Dave Ramsey speechless after man admits to borrowing $80K for trailer parked on ‘dirt’ — 3 crucial takeaways
Jeremy from Seattle, Washington, believes his recent purchase of a recreational four-wheeler was a “dumb decision.”
Speaking with finance guru Dave Ramsey on a recent episode of The Ramsey Show, the young man said his new “toy” is irritating his parents-in-law because they want him to focus on repaying $80,000 he borrowed from them to buy a manufactured home that sits on their property.
Ramsey quickly pointed out that purchasing the four-wheeler isn’t his biggest mistake: “You have a $80K trailer and you don’t own the dirt? Oh god, wow,” he said. “You guys have made a colossal mess.”
“You’re playing Russian Roulette and there’s three bullets in the gun — not one,” Ramsey said.
He offers three reasons why Jeremy’s deal with his family is a brewing financial disaster.
Jeremy’s housing situation is precarious because he doesn’t have control over the land on which his home sits.
Millions of Americans live in manufactured homes across the country, according to the Pew Charitable Trust, and 35% of those who financed their purchase have a “home only loan.”
That means they owe money on something that almost always depreciates in value compared to a house. And on top of that, they lack control or ownership over the land, which is typically an appreciating asset.
“You do not have control of the situation,” Ramsey explained to Jeremy. He points out that if anything were to happen — like say the in-laws were to cause a car accident and face a lawsuit as a result — the dirt under their trailer could be taken from them.
“They have no control over that and you have no control over that. So you have set yourself up. And I’ve seen this a thousand times in 30 years of doing what I do — not owning the dirt under your trailer is a massive mistake.”
Jeremy’s situation is exacerbated by the fact that his loan was borrowed from his family.
Nearly 37% of recent homebuyers in the U.S. financed their purchase with some financial assistance from their parents or grandparents, whether that be co-buying, gifting them the deposit or allowing them to live rent free to save up for the purchase, according to Compare the Market.
