{"id":555,"date":"2013-01-09T11:58:34","date_gmt":"2013-01-09T16:58:34","guid":{"rendered":"https:\/\/www.cashflownavigator.com\/blog\/?p=555"},"modified":"2018-08-13T19:32:54","modified_gmt":"2018-08-13T23:32:54","slug":"the-secret-to-winning-at-monopoly%e2%84%a2","status":"publish","type":"post","link":"https:\/\/www.cashflownavigator.com\/blog\/2013\/01\/the-secret-to-winning-at-monopoly%e2%84%a2\/","title":{"rendered":"The Secret to Winning at Monopoly\u2122"},"content":{"rendered":"

The Famous Board Game Offers Lessons on Real Estate\u2019s Rewards \u2013 and Risks<\/em><\/strong><\/h3>\n

Monopoly is one of the most popular board games of the past century.\u00a0 And why not?\u00a0 It gives you the opportunity to acquire wealth in form of real estate AND to generate cash flow not just from the properties but by also by passing \u201cGo\u201d.\u00a0 What\u2019s not to like?<\/p>\n

But time moves on, and to stay on top you need to adjust to change .\u00a0 The length of a typical Monopoly game is often over an hour, and can stretch to 3 or 4 hours.\u00a0 I remember playing a game with my childhood friends that lasted two days.\u00a0 Now that might have been a good thing in the 20th<\/sup> century but to maintain a leadership position among games in this new millennium where sound bytes and multi-tasking rule, sitting in one place for 3 or 4 hours or more just won\u2019t do.<\/p>\n

So I\u2019d like to share a secret strategy to help you win at Monopoly, and to win quickly.\u00a0 The secret:\u00a0 Get a hotel, any hotel.\u00a0 It\u2019s only a matter of time before others check in, pay you loads of rental income, and then check out\u2026of the game.<\/p>\n

WARNING: This secret strategy doesn\u2019t work all of the time.\u00a0 Why?\u00a0 Because, like life, Monopoly is a game of chance (hence the dice).\u00a0 That means there are risks. But if you understand what is behind the risks you can manage them in order to nudge the odds in your favor.<\/p>\n

Monopoly is mainly about acquiring and managing real estate.\u00a0 Importantly, real estate has an edge over many other investments:\u00a0 leverage.\u00a0 Leverage allows you to acquire a property by paying only a percentage of its total price up front and borrowing the rest.<\/p>\n

Here\u2019s an example of how it works.\u00a0 Let\u2019s say you put a $20,000 down payment on a $100,000 property.\u00a0 (You borrow the other $80,000 in the form of a mortgage.)\u00a0 If the property appreciates 5% in a year you benefit from 5% growth on the full $100,000 value of the property<\/em>; so your investment grows in value to $105,000.\u00a0 That\u2019s a $5,000 increase on your cash outlay of $20,000, so the return on your investment is 25%.<\/p>\n

If instead you had put your original $20,000 into a savings account that pays 5% interest, the account would have grown by $1,000, not $5,000.\u00a0 There is no leverage associated with the savings account so the return is, in this example, five times less than the return on the real estate investment.<\/p>\n

Real estate has an edge over many other<\/strong><\/p>\n

investments: leverage.\u00a0 But while leverage<\/strong><\/p>\n

can be your best friend, if mismanaged<\/strong><\/p>\n

it could turn into your worst enemy.<\/strong><\/p>\n

Leverage allows you to accelerate the timeframe to purchase multiple rental properties, and this in turn creates the opportunity to potentially grow the total amount of your rental income.\u00a0 That\u2019s what you\u2019re doing in Monopoly when you upgrade from a house to a hotel.\u00a0 In the game, hotel rents are so high that most other players can\u2019t afford to land there more than two or three times before it cleans out their bank accounts.<\/p>\n

So that\u2019s the strategy for winning Monopoly. Trade up to a hotel and rake in the cash.<\/p>\n

Oh, but I forgot to address the risks.\u00a0 While leverage can be your best friend, if mismanaged it could also be your worst enemy; for while it enables you to grow your real estate portfolio rapidly, by doing so you could be increasing your debt at an unsustainable rate.\u00a0 That is, the income from your properties isn\u2019t enough to pay for the cost of carrying the assets \u2013 you can\u2019t make your monthly mortgage payments.\u00a0 In that case, it will be your<\/span> bank account that is cleaned out.<\/p>\n

For a real-world illustration of this, see our \u201cWealth and Cash Flow Lessons from Donald Trump\u201d article.\u00a0 In the meantime, enjoy the game!<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Famous Board Game Offers Lessons on Real Estate\u2019s Rewards \u2013 and Risks Monopoly is one of the most popular board games of the past century.\u00a0 And why not?\u00a0 It gives you the opportunity to acquire wealth in form of real estate AND to generate cash flow not just from the properties but by also […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,10,9,45,18,20,17,16,3,13,11,8,12,46,21],"tags":[24,92,53,40,25,23,29,93,91,62,61,48],"class_list":["post-555","post","type-post","status-publish","format-standard","hentry","category-asset-accumulation","category-assets","category-cash-flow","category-debt-2","category-debt-accumulation","category-debt-reduction","category-financial-independence","category-financial-life-cycle","category-financial-planning","category-investments","category-liabilities","category-net-worth","category-savings","category-wealth","category-wealth-accumulation","tag-cash-flow-2","tag-cash-flow-navigator","tag-cashflownavigator","tag-debt","tag-financial-independence-2","tag-financial-life-cycle-2","tag-income","tag-investment","tag-keith-whelan","tag-leverage","tag-monopoly","tag-wealth-2"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/555","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/comments?post=555"}],"version-history":[{"count":24,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/555\/revisions"}],"predecessor-version":[{"id":564,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/posts\/555\/revisions\/564"}],"wp:attachment":[{"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/media?parent=555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/categories?post=555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cashflownavigator.com\/blog\/wp-json\/wp\/v2\/tags?post=555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}