I was playing monopoly this weekend – you know, the old-fashioned board game with paper money, iconic pewter playing pieces and nostalgia of childhood epic-fun and crushed dreams.
The first game, I was playing very conservatively. If the property didn’t fit my exact needs and wants, I didn’t buy it. I figured, “Ehh, I’ll wait a round and after passing go, when I have some extra spending money, I’ll snatch it up.” I was saving my money and opportunity to land on Park Place and Board Walk, the Holy Grail of monopoly real estate.
Wouldn’t you know it, after a few strolls through the block, I was able to control the most valuable real estate. Now it was time to amass my empire and erect new construction houses, and develop some hotels. Just as my world was reaching new levels of economic development, something else was taking place I didn’t realize.
My wife had complete control of a good majority of the board. Over half of the first portion of the board was now covered with one or two houses – later I would come to call this portion of the board, “Death Row.” Her tactic was buying anything and everything she could afford. She was making any opportunity afforded to her work.
I was able to dodge some of her properties, luckily landing on “Chance” and “Community Chest.” After a while, she landed on Board Walk. I felt pretty proud to be collecting $500+ in rent, and felt the start of my reign as The Monopolist.
Soon after collecting my biggest rent check, I started to feel the slow bleed of her single and double-housed properties. The same low-end properties, which I scoffed at, were now getting the best of my checkbook. Almost overnight, I began to barely scrape by, having to mortgage everything I owned. Suddenly my empire began to crumble, and hers began to rise. Her “Death Row” was now laden with hotels and my only hope was to go to jail, AKA sit in the corner and hope the world would suddenly change for the better.
Needless to say, I lost my houses on the most prestigious properties, and was out of the game quickly. I lost it all. This taught me some very valuable lessons about real estate.
Firstly, when you start out in the real estate game, it’s all about wealth building. Its like Robert Kiyosaki says in part of his strategies (Author of Rich Dad Poor Dad), there’s a time to manage wealth, and then there’s a time to build it. When you’re just starting out, you should be trying to control as much real estate as possible. This, at times, means you might need to be highly leveraged.
Secondly, you should diversify your real estate portfolio. I’m not saying branch out into stocks and bonds, but spread it evenly between property types. Don’t only invest in high-end properties that fit your specific criteria. This will not make you bullet proof. To those of you who say diversify across all platforms, take a lesson from Warren Buffet who said, “Diversification is the lack of knowledge.”
Thirdly, don’t let the state of the economy dictate your actions. If you are at a point in your life where it makes sense to build wealth, build it. Do not wait on the sidelines at hopes the world around you will change – make it change. There are always opportunities out there, you just have to keep an eye out and be persistent. Think of it like the people who want to lose weight, and wait for Monday to come to start their diet. Mondays never come!
After licking my wounds, we played a second game. This time, my strategies shifted. I began to barely scrape by in the beginning, while picking up as many pieces of property as possible. This time, I was building my wealth and I was very highly leveraged.
No longer did I have specific criteria of property, I just bought it if it made sense. The game went much differently this time. My wife, who already implored an awesome strategy, was battling with me for control. After a little bit of luck, and some application of my knowledge, I was able to dominate the board, all without the two properties I had coveted so highly before. Before long, I was able to exact revenge and relive my gloating seven-year-old-self as the Monopolist.
Monopoly also taught me some other valuable nuggets of real estate wisdom, but that’s for another time!
For information about Real Estate in Alaska, contact our local Real Estate Expert James Cash at (907)-360-7448 or e-mail at jamesfcash@gmail.com
