Passive Investor Tips is a weekly series hosted by full-time passive investor and Best Ever Show host, Travis Watts. In each bite-sized episode, Travis breaks down passive investor topics, simplifying the philosophy and mindset while providing tactical, valuable information on how to be a passive investor.
In this episode, Travis discusses the parallels between the game of Monopoly and real-life real estate investing. He highlights a few key takeaways from this comparison:
“The key is to see investing as a game. You’re not going to win in every deal; you’re still going to have setbacks. But with enough emphasis and time, you can get to the point where you win the game.” —Travis Watts
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TRANSCRIPT
Travis Watts: Welcome back, Best Ever listeners. I'm your host, Travis Watts. You're listening to Passive Investor Tips, right here on Best Ever. Disclaimers as always, never financial advice; not telling you or anyone else what to do. With that top of mind, please seek licensed advice.
In today's episode we're talking about the game of Monopoly, the strategy of the wealthy... And I saw a post the other day online. I'm going to put that up on the screen for you if you're tuning in on YouTube. If not, I'll read to you what the post says. Basically, it's a snapshot of the Monopoly game board, and it says, "Imagine playing Monopoly and never buying any assets or investments that generate income. Imagine you just go around the board collecting $200, giving your money to the rich, and trying to stay out of jail. That is how most people live their life."
So what's interesting about the game of monopoly is the game starts in the same way that a lot of people get started in real estate, myself included, and that's with an active income and some savings you buy a single-family home and you put it on your board space. Then when you have a little bit of additional cash flow from the rental, and still your active income and further savings, it allows you to continue buying single family properties. And as we all know, you finally get to the point where you can put the red hotel on your game space. That can be used as a parallel for multifamily apartments, or self storage.
So the game is essentially won by owning commercial real estate and having diversified cash flow income streams. And I loved this game as a kid. I got to the point where nearly nobody could beat me except for my dad, who happened to be a real estate investor at the time, when I was not yet. Years later I started playing the game of monopoly in real life, and that really helped pave the foundation for my investing journey. And it teaches you throughout the game how to negotiate, how to barter occasionally, you get lucky and you might stumble across a foreclosure, or be able to pick up a distressed asset, things like that.
Some of you might be familiar, by the way, on a side note, with the board game called Cashflow 101 and Cashflow 202. This is a board game a lot like Monopoly, created by Robert and Kim Kiyosaki, just shortly released after the book Rich Dad, Poor Dad. And what's cool about cashflow is it really hones in on the reality of actually investing in properties, and in stocks, and owning options... And you start that game by being in what they refer to as the rat race, which is essentially having a profession, only having an active income source, living paycheck to paycheck, and then to win the game, you have to ultimately invest. And the name of the game, of course, is Cashflow, so they put a heavy emphasis on owning real estate and other assets that produce passive income. If you haven't checked it out, I highly recommend it. It's a great board game to teach your kids, to teach your friends, to teach your family. It's a game that my wife and I have bought for numerous friends and family along our journey.
Break: [00:04:43.07]
Travis Watts: In any case, the key is to see investing as a game. You're not going to win on every deal, you're still going to have challenges and setbacks in life and on the game board. It takes time, it takes patience, it takes dedication, but with enough emphasis and time, you can eventually get to the point where you win the game.
And a few key takeaways from all of this is that the game starts for a lot of us with earning an active income. And then number two, you must learn to save and invest. Number three, you focus on acquiring cash-flowing assets. Then number four, your passive income exceeds your lifestyle expenses, which is where the real fun begins; you can then begin to branch out, expand your means, be part of larger projects, and enjoy the true benefits of the wealthy, which to us is having freedom over your time; not having to rely on active income and work to make a living.
Something to think about for the week - by the way, I'm giving away a couple spreadsheets; if you want them, you can simply DM me on social media, use the platform of your choice... The first sheet is basically the financial statement that's mimicked from the cashflow 101 and 202 board game, which will show you your income, your expenses, your assets, your liabilities, your net worth, and also, I've added some additional features where you can track your historic, so you can see how far you're progressing along your own journey.
The second spreadsheets what I call the Financial Independence Calculator, really cool spreadsheet that you can plug in your current age, your anticipated retirement age, how much money you anticipate having invested, what percentage or ROI you expect to have each year, you can play with metrics like inflation, and it's really cool. Withdrawal amounts can be changed, and it's going to show you visually, through a graph, what would happen to your potential net worth and income over time.
So again, Facebook, Instagram, search @passiveinvestortips, LinkedIn and Bigger pockets, Travis Watts. I'd be happy to share those with you. So with that, I hope you've found some value in this episode. You're listening to Passive Investor tips, right here on Best Ever. I'm your host, Travis watts. Have a best ever week, everyone, and we'll see you on the next episode.
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