Hey everyone, and welcome to Passive Real Estate Investing. I’m Melissa Nash, your guest host jumping in for now. Let’s dive in. Picture this, you’re 12 years old sitting around the kitchen table on a rainy Saturday afternoon. The monopoly board is spread out in front of you, and you’ve got that satisfying stack of colorful money in your hands. Your sister just landed on Boardwalk again and she’s practically broke from paying rent to your dad, who somehow owns half of the board. Sound familiar? If you grew up before iPads ruled the world, chances are you spent countless hours locked in epic monopoly battles with family or friends. But here’s what I realized recently that completely blew my mind. Most of us learned the wrong lessons from that game, and worse, we’re still making the same mistake with our real money today. How many of you remember your monopoly strategy as a kid?
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I bet most of you were like me, obsessed with hoarding cash. I’d sit there with my neat little piles of five, hundreds and hundreds feeling rich and secure. Every roll of the dice felt like a gamble because laning on someone else’s property meant watching my precious cash pile shrink. But then there was always that one player, maybe it was your dad, your older brother, or that annoying strategic friend who took a completely different approach while you were there clutching your cash. They were spending every dollar they saved on properties, Baltic Avenue, they bought it, Oriental Avenue. There’s too, even those cheap properties that nobody wanted. At first you probably thought they were crazy. Why are you spending all your money? But then something interesting started happening. Every few turns someone would land on one of their properties and another person, and then suddenly that player who had wasted all of their money buying up the board, was collecting rent from everyone else.
They weren’t stressed about rolling the dice anymore. They were hoping you would roll because every move you made was potentially putting money in their pocket. So looking back on that one thing that hit me really hard, monopoly isn’t really about hoarding money. It’s about creating systems that make you money so that you can sleep for the rest of the game. Now, here’s where it gets fascinating and maybe a little uncomfortable for some of you. Most of us are playing real life with the exact same cash hoarding strategy that loses in monopoly. So think about it. We save our money in checking accounts, earning 0.01% interest. We are terrified to risk our money on investments. We feel rich when we see a big number in our savings account, and every financial decision feels like a gamble. Meanwhile, there’s a smaller group of people following the Monopoly winners playbook.
They’re buying assets that generate passive income. They’re not hoarding cash, they’re putting it to work. They’re building systems that make money whether they are working or not. The wealthy aren’t just people who make more money. They’re people who figured out how to make their money work for them, just like owning the boardwalk or Park Place. So here’s the question that is going to drive today’s entire conversation. Like I said at the beginning, what if everything you’ve been taught about money is actually the losing strategy from Monopoly? What if being financially responsible, saving every penny and avoiding all risk is actually keeping you broke? What if the real path to wealth isn’t about how much you earn, but about how many properties you can acquire that pay you rent? Of course, I’m gonna talk about this today. So we are going to break down exactly how the monopoly mindset applies to real life and why most people are stuck in the cash hoarding trap.
And most importantly, how you can start building your own passive income empire one property at a time. Because here’s the truth that nobody wants to tell you, the game is already being played. The question is, are you going to keep hoarding your play money or are you going to start buying up the board? So let’s start with the most dangerous financial advice. Most of us grew up believing debt is bad. Pay off everything, never borrow money. Now, all of you, Dave Ramsey folks out there, don’t turn off the podcast just yet. Here’s what’s interesting. Dave Ramsey himself is a real estate investor. He absolutely understands there’s good debt and bad debt, but his clientele, their consumers drowning in credit card debt and car payments. So he’s talking about debt through that lens. And for those people that advice is absolutely correct. When you take out a credit card and don’t pay it off every month, you’re watching those balances build month after month because of compounding interest.
That is bad debt. When you’re living above your means, buying boats or high-end cars on credit that you can’t afford, that is bad debt. Anything that takes money out of your pocket every month without giving you anything in return, bad debt. But here’s what the monopoly winners have figured out that most people never learn. The wealthy use good debt like a superpower. Now, throughout history in the United States, the wealthiest people have owned real estate, not because they’re paying cash for everything, but because they’ve mastered the art of leverage. So let me break it down. In a real example, I recently helped a client buy a turnkey property in Indianapolis. Fantastic market, by the way. We love the Midwest. Historically, you can go there really affordably, and you can buy a property that is turnkey, meaning it is already renovated with a local property manager in place.
So this property was $150,000. Now, if you were gonna buy that property, are you putting $150,000 down in cash to buy this property? No, absolutely not. Now, you’re gonna want an investment friendly lender, and yes, I have those. So you’ve got questions about that. Click the link in the show notes below. But anyways, you are going to put 20% down with that lender, correct? So that’s $30,000. Now the lender funds the other 80% because you’ve done your homework and shown them the numbers, and you’re gonna say, here’s the average rent in this area. If you give me this loan, I am going to profit X. Every month, the lender looks at your deal and says, awesome, thanks for bringing us this opportunity. Here’s your 80% and let’s close on this property. Now, here’s the key question. Who owns the property? You do, it’s titled and deeded to you or your LLC.
You control it, you are responsible for it, and you get all the benefits from it. The bank just holds the note, essentially an IOU, that you’ll pay them back over 30 years. But here’s where it gets really beautiful, that interest, you’re paying the bank tax deductible. Every monthly payment you make includes both principal pay down and interest. So every month your debt is shrinking. Now, going back to that $150,000 Indianapolis property, you are paying down about $200 a month in principle. And here’s the real kicker. If you’ve done your math right, your tenant is covering that mortgage payment. So you’re literally paying down your debt while you build equity. Now, we all know that real estate generally appreciates over time, especially in high demand areas where people are moving in, not leaving. And if you think about your own home, you’re probably sitting on significant equity right now that equity is what I call lazy couch potato money.
It’s just sitting there doing nothing. So let’s say you have about a hundred thousand dollars in equity, you can tap into that through a heloc, a home equity line of credit. You could also do a cash out refinance. Those aren’t as popular these days because so many people have locked in really low interest rates when the interest rates were lower. But if you do have an interest rate that’s a little bit higher, you could also do a cash out refinance. And here’s the thing, you can do this without paying taxes on that money because debt isn’t taxable income and you only pay interest on what you actually use. So let’s say you take out a hundred thousand dollars heloc, but you only need to use about $20,000 of it for a down payment on a rental property. So you are only paying interest on that 20,000.
So if that new property gives you a, let’s say, 10% return after expenses, you’re going to use that cash flow to pay down the HELOC aggressively. And when I say aggressively, I want you to take the entire cash flow and just pay down your heloc, because every month you’re gonna be paying less and less because the balance is shrinking if you pay more than just the interest. So eventually you’re going to pay off the HELOC completely, and now that cashflow is pure profit, maybe that $300 a month that you’re gonna have in passive income is going to help you pay your utility bills. Or maybe that $300 in passive income will make your car payment. Regardless, that $300 a month in passive income is truly passive. This property in Indianapolis, for example, was already renovated. There’s a local property manager managing it. You just get to make sure that the mortgage gets paid every month, and obviously you’re gonna automate that.
So the cool thing about all of this is that lazy equity money basically got you a free property. You didn’t take any of your hard earned money that you earned. You didn’t take money, what we call trading time for dollars. It was just equity in your property. So now that is pure profit, $300 a month, plus you can use that HELOC to buy more properties. You only use 20,000 of that a hundred thousand plus you paid off that 20,000 aggressively. So it’s like a line of credit. You can use that HELOC again for the next property, and the next property, rinse and repeat. This is how you get started or scale a portfolio if you think you don’t have the money to do it. If that doesn’t blow your mind, maybe the next part will. This is how ultra wealthy avoid paying taxes. You’ve seen it all over the news.
There are, you know, billionaires and all these wealthy millionaire people that own lots of investments and lots of real estate and they don’t pay taxes. And you’re like, I don’t understand. Why is the middle class stuck paying everybody else’s taxes? Because most millionaires or billionaires don’t pay themselves traditional salaries. They pay themselves through debt. So if we use the example that I mentioned before, so they’re going to borrow money against their appreciating assets, and they’re gonna live off of that money since it’s debt, not income, it’s not taxable. They’re essentially using their assets as their own personal bank. This is the monopoly strategy. In real life, your properties are generating rent. That is the cash flow they’re appreciating in value. That is the equity and giving you access to tax free money. That is the debt, and you can use it to buy more properties to fund your lifestyle.
Now, the difference between the monopoly winners and losers isn’t just strategy. It’s mindset. The cash hoarder see debt as scary and dangerous. The property buyers see debt as a tool and a lever that amplifies their returns. Now, when you put that $30,000 down on that $150,000 property that might appreciate, you know, let’s say three to 4% a year, you are not just making three to 4% on your money, you are making 15% because you only put down 20%. That is the power of leverage. So you guys, I can literally sit here talking about real estate strategies all day long, but here’s what I want you to do instead. And Warren Buffet said it best, someone sitting in the shade today because someone planted a tree long ago. You guys, that tree planting moment, it starts with understanding the game you’re actually playing. So here’s your homework.
Go dig out that old monopoly game from your closet. If you don’t have one, grab one the next time you’re at the store. And this weekend, I want you to play the game with your family and friends. And here’s the challenge. While you’re playing, I want you to think about some of these things. And you know it would be extra cool if you’re playing with kids, by the way. You could explain to everyone at the table what you learned today about good debt versus bad debt. Use this as a teaching moment and tell them why the winner of Monopoly isn’t the person with the most cash at the start. It’s the person collecting the most rent at the end. Now, you can use this as a teaching moment, or you could just beat them all and then explain it to them at the end. But either way, I want you to think about it and play the game like the wealthy do in real life.
Don’t hoard cash and buy every property you can afford. And I want you to watch how the game changes when you focus on building your passive income empire instead of protecting your pile of money. And remember, most of us are playing the money game with the wrong strategy. We’re sitting there clutching our cash while the real players are busy buying up the board. Don’t be this person who learns this lesson too late. And by the way, I did not start building my real estate portfolio until I was in my mid forties, and I’m still building it. I’m still growing it. It is not too late. The game is happening whether you play or not. The question is, are you going to keep hoarding your play money or are you going to start building your empire? So I want you to go ahead and check out the show notes below. We’ve got some special resources for you to help you get started on your real estate journey. Thank you again for listening today, and I hope you have fun playing Monopoly and I will see you on the next one.
Thank you, Melissa, for today’s episode. If you have any questions or topic suggestions, please do submit those via our NORADA contact form. Please remember to subscribe. We put out content every week. Again, thanks for listening. We’ll see you in the next episode.
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