A caller named E called into The Ramsey Show sitting on a remarkable financial position: a three-unit property with $450,000 owed against it, in a market where comparable three-family homes sell for $1.8 million. The equity position is large. His plan was to take out a HELOC to fund renovations on two completely gutted units. Rachel Cruze had a better idea.
The Boat Strategy Cruze Actually Recommended
Cruze’s response was direct. “Go live on the boat, rent out the unit for $8,000 a month, use that to help cash flow these renovations, and I would just cash flow one at a time,” she told E. “So no, we’re not going to tell you to take out a HELOC.”
The logic is clean. E already spends summers on a boat about a mile from his house. Moving there full-time costs him nothing extra. His unit rents for $8,000 per month. That income funds renovations one unit at a time, without adding debt to a balance sheet that already carries $8,000 in credit card debt while he works through Baby Step 2.
A HELOC against this property would be tempting because the equity is enormous. But the 10-year Treasury yield sits at 4.33%, and HELOC rates float above that benchmark. With the federal funds rate at 3.75%, variable-rate borrowing carries real cost and real risk. E estimates he can complete both renovations for under $50,000 combined. Eight thousand dollars a month in rental income covers that relatively quickly without touching a credit line.
The Other Path: Walk Away With a Fortune
Cruze also laid out a second option that most callers in this position never seriously consider. “The other option would be to look at everything in full with two vacant gutted units, yours, and how much would the whole thing sell for? And do you want to get out of this deal?”
Even selling at a steep discount accounts for the gutted condition. “Even if you had to drop the price $400,000, that’s $1.4 million, you know what I mean?” Cruze said. After paying off the $450,000 mortgage, the remaining proceeds before transaction costs would be substantial. That is enough to buy a replacement property outright in most U.S. markets, with no mortgage and no renovation exposure.
Housing starts hit 1.49 million annualized units in January 2026, near the top of the 12-month range, which signals active buyer demand. Selling into a healthy market with strong construction activity gives E a real exit at a real price.
Who Each Path Actually Fits
Cruze summarized the choice plainly: “It’s A, I’m gonna just slowly redo each unit because you’ll love the life you’re in,” or “option B is I’m just gonna eject out of this whole thing and holy crap, make a lot of money probably. Go buy something with cash.”
Path A fits someone who genuinely wants to be a landlord, has the skills to self-manage renovations, and is comfortable with the operational complexity of a three-unit property. E said he can do the work himself and already lives in the building. That profile fits Path A well. The boat move is a short-term inconvenience that unlocks $8,000 monthly without borrowing a dollar.
Path B fits someone who wants simplicity and liquidity over operational involvement. Selling a partially gutted multi-family property is not painless, but the equity cushion here is wide enough to absorb a discounted price and still produce a life-changing cash outcome. Consumer sentiment sits at 56.4, well below the neutral range, which means buyers are cautious. A realistic seller price needs to reflect that.
What E Should Do Next
Borrowing against equity to fund renovations adds interest cost and repayment pressure to a situation that already has a clean solution: the boat, the rental income, and time.
If E chooses Path A, the sequence is straightforward. Move to the boat, list the current unit at $8,000 per month, collect rent, and fund the first gutted unit renovation from cash flow. Complete it, rent it, then repeat with the second unit. No new debt, no variable-rate exposure, no HELOC hanging over a Baby Step 2 household.
If the operational reality of managing a three-unit property sounds exhausting rather than rewarding, get a broker’s opinion on what the property sells for as-is today. The $1.3 million in equity does not require two finished units to be real money.
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