Get rich in real life
One option many who play Monopoly ignore is the use of mortgaging to buy more properties and control the board. But that’s the best way to win! Here’s how to win at Monopoly in real life by adopting some of its real estate strategy.
- How do you cash out rental property equity to increase your holdings?
- Considerations for investors with multiple mortgaged properties
- Mistakes to avoid
The leverage you gain with smart mortgaging allows you to control more rentals and acquire wealth.
Monopoly and mortgages
The objective of this classic game is to control property and extract rents from your competitors until they run out of money. When you roll the dice and land on a property, one of three things happens: you buy it, you ignore it, or you pay rent if someone else already owns it.
Some properties are more valuable and desirable than others, and owning a matching group allows you to build homes and hotels and charge much higher rents. So if you already own Park Place and you land on Boardwalk, you don’t want to miss the chance to buy it.
Likewise, snapping up one of a color group prevents your opponents from getting all the properties in that group. And extorting huge sums from you when you land on their hotels.
But if you don’t have the cash to buy Boardwalk, you can still tie it up and keep your competitors from getting it — by mortgaging your other properties and using those funds to purchase Boardwalk. Mortgages allow you to increase your rental income while keeping your competitors from buying up all the good stuff.
Real estate strategy: leverage
Monopoly is not just a game. It parallels real life in many ways, especially relating to real estate investment.
One of the biggest advantages of real estate as an investment is that you can leverage it. That means you can control a large asset by making a relatively small investment upfront. You get leverage by borrowing part of the purchase price.
In fact, the less of your own cash you invest, the greater your possible return.
How does this work? Imagine that you buy a $100,000 property and in a year, its value increases to $105,000, a 5 percent return. But…