When I was a kid, I used to play the game of Monopoly without really understanding much about it.
All I was focused on was getting the racecar player piece and staying out of jail…
Oh, and Park Place!
I had to look cool and somehow land property on Park Place.
In many ways Monopoly is a great analogy for life.
How many of us are out there looking good, but in reality going nowhere?
Round and round on that board, trying to stay out of jail and not go broke.
Like all things, the Game is what you make it.
As I’ve matured, my understanding of finance has changed and evolved while the game of Monopoly hasn’t.
Monopoly still has the same lessons to teach, as far as I have the ability to learn them.
The lesson is this, a simple formula:
Four Green Houses – One Red Hotel.
This is the simple formula for building wealth in Real Estate.
All the rest is child’s play.
Now you might say, that’s fine for a board game…but, if you’re really going to go into Real Estate, it’s better to flip houses; or hold for a short time after a rehab until the market value increases.
To that, I say the same thing:
Four Green Houses – One Red Hotel.
Do you wanna get rich and stay rich?
Or do you only want to look as good as the next Property Guru on HGTV?
Remember, the work is hard no matter how you slice it, and most of us aren’t going to have our doors beaten down by Cable TV execs anytime soon.
So if you’re interested in getting answers to those former questions, let’s continue.
If not, then here we must part ways…I wish you all the best and hope to see you soon on HGTV.“Man & Land”
My first coach in Real Estate always said that he invested in Man & Land, in that order.
A lot of the failure in achieving long-term success in Real Estate and other investment opportunities comes from a lack of investment in self.
Just ask Financial Peace author, Dave Ramsey, who was flying high in Real Estate at an early age:
“By 1986, Ramsey had amassed a portfolio worth over $4 million. However, when the Competitive Equality Banking Act of 1987 took effect, several banks changed ownership and recalled his $1.2 million in loans and lines of credit because he was over-leveraged.”
Due to his lack of strategy and foresight, Ramsey was forced to declare bankruptcy the following year.
But, that wasn’t the end of his story.
Nor does it have to be yours when you find yourself on the wrong end of a bad deal or unforeseen circumstances.
Drawing on Dave Ramsey’s later principles of wise stewardship, combined with an awareness of the Cashflow quadrant, any loss can be kept to a minimum.
It’s a balanced mindset that is not impulsive or stingy.
Weigh all the contingencies, invest in yourself, and let the cash flow from your assets fund your current lifestyle and retirement.
This is the Investor’s Way.
Alternatives for the Future
Again, you might be saying to yourself, this all great but where do I start?
How do I acquire my Four Green Houses?
I understand your frustration:
Maybe you have bad credit.
Maybe you’ve taken every coaching program out there that continues to eat away at your crumbling finances.
There is hope, but it can’t be acquired by going down the same old avenues that lead to insanity.
Attempting the same old process over, and over, again and expecting a different result.
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While Man & Land remain a constant, the way to Real Estate Riches is evolving to more creatively favor the investor.
Traditional vs. Alternative Assets
We’re all familiar with the landscape of traditional assets, which I refer to as the 3Ps – Paper, Property, and Payouts – lines of credit can also be utilized as an asset if leveraged correctly.
- Paper Assets have historically been the most popular.
On average when we think about paper assets, its usually around stocks and bonds. Mostly stocks.
The popularity of stock stems from its inherent potential for speculation.
Long story short, a lot of individuals got rich quick on the Stock Market.
Its speculative nature lends it no intrinsic value, and even the “safest” stock can be subject to widely variable degrees of volatility.
This is the major drawback of employee retirement plans being placed in financial instruments such as 401Ks and IRAs.
- Property is the most stable long-term investment.
The drawbacks of ownership is managing the property, which can be a full time job if you don’t pay a property manager.
Also, you may have to rely on a traditional bank loan to acquire it. This opens the door to scrutiny and reliance on the bank’s standards for your purchase.
While seller finance might be a better option, it’s not the ideal.
The cost of a property manager and monthly mortgage payments are expenses that can easily bring your cash flow to a trickle.
Then what happens when the property is left vacant without tenants?
All things to consider, but never explained in the Monopoly rulebook.
Don’t get me wrong, there are far worse deals…my preference is to have my assets put a significantly greater amount of money in my pocket without the threat of just breaking even.
- Payouts are what I call any form of payment that you work for.
This can be a salary from your J.O.B. (Just Over Broke), or from an occupation.
It can also be categorized as the revenue from a small business whose owner has to manage the operation on a continual basis.
The first individual has a job, while the second one owns a job.
What they both have in common is this – no work equals no pay.
The asset itself in this equation is the cash, but without proper leverage it goes down the drain due to ordinary business expenses and lifestyle habits!
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All of these have the potential to end in the 4th P, which I want to help you avoid – Poverty!
Going Beyond the 3Ps
My company, BBig Financial, will give you a strategy that goes beyond the 3Ps.
As I’ve shown, being in the Matrix doesn’t always mean having a boss at a job.
You could just as easily be working for your business, rather than having your business work for you.
You could be enslaved to the banks.
You could have your assets tied-up and unavailable when you need to lean on them most.
We started all of this off by talking about the best strategy for Real Estate Wealth:
Four Green Houses – One Red Hotel.
That’s simple math and it will never change if managed right.
But what if Four Green Houses and a Red Hotel were just optional?
Not because you can’t afford them, but because you don’t need them.
Think in terms of cash flow.
I’m originally from Pittsburgh, so I know the Allegheny river.
Rivers and lakes are relatively calm and placid – they flow in, they flow out, and they form tributaries.
It’s not bad.
Now think about Niagara Falls – powerful in its magnitude.
Now think about the source of them both, which is the Ocean…
Vast and never ending.
There have already been countless individuals and families you may have never heard of that know about a financial strategy as vast as the Ocean.
These are the strategies of the JP Morgans and the Rockefellers.
Two examples of wealth that isn’t going anywhere and can’t be eradicated.
Last time I checked, Exxon Mobil isn’t going anywhere.
Neither is Chase Bank.
My point is this, starting off with building your wealth in Real Estate is great.
It’s better than not starting at all.
A consultation with BBig Financial, will show you how to leverage your dollars properly so there’s ZERO risk involved in your Real Estate investment.
As I always like to quote, Warren Buffett once said,
“The first rule of an investment is don’t lose money. And the second rule of an investment is don’t forget the first rule.”
Warren Buffett
This is your opportunity to not just BBig with us, but to be in the Big Leagues and learn from the best.