Cashflow

Have you ever played the game, CASHFLOW?  It’s a game created by Robert Kiyosaki, the author of Rich Dad, Poor Dad.  The book and the game teaches you how to manage your money as well as to build wealth.

I host a game every Friday evening to help teach people the basics of financial management and wealth building.  We learn and practice how to recognize a “good” deal and learn how to buy or partner up with our fellow players in order to take advantage of “positive cash flow”.  It is significantly more than that, but I don’t want to spend time explaining.  You’ll just have to come to my event or find a group of players and play it.

So, why am I bringing this up?

The place we hold our event is being utilized as “office space rentals” or  “co-working space” and the person who started it subleases space to upstart tech-type businesses.  The idea is to give these new businesses a location where they can create and build their ideas into large successful businesses.

Now I don’t know the numbers, but this person funded his idea with a 401k in hopes that  enough “renters” would take a liking to the place and cover the rent so he would not have to “self-fund” his idea.  Well that hasn’t happened, he’s run out of funds and is now on the verge of losing the space.  He has asked everyone to pay more in order to keep the location open.

Now I applaud the guy and what he is trying to do, because there is nothing like it in San Diego County and it’s needed,  but if this was an opportunity in the game CASHFLOW would it be a good deal? Possibly.  I don’t know if he figured out his ROI if it all worked out, but from what I understood, he didn’t want to “profit” from it, he just wanted to help new techs get started somehow, so he charged a small ‘rental’ fee.

Let’s look at it from the perspective of a Cashflow player…

He had a lump of cash, took a negative cashflow and hoped he could get enough people to rent spaces to “break-even” or reach a zero cashflow by a certain time.  Although he charged a small rental fee, he is now out of funds and about to lose his space and is asking the renters (me) to increase their rent payments to twice or three-times the amount they are currently paying until there are enough renters to break-even, at which point he could lower the rental fees.  In other words, he is asking renters to increase their expenses in order for them to keep the space open, and some of them may have not yet seen an increase in income.  Thus, their cashflows will then be less than usual. And, there are no guarantees that there will be enough people wanting to lease space within the time frame needed.

If you are a player, do you pay the higher rent and increase your expenses?

Maybe our friend should have played CASHFLOW with us more often?

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Cashflow Game Board

 

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~ by Llew Quinol on February 22, 2016.

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