The equity in it helped me secure two further investment properties with next to no cash deposit. There were plenty of other students in my class with access to more cash (mostly from their parents) and with more income, but they rented. It wasn’t easy, but I bought a two-bedroom apartment and rented out the second room to cover the mortgage, all without requiring a guarantor. I had two more years of university remaining before I’d get any real cash. At the time I went for the loan, I was only employed in the summer holidays. I’d scraped together my deposit over five years of part-time work and stingy living at my mum’s house. I bought my first place for $103,000 with a $75,000 loan. The good news is that it doesn’t really matter in the long run. The amount they have saved, their equity, their spending commitments and their income will be different, therefore the amount of money they can access to purchase a property will be different. This is where Person A differs from Person B. The initial cost of the property you can buy is limited by those two items: how much deposit you have, and how big a loan you can get. And unless you have 100% of the purchase cost and associated fees in cash, you will likely need a loan to make the purchase.

Unless you are pursuing some form of sponsorship, or you have a heap of equity in some other form, you will need to contribute some cash as a deposit when you buy a property.

In terms of property investment, this is significant. Where you were born and your upbringing has an effect on your life. This is blatantly nothing like the human experience.Īs Warren Buffett puts it, there’s an ovarian lottery. The rules even specify the denominations each person should receive. The Bank gives every player $1,500 at the beginning of the game. Here are six ways in which Monopoly misses the mark… However, it’s best not to fall into the trap of thinking Monopoly can teach you everything you need to know about property investing. I know you’re not silly enough to think you’ll get $200 every time you go around the block, and your kids probably aren’t that silly either… at least I hope not.

It’s hardly surprising that a board game does not fully capture the intricacies and nuances of something as complex as property investment. In the interest of balance, I’m following up with this post about the ways in which Monopoly is NOT like real life property investing. In last week’s post, I expounded on my theories about how Monopoly (the board game) is like real life property investing.

Monopoly mortgage rules