Its funny to watch the game as its a microcosm of what must have happened in the early days of the Celtic Tiger. People get money that they haven't had before and they think "Ooh, I'll buy that!". They buy so much they overstretch their cash fund and are not prepared when some catastrophe (Chance card) strikes. Then they are forced to negotiate with other players or the bank to free up cash by selling or mortgaging some properties.
I tried buying tactically, thinking that if I bought one property in each coloured region then any property tycoon would be forced to pay an exorbitant price to achieve their own goals. I was right at the start and in some cases managed to double my money within a few minutes. I even managed to trade Shrewsbury road and Crumlin for somewhere like Nassau St.
My luck ran out; In a way I was the agent of my own destruction. I sold the LAK Busaras for a tidy profit, enabling her to charge 200 every time anyone landed on a transport hub. Then she dominated one side of the board in the yellow group and was able to charge 800 if you landed on any of her properties. What I realised was that by being out of the "property game". I could not earn rents and so was subject to exorbitant rents from others plus a super tax ( that I hit twice).
Whats interesting is how this must have parallelled the early years of the property boom. People sold their properties when they had jumped in value, only to find that the 2 bedroom semi-D they bought for 80k 10 years ago (while doubling in value) did not provide them enough cash to move or trade up. They probably decided to mortgage at say 5-7%, wait a little while for the property to appreciate, then sell on and restart the whole process. With that logic its easy to see how we got caught up in the boom, especially when we had access to cheap, seemingly unlimited money. It actually came to a point where people were buying property to ensure that they could afford future property via house price appreciation. No wonder we are where we are now!
The difference with Monopoly and real life is that Monopoly ends with one ultimate winner, while life keeps running, elevating new winners, crushing them as losers and creating new winners. Alan Greenspan called it "creative destruction". Capital is released from unprofitable projects / uses and is re-allocated to more deserving causes. (he is no longer my hero, hindsight is 20-20)
One of the other lessons the game gave us was that being property rich but cash short is no good; It wiped out JBoy's empire and made short work of Eliza once LAK had set up her boardwalk! Once she wiped me out I was left (aptly enough) with the below:
7 bucks and the water works! The LAK wasn't immune btw; she drew a chance card that told her she'd have to repair each of her properties @ 30 per house and 50 per hotel. It totalled over 1000!. She was able to mortgage most of her properties and quickly recovered, however the bank was sympathetic and extended her facilities. If we contrast that with the current situation where landlords need cash to cover rent shortfalls and repair costs and are struggling to get lenient terms from the banks we see the real difference between the game and real life; The bank has a symmetric policy of valuation in monoply and a non-symmetric, time dependent policy in real life, i.e. During the boom they will happily loan you money and be flexible about credit arrangements but in bust they will demand the pound of flesh. (Of course in real life everyone is in trouble, rather than just one customer; something the riskmetric models say shouldn't happen that often!)
So what lessons have I learnt overall?
- In monopoly while you can speculate on large returns for single properties its only helpful to do so once or twice. The main thrust of your strategy should be investment with optimised pay offs
- Balance the payoffs. The most and least expensive properties are not necessarily the best.
- You get doubles far more often than you would think!
- Putting all your money in properties will not save you when the tax man or building assessor (repairs) comes
- .Properties are no good if they are mortgaged.
Since I explained my own failure above I thought I'd comment on the LAK's success
- First thing she did was buy that transport hubs. These were a cash cow!
- With the cash above she was able to buy properties and very rapidly add houses.
- Luck! I don't mean this grudgingly but she didn't get hit with large taxes and had no real bad luck till she got hit with house repairs (however that was very bad. 1000; she had to mortgage nearly everything!
- She chose her houses well, Not too expensive to build but they brought in good rent. At full force enough to wipe out any cash and property reserves and force a fire sale.