Ramsey Tells 65-Year-Old Investor With $2.2M Portfolio to Skip DSCR Debt
-
Dave Ramsey advised a 65-year-old investor with a $2.2 million real estate portfolio and $400,000 in liquid reserves to avoid a DSCR 6.75% refinance loan, saying that borrowing at a rate higher than the money market’s yield destroys wealth.
-
DSCR loans charge higher rates than investment property mortgages because lenders qualify borrowers on rental income rather than personal income, making the 6.75% rate a subprime option for an investor with sufficient savings and stable rental income.
-
Have You Read A New Report Shaking Up Retirement Plans? Americans answer three questions and many realize that they can retire earlier than expected.
Dave Ramsey doesn’t mince words, and when a 65-year-old investor came in with a $2.2 million real estate portfolio and a question about a DSCR loan, Ramsey’s answer was quick: don’t do it.
“I don’t teach people to borrow money, Jimmy, because I found that the fastest way to get rich is to get out of debt and not into debt,” Ramsey said on the Ramsey Show on March 26, 2026.
The caller, Jimmy from Atlanta, painted a vivid picture. He had just turned 65 years old, owned five rental properties in addition to his residence, which had a $175,000 mortgage at 4.25%. His rental income was about $100,000 a year, separated from other income. He had less than $400,000 in a money market account, down from about $700,000 after financing the purchase and renovation.
Have You Read A New Report Shaking Up Retirement Plans? Americans answer three questions and many realize that they can retire before than expected.
His strategy worked: he paid $120,000 for one property and $150,000 for the other, both now worth $400,000 each. The question was whether he should take out a DSCR loan at 6.75% to fund the next renovation instead of drawing down his savings.
A DSCR loan (Debt Service Coverage Ratio loan) is a loan product designed for real estate investors. Lenders qualify loans based on whether the property’s rental income includes the mortgage payment, rather than personal income or tax returns. That makes them popular with self-employed homeowners with complex income pictures.
The tradeoff is the price. The 10-year Treasury yield remains at 4.33% as of March 25, 2026. A typical investment property loan is priced at a spread above that benchmark. DSCR loans add another premium for loose underwriting standards. Jimmy’s quoted rate of 6.75% reflects that risk premium.
Ramsey made the comparison clear: “Even if you will go into debt, DSCR is not a good loan because it is high interest. There are regular loans.” Then he asked a sharp question: “Why do you want to pay a subprime rate to borrow money when you have it in the bank to do the job? Absolutely not. I wouldn’t do that.”
The Fed funds rate currently sits at 3.75%, but the cost of borrowing for investment real estate has not fallen proportionately. Paying 6.75% on a refinance loan when you’re holding $400,000 in a very low income money market is a direct wealth transfer from your account to the lender’s.
On a $150,000 DSCR loan at 6.75% over 30 years, interest costs alone run well into six figures, before accounting for principal, points, and the higher deposit requirements that lenders place on DSCR products.
Ramsey’s point about value capture: “Your value has not decreased. Your money has increased because the value of the property has increased because you have repaired it for more than the cost of repairing it.” Paying a renewal fee takes away all that profit. Borrowing at 6.75% to finance the same renovation gives a portion of that profit to the lender.
Ramsey practices what he preaches here. “I have several hundred million dollars worth of real estate and it’s 100% paid off and we’re renovating 100% of it in cash or not,” he said. Rachel Cruze added an active follow-up note: “Just pause when you buy a new property and use it to renovate and upgrade.”
Ramsey’s framework works cleanly for investors like Jimmy’s profile: at or near retirement age, substantial equity built up, reliable rental income, and enough liquid assets to fund the next project without draining emergency reserves.
A 35-year-old investor with $80,000 in savings and a high-paying W-2 job faces a different equation. Acquisitions can accelerate portfolio growth when time horizons are long and income is stable. At age 65, with $100,000 in annual rental income and a portfolio worth $2.2 million, the risk-reward of borrowing at 6.75% depends strongly on the loan amount. Consumer sentiment remains in pessimistic territory between 2025 and early 2026, well below the 80-point threshold. The latter makes the management of secured capital more secure.
Run a simple comparison before touching the DSCR program. Take the maintenance budget, calculate the total interest cost at 6.75% over the waiting period of the holding, and compare that figure to the opportunity cost of the money market downgrade. If a cash account yields less than 6.75%, each dollar borrowed costs more than each dollar spent in savings.
For Jimmy, the answer is already clear. He built a $2.2 million portfolio by buying distressed properties for cash and renovating them without recourse. Introducing a mortgage with a high rate of 65 to preserve a cash cushion that earns less than the cost of the loan is at odds with the strategy that built his $2.2 million portfolio.
You might think that retirement is all about picking the best stocks or ETFs and saving as much as possible, but you’d be wrong. After the new retirement income report was released, wealthy Americans are rethinking their plans and realizing that even modest portfolios can be serious money machines.
Many have even learned that they can retire before than expected.
If you are considering retirement or know someone who is, take 5 minutes to learn more here.
