Real Estate Ownership and Probability

Investments involve uncertain outcomes. Insight into this sort of risk can be gained by thinking of the purchase of an investment as the fee paid to enter a game of chance. The classic example is a coin toss. You pay a fee and get a return if it turns up heads. A number of demonstrations of this phenomenon exist on the web. Dice may be viewed as a more complex but similar situation. A die is just a square coin with mass added to the middle to permit it to land on four more sides. For simplicity we will deal only with six sided dice, as on the left below. We then modify it to create what is technically known as a "frustum", as on the right, it to illustrate the situation in a real estate investment setting.