Learn To Be Rich

Learn To Be Rich is more than just a game, and sophisticated economic model. It’s a teaching tool. In fact, there is much research that supports the idea that games are among the best teaching tools. If a student can explore concepts in a hands-on manner, the lessons are learned on a fundamentally deeper level.

This is an important area on which to focus. In fact, I believe this is a topic that should be explored periodically throughout the game’s development.

One way to increase immersion is to enhance the player’s identification with the game. Video games made a revolutionary move in this regard with the introduction of the 1st person 3d perspective. While that technique isn’t pertinent to Learn To Be Rich, there are many other methods we could employ.

A thought that has been going through my mind as I play is that I compare the game timeline to my personal financial goals. I find myself asking questions as I play, such as:

• How long does it take me to acquire my first property in the game?
• Is that similar to my real life experience?
• How long to acquire my 10th property in the game?
• What issues do I have to face in the game to get to that level?
• What can I learn from this exercise?
• Should I change my plan of attack in real life?

So, the question (or meta-question rather) I have now is, how do we enhance that learning and reflective experience?

The first idea that has come to me is to simply set a couple variables at the beginning when starting a new game: Starting date & Starting Player Age.

My theory is that to incorporate these concepts would allow for something more tangible and personal than simply the turn number. This would enable players to input their own age, for instance. I believe that seeing the age of their in-game character displayed would greatly increase the tendency to compare the game with “real life”.

Additionally, I like turn number, and would like to see that preserved, perhaps next to or underneath the current game date. From a longterm strategy point of view, seeing: Turn: 1,545 of 2,444 Turns (that’s a working lifetime) as valuable as mentally I estimate that’s a little more than halfway through the game.

Starting date might be less useful, actually. My thinking was that if a player had been investing in real estate for the past 3 years, then they could have the game start in 2005 and so more easily compare in game performance to performance in real life.

B.

I just recorded a video that I am sure will be extremely boring for most of you, but it demonstrates exactly how I write a blog post and article.

Here is the video:

Until my next post,

James

When investing in real estate, you might encounter negative cash flow in your market. Why?

When the mortgage payments you have on a property for the amount you are putting down are higher than what you could collect for rent on the property, you have negative cash flow.

Some people include taxes, insurance, management, maintenance and other expenses for their property when calculating their cash flow, but for the sake of this discussion we will use a comparison of rent and mortgage payment.

So, what can you do when you find yourself in a real estate market, like the one we have here in Colorado, where the rents are not nearly enough to cover the mortgage payment on a reasonably low sized down payment?

Well, one solution is to offer the house on a rent-to-own.

By finding someone who is willing to purchase the house and not rent it, you can have them pay you an amount that is more like a mortgage payment and less like a rent amount.

They would also be responsible for taxes, insurance, maintenance and any other housing related costs like HOA.

This, combined with purchasing the property below market, can give you a positive cash flow where you would have a negative cash flow in that market with a straight rental.

For example, you may buy a house for $180,000 (at a $20,000 discount) with an interest rate of 6.5% and sell the house to a tenant-buyer on a rent-to-own for $200,000 (its actual full market value) with a payment that is the equivalent of a 7.5% interest rate.

You now are collecting payments on $200,000 at 7.5% when you are only paying payments on $180,000 at 6.5%.

Is charging someone who can not get a traditional loan one percentage point higher than the rate someone like you with good credit can get unfair? No, I think one percent is actually a good difference for them. Check the rates for good credit and poor credit at your lender to see what a fair difference would be in the current credit market.

Take a few minutes, on your own, to calculate out what the payments would be for buying a median priced home in your market at a 10% discount and selling it for full price on a rent-to-own with a 1% difference in interest rate and see how that changes the cash flow on that property.

Until my next post,

James