(Spoilers below, beware!)
Rules and laws of real estate zoning and inheritance/estate law can shift, but the fundamentals of real estate are essentially timeless.
Looking no further than HBO’s Game of Thrones; here are the top 9 lessons about real estate that we can learn from the denizens of Westeros.
1. Choose your REALTOR® wisely because your partnerships will be tested (and often).
Partnerships are tricky things, and should never be entered into without 100%, unfailing trust.
Just ask Ned Stark after Littlefinger revealed his true colors. Or Robb and Catelyn Stark at Edmure’s wedding, hosted by the Freys. For better results, Jon found someone he can trust implicitly in Ser Davos, in Sam, in Tormund. Of course, he too learned some hard lessons by trusting Ser Allister Thorne to be First Ranger. But note that the lesson he took to heart wasn’t “trust no one” after he was betrayed; it was to take the true measure of his future partners and only partner with honest, loyal people.
Buyers and sellers should take this to heart too and connect with a real estate agent who they trust!
2. Debt can crush the rich, too.
When you spend outside your means, bad things happen. Excessive debt can ruin families and can undo all of the legacy that a family has built.
Robert Baratheon overspent, and it put him under the power of people who didn’t have his best interests at heart. His successors are still trying to clean up the financial mess of the debts he left behind. And then there’s Jorah Mormont, who accrued so much debt that he turned to crime to try and pay it down.
We have learned over time that it is best to live on a fraction of your income and invest the rest. If you spend more than you earn, you’ll find yourself at the mercy of your lender.
3. Leverage other people’s money and time for your gains.
One of the greatest lessons about real estate is that you can put other people’s money and time to work toward your goals and wealth. Leveraging other people’s money involves either borrowing money or raising money through partnerships. Real estate investors tend to understand this lesson implicitly.
In Westeros, Cersei Lannister took advantage of both sides of leverage in a single maneuver. She arranged a loan from the Iron Bank, specifically to hire 20,000 mercenaries in the Golden Company. An army to defeat her enemies and consolidate her power.
Leverage is one financial lesson you should learn sooner rather than later, or you’ll still be relying on your own sweat and your own savings in 20 years from now, rather than leveraging others’ money and time.
4. Calculate risk, rather than avoiding it.
Life is inherently risky and you can’t run from risk your entire life. But, you can manage it, calculate it, and choose which risks are worth taking and which are better left alone.
Look no further than those who choose to rent (rather than own) real estate. History has shown that not investing is far riskier, in the long term, than investing.
Jaime Lannister calculated risk when he sent Edmure Tully into Riverrun to take command and surrender the castle. Jaime had a choice: an extended siege that he couldn’t afford (in other words, guaranteed failure), or take a risk on Edmure.
5. Think like the bank, because the bank wins in the end.
Investing in real estate is one of the best investments one can make – especially when referring to owning your own property free and clear.
Monarchs and dynasties came and went in Westeros. The Iron Bank outlived them all. They don’t play at politics or war or trying to impress anyone with fancy clothes or titles. Instead they make investments and live off of the income of those investments. It’s an easier life than running around trying to conquer the world. And a lot less dangerous to boot.
Among the most important lessons about real estate is learn how to build passive income (through real estate investing). You can put your feet up while everyone else is working!
6. Diversify your income streams.
Passive income is great, but if you rely only on a single source, you’re vulnerable to that source disappearing.
Tywin Lannister saw the writing on the wall when the family’s gold mines ran empty. So, he arranged marriages with the wealthiest family he could find, the Tyrells, to bolster the crown’s resources.
If you rely on one property to generate all of your rental income, or one stock to pay all your dividends, you risk complete financial collapse if that one investment suffers.
7. …And even when people do inherit property and money, they usually squander it.
Did you know that 70% of wealthy families see the wealth exhausted by the second generation? By the third generation, 90% of originally wealthy families are no longer wealthy.
Robb Stark lost his family’s wealth and property. Jorah Mormont did the same, blowing through his family money and racking up terrible debts.
The same is true of lottery winners; 70% of major lottery winners are broke within three years. Save and invest in diverse assets that produce income (like rental properties) if you want to build sustainable wealth.
8. Starting rich helps, but it isn’t everything.
It definitely helps to begin life with the advantages of a wealthy family. For starters, you have the opportunity for higher education, which prepares you to create your own success. Beyond education, family connections can make a world of difference. And then there’s the little matter of access to funding when you need it.
How far would Tyrion have gotten in life without his education, or his access to money? Still, where you start isn’t always where you stay. Tyrion was sold as a slave, after all. And look at poor Sam Tarly: firstborn son of a wealthy landowner, whose father disowned him and sent him packing for the ends of the earth. But, in both of those cases, excellent educations eventually led to their recovery, their ability to stand back up after a fall from grace.
9. Hard work yields results (especially when that work is put toward networking).
There’s no substitute for hard work, no shortcuts to lasting success.
Jon wasn’t made Lord Commander because he was the most popular guy in the Watch; he earned grudging respect because he worked harder than everyone else and kept a cool head in a crisis. Even Littlefinger, who married into real estate, didn’t take a shortcut – he spent years working harder, networking more, learning and knowing more than anyone around him.
Success takes work. Nor does it last, regardless of how much wealth you’ve already attained, if you don’t continually work at maintaining and improving it. Life, like Game of Thrones, is unpredictable, but there are still firm rules to success. Someone with connections and education can go far in real estate investing and in life, if they carefully manage their finances and their partnerships.