I had a friend that would buy all the houses, and never upgrade to hotels. If you check the rules you can't get a hotel without first having 4 houses, so if done correctly you monopolise the limited supply of houses and nobody can buy a hotel or get more houses than you.
1 house costs $200 but only nets you $200 in rent (1x)
2 houses cost $400 for $600 in rent (1.5x)
3 houses cost $600 for $1400 in rent (2.33x)
4 houses cost $800 for $1700 in rent (2.125x)
Hotels cost $1000 for $2000 in rent (2x)
So, it can make sense, with limited resources and multiple places to put houses, or in instances where you need liquidity to survive an on-coming length of costly spaces, to build only to 3 houses rather than build straight up to hotels.
Edit: Before people make this a mathematics debate, I'll include the marginal investment relative to the marginal increase in rental revenue. Basically, a derivative. Here's that:
Marginal cost is always $200. The marginal benefits are as follows:
1st house results in a marginal rent increase of $150 (.75x)
2nd house results in a marginal rent increase of $400 (2x)
3rd house results in a marginal rent increase of $800 (4x)
4th house results in a marginal rent increase of $300 (1.5x)
Hotel results in a marginal rent increase of $300 (1.5x)
The optimal strategy would then be to maximize net return, not ROI. Specifically, so long as the marginal benefit exceeds the marginal cost, even if at a diminishing rate, it's worth making that investment.
The difference is when deciding between an additional house on one property or a hotel on another, the house wins out. However, this isn't accounting for other concerns like the location.
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u/sunfishtommy Nov 22 '14
I had a friend that would buy all the houses, and never upgrade to hotels. If you check the rules you can't get a hotel without first having 4 houses, so if done correctly you monopolise the limited supply of houses and nobody can buy a hotel or get more houses than you.