‘Tired of the crazy train’: Dave Ramsey tells frustrated young landlord to ditch the duplex and ‘go get a house’ — 3 ways to invest in real estate without the headaches of having tenants

“You’re out, you’re done,” the personal finance expert said.

Joe bought the duplex with his girlfriend in the fall of 2020 for around $164,000. They’ve since lived in one of the units and rented out the other. They’ve done some renovations and they expect they could sell the property for around $200,000 or more.

Joe admitted he was tired of having tenants — and of living underneath them — but he remained uncertain about how to handle his investment. He asked Ramsey whether it made sense to keep the duplex as a rental property and use the income to live elsewhere.

‘I would sell the crap out of this thing,” Ramsey responded during the episode.

“Someday later, you may want to be a landlord again, but right now, you’ve had your trip on the crazy train and you’re tired of the crazy train. That’s ok. Take a break from crazy. Go get you a house,” he added.

If you’re keen to invest in real estate​, but like Joe, you’re not sure if you’re cut out for the landlord life, here are three other ways to get in on the action.

Real estate investment trusts

Investing in a real estate investment trust (REIT) is a way to profit from the real estate market without having to buy a physical property or deal with any landlord duties.

Like giant landlords, REITs are publicly traded companies that own income-producing real estate like apartment buildings, shopping centers and office towers. They collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments.

Generally, they’re described as high-return investments that provide solid dividends and the potential for moderate, long-term capital appreciation.

Also, as REITs are publicly traded, you can buy or sell shares any time and your investment can be as little or as large as you want — unlike buying a house, which usually requires a hefty down payment followed by a mortgage.

Real estate ETFs

Another easy way to invest in real estate without having to pick and choose which stocks to buy and sell, is through exchange-traded funds (ETFs). You can think of an ETF as a diversified portfolio of stocks.

As ETFs trade on major exchanges, they’re convenient to buy and sell. Some ETFs passively track an index, while others are actively managed. One thing to note is that they all charge a fee — referred to as the management expense ratio (MER) — in exchange for managing the fund.

The iShares U.S. Real Estate ETF (IYR), for example, gives investors targeted access to domestic real estate stocks and REITs. The fund is managed by BlackRock and currently holds 78 stocks with total net assets of $2.85 billion. Since the fund’s inception in June 2000, IYR’s net asset value (NAV) has grown 8.47%. Its MER is 0.39%.

You can also check out the iShares Cohen & Steers REIT ETF (ICF), which tracks an index of U.S. REITs, with its top sectors being telecom towers, retail, data centers and multi-family residential. With 30 holdings and total net assets of $2.24 billion, this is another giant ETF that has produced total returns of 8.66% since its inception in January 2001.