Monopoly: 4 concepts that can help you in investing in Real Estate

01/30/2016

If I say Monopoly your mind will immediately run towards memories of the past when the famous board game was always a perfect choice to conclude a dinner with the family.

You will also remember the fun you had in playing with it and the many little fights that started from trying to steal the metal play piece your brother had already chosen to negotiate with the money-hungry uncle that owns almost all of the properties to repay the rent.

It might be a story not known to everybody, but this game was created at the beginning of the XIX century not only to entertain families and friends, but to demonstrate that an economy which rewards wealth creation is better than one in which monopolists work under few constraints.

Furthermore, through rolling the dices and moving you metal piece from the cheap Old Kent Road to the expensive Mayfair, we have learnt some tips that you can actually apply to Real Estate Investment.

1: Location, Location, Location

Maybe you think that owning Old Kent and Whitechapel Road is a good strategic idea. You can buy these properties for a cheap price and have more money to invest in Utilities and Stations.

In the long-term, this will not be a wise strategy, as players will have to pass through ‘Go’ and will gain some cash before stopping on your properties. Rarely the brown cards will push players to bankruptcy unless they are already on the edge of a financial crisis and remember: pushing your opponents out the property run is the goal of Monopoly.

We can apply the same idea to real-life investments. When you are looking for properties, it’s easy to be fascinated by the cheap price of a property, but consider also other important key factors before closing the deal. Search for properties able to appreciate in value and to also able to preserve it even during recession times.

Real Estate professionals will always repeat a mantra when assisting their clients in finding new investment opportunities: ‘Location, Location, Location‘. This is our evergreen but we have to admit that the location will override all the not favorable elements when evaluating a propriety. Not surprisingly, when playing Monopoly, to win the game, we will all head to Mayfair and Park Lane: the most expansive locations but also with the highest rental.

2: Enlarge your properties portfolio

When we play Monopoly we try immediately to buy as many properties as possible. So leaving little change to opponents to take advantage of our hesitation. Players taking time in buying properties will typically end up losing the game. The same concept is true when investing in properties.

Just as in the game, there are a fixed number of properties and in areas such as London, building new ones is not an easy task, since there is no land available for construction.

If we wait, quicker investors will not lose the change to conclude a good deal. Furthermore, external elements such as inflation and interest rate can make less convenient to invest in the future and we have no control over them.

For this, start today building your collection of properties. And collect the rent, always combining some tactic (keep in mind that investing is still a dangerous game. So if we don’evaluatete carefully our finances and possible costs) and emotion control.

3: Be always updated

Before investing and also when holding already your portfolio of properties. And regulations and learn from the experience of other investors that you might know.

The knowledge of other people and a different point of view can help in changing the strategy and trying new solutions. Whilst keeping in mind new rules and regulations can offer you the inspiration to refresh your strategy. So with some tactics that other investors might ignore.

4: Think long-term

As soon as we start the game, we all want to buy Utilities. They offer a good return and for that many players will fight to obtain them. If look closer we will notice that instead of buying Stations. It is a better investment in the long term and will generate more revenue.

When buying properties, it is wise to understand the return you want to generate in the long term. Try to analyze the trends of the area. If the property will be able to keep the value over the time. In the end, the real-life investment is a game like Monopoly, where you can only lose or win.

If you wish to be assisted by professionals in starting collecting properties to create your own investment portfolio. Then get in touch with Marylebone Properties International. We have properties in Central London and UK that are just waiting for the next player to close the deal.