Playing board games is a familiar pastime to most people and for good reasons; it’s a great way to enjoy the time, have fun, and you can even learn a thing or two from it. One area of knowledge that lends itself well to board game thinking is real estate investing. Here are four important concepts you can pick up next time while you play.
Don’t Make Decisions Based on Emotion – You’ve had those moments when playing a game where after a roll of the dice your piece puts you in a spot where you don’t want to be. Or you are dealt with the wrong cards and can’t make the move you want. Just like in a board game, dealing with the emotional consequences of your actions will often affect whether you win or lose.
In real estate investing, this often boils down focusing on what will make you the most profit versus your personal tastes. Remember that you are not purchasing property to build your dream home and live happily ever after. You are looking to earn a profit from it through either rental or sale. Approaching your investing with that clear mindset will simplify the process and prevent it from becoming emotionally draining or making unnecessary mistakes.
Expensive Is Not Necessarily Best – In the beloved game Monopoly, everybody wants to get their hands on both Park Place and Boardwalk. Why? Because those two spots have the largest payouts out of any other properties on the board. However, there’s a catch that many players often forget – Boardwalk and Park Place are the most expensive properties to maintain. As a result, players often lose the entire game because they focus on getting their hands on those crown jewels while losing sight of the greater picture, which is cost matters as much, if not more, than cash flow.
Transfer that mindset to real estate investing now; finding a property that looks amazing but requires a considerable amount of money does not garner profit. Everyone knows the key is to find a property for cheap to reasonable pricing, putting in whatever refurbishment is necessary then either turning it into a rental for steady cash flow income or flipping it immediately for a one-time profit. Park Place and Boardwalk exemplifies the age-old truth – buy cheap and sell high. Doing it any other way is not worth the time or, more importantly, money.
Make Money Through Cash Flow – Going back to Monopoly, one great thing that the game teaches about real estate investing is the value of cash flow. When you purchase a property in the game, pay will inevitably pay you money for rent when they land on it and vice versa; it is the primary means of acquiring money and, in the end, whoever has the most money wins the game.
But what’s important here to see is how that money is accumulated, and that’s through consistent rent collection. So the game stresses how valuable it is to collect money on a regular basis. Furthermore, virtually any property will increase in value in part if it can generate higher levels of cash flow. Other factors come into play of course, but determining how much money a place can make for you will affect how much you need to pay to purchase it from a seller for example.
Strategy Is Best – While luck plays a role in games as well as life, it’s strategy that will take you further. Be it chess, Monopoly, or real estate investing, a little forethought and robust strategy will get you further than luck. What we’ve discussed so far – the importance of price, keeping a calm head, these are all factors of a real estate investment strategy that have worked for countless entrepreneurs. Research, planning, and efficient execution as exemplified perfectly by numerous house flipping shows, for example, show that making decisions in this type of endeavor rarely comes down to chance.
Where board games can fall short, though, unfortunately, is being able to protect all those investments effectively enough to avoid anyone taking them away. Fortunately, though, Anderson’s team has decades of experience protecting investors in the real estate game from liability and helping secure their families’ financial futures. The security and peace of mind this protection creates for our clients has proven incalculable over the years Anderson has been helping people like you. If you are interested in learning more about Anderson’s asset protection ability or its various other services, then contact us for a free thirty-minute strategy session today.