I played the board game Monopoly with my Dad’s adopted kids over the Thanksgiving vacation.

It reminded me of some of the great lesson you can pick up about real estate by playing Monopoly.

The basic principle is that the one who owns most of the real estate almost always wins. That means that to win you have to aggressively buy real estate from the very start of the game. You’ve got to buy property whenever you have the opportunity to do so regardless of how much cash you have on hand.

This general principle is also true of REAL real estate investing…to the extent that the investor is capable of raising capital as needed. Also, the investor must be able to produce enough cash flow to cover the running expenses for those properties and cover the loan payment(s).

It is also instructive to think about the flow of cash during the game. The general flow of cash is from one individual to another to cover one sort of rent or another. The individual accumulating the cash then is able to invest in further improvements on their property (buying houses and hotels). The more that invested in improvements, the greater the cash flow from that property.

This is also true of REAL real estate in general. The equivalent for rent to real estate investors is the rent paid on borrowed money from the bank. If you are overleveraged, you may not be able to cover your debt service. However, when you own properties free and clear, you stop paying rent to the banks. Instead, you only collect rent from your tenants.

If you get the opportunity, I’d encourage you to play a game of Monopoly and experience these principles for yourself.