Ready to Play Monopoly?

Here's the analogy: Monopoly and the game of real estate. Pretty simple on the face of it: buy properties and collect rent when people land on them. Over time, buy houses to collect more rent, then turn the properties into hotels or apartment buildings to maximize rents.

But the smart player or investor wants to buy where most people land (or want to live). Not the glitziest or most expensive neighborhoods, only the most popular...think Orange on the game board.

The cheapest properties are often in the most challenging areas, with an abundance of vacant or run-down buildings, high credit risks and high crime rate...think Baltic Ave. Money can be made but it's not for the faint of heart.

The most desirable neighborhoods for most players and investors are the middle markets, where lots of people want to live because they are now further from the Purples but can't quite get to the Greens. So in the game of Monopoly, the odds are greatest that players will land in the middle, on Orange or Red...in the game of real estate the same applies; only people coming to those properties are renters.

What this all means for investors interested in owning rental properties is that while purchase prices may be higher in nicer neighborhoods, the rents are higher and the demand from better qualified renters is greater. So the best deal is not always where it's cheapest. You can buy low and rent low (Purple) or pay more and charge more and make more money (Orange and Red).

And don't forget the possibility of appreciation...but that is for another day.

Contact me when you are ready to play in Metro Washington, DC, one of the most stable real estate markets in the country.