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Saturday, October 6, 2007

How to win at Monopoly: Buy Houses, Charge Rent

Remember how to play Monopoly?

The object of the game is to purchase multiple properties, so when an opponent lands on your property, they have to pay you rent. This all time classic game is truly a mirror image of life. Controlling properties (homes, apartments, offices, etc.) gives YOU the upper hand in the game of life. After all, it will be you getting the rent check each month.

If you've done your homework, and bought your property below its market price, you will be cash flow positive. As an investor, you NEVER want to be cash flow negative. If you are cash flow positive on multiple properties, you will have a great second stream of income. This extra money can be put in savings, in the stock market, or into another property.

If you are "jonesing" for a new Lexus, first I would suggest a used Toyota, but if you must have that car because you've earned it, then pay for it with the extra income that you've managed to build. Avoid paying for it from your primary salary, and never ever lease!!! After all, who wants to rent? :)

Cheers!
JMK

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