offer on the property that is net lower than the actual balance and you submit that to the mortgage company and they realize having done an appraisal that they're not going to get any more than that after they foreclose on you. So, they take that and you are looking for and you remember this phrase without recourse. >> Yes, sir. because that means they don't come after >> another >> they don't come after you for the difference of that is >> okay yes and another thing on top of that is um my the old boss he paid his best friend to cosign for me so he's he's kind of scared and going downhill with me so he's kind of pressured me into paying the payments previously but I I've just told him I'm done >> yeah well tell him talk to your old boss >> who set this up you didn't talk him into doing it the other guy did >> and he did it That's the stupid thing about cosigning. He >> Yeah. Sucks for him. >> So, let me ask you this. Okay. You cosign for a 21-year-old who's overpaying for a piece of property and then you're shocked that you get stung. >> Okay. I'm just saying put together by a bunch of flippers. Yeah. >> Yeah. This is a good way to get screwed. >> And so, yeah. Yeah. I'm so sorry you're going through this. The great news is is that when you're the other side of it, you will have learned several lessons if you learn them. And you need to write them out. I'll tell you what some of them are. Never cosign. Never accept a cosign. Never buy a piece of property with nothing down. Don't borrow up to your eyeballs and expect a piece of real estate to work. It doesn't work. It doesn't cash flow. There's no possible way this nothing down tick tock crap works. It's the >> Don't get in the Airbnb business either, Braden. Don't follow your mom's footsteps. >> Yeah. and quit quit looking for all the get-richqu stuff. Every one of these things is in the get-richqu stuff. But write down, okay, I don't need partners. I don't need co-signers. And I don't need favors from friends who aren't really friends who help me buy something that I overpay for and over borrow on and trap me in. And so, you know, I one of my lessons is I never cosign. That's one of the things I learned when I was just a little bit older than you and I went broke. And um one of the lessons I learned is I don't have the only ship that won't sail a partnership. I'm not in partners with anybody. Period. One of the lessons I learned is I don't borrow money anymore. Period. The borrower's slave to the lender. And boy, don't you feel that right now, man. Gosh, I'm so sorry, Braden, but a short sale is your way out. Cleaning out the tenants is part of that program. Doesn't it's not necessarily start it, but I would start it. I would get it on the market and get an offer that you can take to the mortgage company and have them accept a a reduced payout on the mortgage called a short sale without recourse. If they don't say without recourse, they're going to sue you for the difference as if they had foreclosed on you. >> And Braden, you're you're a go-getter. You're doing stuff at 21, but this real estate the real estate world, there's so many traps, what we just laid out earlier in the call, what Dave was saying. So remember those, okay? there. It's going to be really easy to get sucked into a deal that feels so great. Remember these principles and it's going to be a more boring ride, but a safer ride for you. Create your free every dollar budget today. The simplest way to budget for your