Like in the game of Monopoly, most property investors have the goal of – buying as many properties as they can afford and earning as much income as possible.
However, there are other things property investors can learn from Monopoly. We take a look at some of the key lessons.
Understanding the rules
In a game of Monopoly, the player who has the best understanding of the rules is going to have the best chance of winning. The same applies to property investing. If you understand the laws, regulations and rules that apply to making wise investing decisions, you’ll be more likely to invest in the right properties.
The right location does count
If you stop to buy property at every space you land on without a plan, you’re going to go broke before any of your properties begin to pay dividends.
On the other hand, if you skip on opportunities that don’t make sense for your board game strategy, by strategically waiting to buy the complete set, you’ll be sure to generate good income that will pay off for you in the long run.
Also consider whether they are in close proximity to local services and infrastructure such as schools, shops and healthcare and transport.
Keep cash on hand
To win in Monopoly you have to be the last player left. There are taxes, penalties, unexpected trips to jail and all sorts of uncertainties that pop up. To play well, you’ll need to keep a good chunk of Monopoly money at the ready in case your opponents get lucky.
Real life business management is no different. You have to keep money set aside for unforeseen expenses.
Maintaining a cash (financial) buffer is fundamental to ensure you can ride the ups and downs that comes with property investing.
For example, a property will require repairs and maintenance from time to time and having the cash readily available is important to upkeep the property.
Focus on income
In Monopoly there is no greater joy than collecting rent when an opponent lands on one of your properties.
Similarly with investing, nothing beats receiving a steady cash flow. Whether you’re playing with Monopoly money or investing in real life, building a portfolio that pays you a steady, solid income is the key to your success.
Negotiation and persuasion skills are key
There are times in Monopoly when trading properties with another player is necessary to get ahead.
However, you may come up against an owner of the property who is benefiting from ownership and doesn’t wish to part with the property you want to trade.
Your task then becomes convincing the owner that what you have to offer in return will somehow be more beneficial. In the real world, negotiating with creditors and agents is also vital. Your negotiation techniques can make all the difference to a successful purchase.
Make the most of opportunities
Monopoly is a game where every player is given the exact same opportunities – everyone starts on ‘GO’ and you begin the game with the same amount of money.
Perhaps the most defining lesson Monopoly can teach property investors is that sometimes things will go your way and at other times you may fall behind. Ultimately it’s how you deal with the roll of the dice that essentially matters.