Monopoly and the Game of Life



  • I paid off $32,000 in student loans in a year.
  • Paid off our $280k mortgage in 6 years.
  • Flipped several houses in Washington D.C. to help me build income for real estate investing.
  • Have purchased several rental properties without using debt.

This is the story of my first time touching real estate, and what I learned.


I’ve loved the game Monopoly ever since I was a child. I’ve been playing since I was 5 years old. I played with my friends for hours on end! I soon figured out that usually the first person to get a monopoly would win the game.

We were serious about it! We used calculators as banks accounts instead of cash. It made the game move faster.

I’ve always sensed that Monopoly somehow mirrors reality. Having a monopoly, or having several properties in the same area, can help you win at the game of life.

My Grandmother had a small monopoly.

She raised four kids as a single mom. She did something extremely smart that everybody thought was crazy at the time.

On a very meager salary while living in Los Angeles, she bought a four-plex of apartments, and lived in one of them herself. She rented the rest out.

When I was a kid, I equated what she did to having a monopoly. She owned four properties in a row.  It’s kind of like owning the three green properties in Monopoly (which are my favorite).

While these properties didn’t make her rich, it was certainly the key to her financial well-being and security throughout life. It gave her an extra income, supported her, and allowed her to help others throughout life. Also, she is able to leave an inheritance by giving one property each to her four children.

I’ve always admired her for doing that as a single mom.

My grandfather (on the other side of the family) was a construction superintendent. He was in charge of building large tracts of homes, sometimes more than 100 at a time. I loved walking construction sites with him and seeing the progress that was being made. I knew his job was important and he was building something that was tangible and lasting.

I sensed, however, that my Grandpa had a good job, but was not the one getting rich. His boss, the guy that bought the land and had the rights to build new units on them and sell them, was the rich guy. He had a real-life monopoly.

I always knew I needed to buy a property as soon as I could.

I’m in the U.S. military, and my first job took me to Guam.  Gorgeous island! (google it, most American’s don’t know where it is). I was eager to buy property, but I wasn’t about to buy in a place that gets hit by typhoons (hurricanes) several times a year!


Three typhoons (one wiped out my apartment) and two earthquakes later, I had finished my time in Guam and finally moved to Washington D.C. where I started looking for a house, eager to finally own one.


By this time I was 29, and still without a property. I felt like I was behind in life, and sensed I was missing the boat on the key time to buy.

I needed to find a real estate agent, and I didn’t know where get a good one. I saw an advertisement from my bank that said they would find the best real estate agents in my area. They would assign one to me, make sure that I was happy with the process, and give me a $2000 check at closing for using their service. Awesome.

If you get the right real estate agent, they are worth their weight in gold (or their commission). Make sure you are happy with the service you are getting. If there is a problem with their service, tell them. If they don’t fix it, get a new one.

Rich on Money

It turns out I did get a very good agent from Century 21. He was a retired Army Colonel who was no-nonsense. In 2003, the market was so hot that every property had multiple offers the first week it was on the market. Most people that bought houses had to attach something called “escalation clauses” to their offers.

An escalation clause is a real estate contract, sometimes called an escalator, that lets a home buyer say “I will pay x price for this home, but if the seller receives another offer that’s higher than mine, I’m willing to increase my offer to y price.

This means that you make an offer of say $300k with an escalation clause to $310k. If someone outbids you at $305K, your escalation clause would move you up to $306k and you get the house. I told my real estate agent that seemed like a sure way to overpay for a house, and that I didn’t want to use it. He said I wouldn’t get a house without one!

I told him I wanted to spend three days looking at houses with him in different areas. He told me the market was hot, and he didn’t have time to show me around. He said he would show me the best deals for a half day, and that if I was smart, I would make offers on all the ones I liked.   At the time I thought he was hustling me, but looking back, he was just tellin’ it to me straight.

We weren’t excited about the first few properties he showed us. No plan to make offers on those. Then he brought me an interesting property. He somehow had the inside scoop on a townhouse that wasn’t going to be listed for sale for three more days. It was an end unit on a man-made lake and was listed for $280k, but several other townhouses in the neighborhood had sold for more than $300k.

Our real estate agent told us this house would go quick. I told him to put in a full price offer immediately before it went on the market. He said he doubted they would take it, since they would be smarter to wait for the first weekend and get multiple offers with escalation clauses. He was wrong. The offer was accepted.


Yay!  Our own townhouse!!

The most important number in buying houses in the purchase price. If you get a good deal when you buy the house, the rest of it is easy. How much to fix it up, how much rent it out for, what you sell it for is all important, but you can’t make the numbers work unless you get a good deal on it.

The money is made when you buy the house. Not when you sell.


$280,000 seemed like a lot of money to me. I honestly thought this could be the worst mistake of my life. I was losing sleep over this for weeks!!

The people we bought it from purchased it for $180k, and made a quick $100k by selling it to me a few years later. I was sure it would dive in price once I bought it and I would regret this purchase for the rest of my life!!!!!

I was wrong.

It just kept going up over the next several years, and I realized I made a good choice.


It was clear I was born for real estate investing.

I’m brilliant.

             But did I make a good choice?

            Does this prove what a great investor I am?

It isn’t a question of me making a good or bad choice.

It’s just luck.

I bought, and it wasn’t the top of the market yet.

If I had bought in 2006, I would’ve regretted it, just as most people who bought then did. Those who bought at the top of the bubble are not less skilled then me or anyone else, they were just unlucky.

Their timing was off, and no one has control over that.

You will not get the inside scoop on when stocks or real estate will nose-dive or skyrocket by reading the Wall Street Journal or the watching the Money Channel. No one knows which way markets will go, but many make lots of money pretending they do.

Some actually think they are good at predicting, but don’t realize they have just been lucky.

For now.

Do not buy a house thinking it will go way up in value. It probably won’t.  If it does, it was luck, and not because you’re awesome.


Those late night get-rich-quick no-money-down infomercials bank on this misconception, and it just ain’t true. Houses historically rise in price at the rate of inflation. Not at sexy as biotech stocks or the newest fad technologies. Sorry.

I had about $30k saved up for this $280k purchase, and as you can see, I didn’t have enough for the standard 20% down. That means I’m stuck paying PMI.

PMI (Private Mortgage Insurance) is an extra fee (or penalty) you pay to the bank each month with your mortgage when you do not have the standard 20% down payment on a property. You are compensating the bank for the additional risk of your loan.

It is best to avoid this if at all possible.

I thought I found a way to avoid it. I had:

– a 30 yr mortgage of $224,000 at 5.5% interest (very low at that time)

Worked out to about $1600 a month

– 10% down payment of $28,000

– a 2nd loan of $28,000 at 7%, and no PMI

About $200 a month.

Essentially, I borrowed the 2nd half of my down payment at a higher interest rate.

I thought I was clever to avoid PMI, but soon realized the extra charge of 1.5% on my second loan was a form of PMI in disguise. The good news is, I could pay it off as fast as I want, and I did that in about a year.

This is how I got my first house. In a little over a year, some of the houses in the neighborhood were selling for over $400k, so I was confident the market was working for me. I timed everything perfectly. I’m that good.

I really am brilliant.

See how I was able for foresee the future and buy at the perfect time? (Perfect timing was actually about two years earlier, but who’s counting)

       Keep thinking that dummy. It’s luck.

Actually, this stroke of good fortune did give me a huge (false) boost of confidence and pride, and I soon decided I would get rich by buying more houses and watching them go up $100k per year.


In 10 years, that’s a cool million.

Wow, making money is easy!!!


Before I get into my attempts at more housebuying in DC, I’ll share some of the major maintenance items I put into this house the two years I lived in it before I made it a rental.

Every townhouse had an ugly blacktop driveway, and someone went around the neighborhood offering a concrete driveway for $1000. I did that.

Our windows were old, and I remember hurting my fingers trying to open one. Some of the windows couldn’t open because they were painted shut. I replaced them all.

I made the mistake of not doing a lot of research into the prices of windows. I just went with what the first company charged me, which was $9000 for the whole house, including the large bay windows and sliding glass doors to a deck. This also included wrapping the bay windows in colored aluminum so they would never have to be painted again.

I think I overpaid, maybe drastically. It was an end unit, so it had more windows that the typical townhouse. I became more shrewd with price as I gained experience.


Since I have great common sense, I decided I should buy another house so I can make $100k in a year again.

Maybe Carleton Sheets was right!

I wonder if I can buy with no money down?  Then I could by five or six houses!! I could also max out my credit cards and borrow cash for down payments.

       Keep thinking that, dummy.

I searched and searched for a 2nd property. I realized quickly the deals I got in 2003 were gone, and I was going to pay a lot more for a much smaller house than the first time.

I bargained, wheeled and dealed, and made lots of offers, but I just wasn’t comfortable I was getting a good enough deal on anything. The market was too hot, and properties were being snatched up too quick.

It made me nervous.

On one hand, nervous to buy, because I didn’t want to make a mistake and overpay so soon after doing great on my first property.

On the other hand, nervous I was missing the boat and everyone around me was getting rich. I was too chicken to put more skin in the game.

Surely I would regret my timidness.

I came close to buying a small 3-bedroom townhouse for $350k, but I was apprehensive about using credit to buy and tapping into my HELOC (Home equity line of credit)

HELOC is a way of using the equity, or the increase in value of your house, to pull money out of your property like a credit card and go by other things. The property is used as collateral.

A common get-rich-quick technique is borrow money from the equity (HELOC) on your first house to make a down payment on a 2nd house.

This is using debt to control more property, and is a bad idea. It sometimes works if you are Donald Trump, the people who do testimonials for no-money-down infomercials, and hardly anyone else.

Not a great idea in my opinion, but better than using the money for cars, vacations, or expensive girlfriends (or boyfriends).

I resisted the urge to go HELOC and get rich quick, and ultimately chickened out.

I did the opposite.

I actually decided to pay off my mortgage early.

          So Rich, How do you invest in Real Estate without a mortgage?!?!?

I’m so glad I asked.

The first way is a rich Uncle. The second is the lottery. Unfortunately, these didn’t work for me.

I’ll tell you what I believe to be the best way to invest in real estate. It’s certainly unconventional.

Some of you will say it’s impossible.

I somehow did it, so it’s obviously doable.


  1. Stop buying expensive $hit.
  2. Get out of debt.
  3. Max out retirement accounts.
  4. Save up enough money to put down a 20% down payment on your property.
  5. Once your property is stabilized, go back to step 4 and do it again.

One of the key things I preach is buying the right house.  I don’t buy a property unless it will make money as a rental.

Home ownership is in many cases a financial mistake.

If you crunch the numbers, most people are better off renting.

American dream my — foot.

So the first house worked out ok.

I still want another easy $100k per year, like I made on my first property (what a genius!)

I had seen people around me make that easy by flipping new construction.

new construction

So let’s do that!

       How did I do on that deal?

Read my next post.

How have you done in real estate?  How do you feel about my philosophy?

Leave a comment!

Interested in how I invest in real estate? Here’s my Complete Guide to Real Estate Investing.

Rich on Money

7 thoughts on “Monopoly and the Game of Life”

  1. Good read. I’m recently FIREd and am considering purchasing a rental property for the income stream. Looking forward to reading the next post!

    • Rafi,

      Excited that you found the blog! Hopefully, sharing what I’ve done will help you. For me living overseas, the key has been finding and cultivating an amazing team of contractors as well as trustworthy real estate agents and management companies. Easier said than done.

  2. Came over from Mr. Collins website, just started poking around. I’m a fan of real estate and adverse from debt, I like your style;)

    We are in the process of paying off our rental home, then making a decision if we will start paying off our primary residence (also a rental) or invest more in the stock market.

    Look forward to reading more about your journey.

    • Thanks for commenting!! I paid off my primary residence pretty fast, then bought a rental property with cash. My savings rate exploded. At this point, the money you make from rental properties snowballs and you buy properties faster and faster… I’m going to write about how i did it in future posts. My two cents, get rid of ALL debt before you start investing in taxable accounts. I checked out your blog. When you pay off your primary residence in Chicago, and you’ve got two properties under you, your savings rate will skyrocket. Let that allow you to buy a 3rd rental property that much faster. Just my two cents. Others might tell you to invest first. I believe I can make more money in real estate.

  3. Great post. The idea of only having one mortgage (if any) at a time is brand new to me, and intriguing. I’m very much against debt, and I thought this aversion would make it impossible to invest in real estate. Knowing it’s possible to successfully invest in real estate without taking on debt is refreshing!

  4. Do you recommend any formulas, rules of thumb, etc to determine if a specific property would be worthy as a rental? On a related note, does paying all cash for an investment property expand your options?

    • Paul,

      Awesome comments, thanks! There are two basic formulas to determine rental property worthiness.

      1. 1% rule
      2. Cap rate

      The 1% rule is quick and easy. Monthly rent should be at least 1% of the purchase price. Example. $100,000 home should rent out for at least $1,000 a month, or it would not be worth looking into. I shoot for 1.5%

      The cap rate is a little more work, and maybe a little more useful number. It’s essentially what percentage the investment earns you per year. You could compare it to the historic S&P500 rate or any other number you want.

      Cap rate:
      1. Gross income from the rental property (add up how much rent you get in a year)
      2. Subtract operating expenses (this is tricky, but worth the time. Taxes, insurance, maintenance, property manager, vacancy losses)
      3. Divide the net income (after subtracting expenses) by the property’s purchase price.

      Example: House rents for $1,000 a month, it’s worth $100,000

      $12,000 a month from rent.
      Minus operating expenses (I’m using a rule of thumb to estimate 50% of rent, it might be less)
      $12,000 – $6,000 = $6,000
      Net income / purchase price
      $6,000 / $100,000 = .06 or 6% cap rate. This is what your investment makes you per year roughly.

      Paying cash for properties means the cap rate is what you will actually get. With a mortgage, you have more expenses and less cash flow.

      Paying cash for properties makes your offer more attractive then higher offers from others using mortgages to buy. You’ll get a better deal on the house.

      Paying cash you sleep better at night, and don’t get wiped out by bad fortune such as unexpected vacancies or repairs.

      Rich on Money


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