Sell rental properties or buy stocks? Dave Ramsey told one landlord to sell one, keep one, and claimed 20% to 25% returns. Here’s what the data shows

Steven, 37, owns three properties in the Richmond, Virginia area. He earns about $150,000 a year and has roughly $250,000 in combined equity. For now he lives in an apartment, but he plans to move into one of his properties soon. That would leave him with two rentals.

He called in to The Ramsey Show with a simple question; should he sell and move the money into mutual funds? His main complaint was cost. HOA fees and surprise repairs, he said, felt like throwing money down the drain.

What Ramsey said about the numbers

Dave Ramsey said rentals pay in three ways; monthly cash flow, rising property values and tax savings from depreciation.


Steven’s bigger rental is worth about $400,000, and he owes $240,000 on it. That leaves about $160,000 in equity. Ramsey thought the value could double in seven or eight years. That works out to roughly 9% to 10.4% growth every year.

He then put real estate returns at 20% to 25% a year, against 10% to 12% for growth stock mutual funds. His conclusion was that if you can handle the hassle, real estate pays more.

The 20% to 25% figure only makes sense with debt. A 10% rise on a $400,000 home is $40,000. Measured against Steven’s $160,000 in equity, that is a 25% gain. The same debt works against you when prices stall.

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From April 1957 through April 2025, the S&P 500 averaged about 10.4% a year with dividends reinvested, or roughly 6.5% after inflation. So Ramsey’s 10% to 12% sits at or above the long-run average. The ride is also uneven. In the 2000s the index averaged just 1.48% a year, and -1.13% after inflation. Still, about 73% of calendar years have finished positive across 154 years of data.

Housing has been much slower than Ramsey’s forecast. The Case-Shiller national index rose 1.9% in the year to July 2026, while inflation ran 3.4%, the 14th straight month of falling real home values. Over the long run, national prices rose about 4.9% a year before inflation from 1975 to 2016.

At that pace, a home takes about 14 to 15 years to double, not seven or eight. After inflation, the average yearly gain from 1976 to 2017 was only 1.3%.

Local markets can differ a lot. Chicago led the 20 cities tracked with a 6.9% annual gain in June 2026.

Richmond is not one of those 20 cities, so, Steven should look up local price trends and rents before leaning on any national number.

Ramsey did not back everything Steven owns. His smaller rental is worth about $215,000, with $175,000 owed. That is only $40,000 in equity. It also carries a $200 monthly HOA fee, or $2,400 a year, which is about 6% of that equity before any other cost. After mortgage payments, repairs and empty months, Ramsey believed it was losing money. He said he would probably sell it.

His plan for the rest is simple. Keep the $400,000 rental and pay off its mortgage. Then pay off the mortgage on the home Steven will live in. After that, put more money into Roth IRAs and mutual funds. Ramsey also said that keeping what you already own is not a reason to borrow for another property. If Steven stays on that path, he said, he could have millions in both mutual funds and real estate in 20 years.

Steven admitted he does not fully understand how his accountant handles depreciation and taxes. Ramsey told him to learn it. The IRS spreads the cost of a residential rental building over 27.5 years, and land is not included.

As an example, if $300,000 of a property’s value were the building, that would be about $10,900 a year in deductions. But depreciation taken in earlier years can be taxed at up to 25% when the property is sold, so a sale can cost more than it first looks.

Before he sells anything, Steven needs three numbers for each property: what is left each month after every cost, what the sale would net after fees and taxes, and what that cash could earn elsewhere.