18 min
Ep. 80 - Overcoming the Emotional Traps of Sunk Cost Fallacy & Maximizing Your Property Investment Returns The HMO Property Show
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- Investing
This episode discusses the sunk cost fallacy and how it can negatively impact property investors. The sunk cost fallacy causes investors to continue investing in ventures that are no longer beneficial due to the resources already invested.
Common examples of how the sunk cost fallacy shows up for property investors are holding onto underperforming properties for too long or continually putting more money into a failing deal. Emotions like not wanting to admit a mistake or cut losses can keep investors stuck.
Understanding opportunity costs and alternative uses for resources is key to overcoming the sunk cost mindset. Selling an underperforming property may unlock equity that could be better used elsewhere. Cash flow should be prioritized over vanity metrics like portfolio size.
Breaking free involves making objective decisions based on future potential rather than past costs. Small strategic changes like selling one deal to buy better cash flowing assets can drastically improve an investor's position and get them closer to their goals. Knowing when to cut losses is an important skill.
A real world example is discussed of an investor with a $7M portfolio but negative cash flow of $35k annually. Selling some properties could fund buying cash flowing assets with no debt. This would transform their situation. Overcoming emotional blocks and the sunk cost fallacy is possible.
Viewers are encouraged to reach out for a portfolio review if stuck. A strategist can identify holdings holding them back and suggest tweaks. Understanding this concept can help maximize returns and avoid common psychological investing traps around past costs.
Keypoints
The sunk cost fallacy causes investors to continue investing in ventures that are no longer beneficial
Emotions like not wanting to admit a mistake keeps investors stuck in underperforming deals Understanding opportunity costs is key to overcoming sunk cost thinking Breaking free involves objective decisions based on future potential Small strategic changes can drastically improve an investor's position
Chapter markers:
0:00 Introduction 4:30 What is the sunk cost fallacy? 8:15 Emotional traps that keep investors stuck 12:30 Prioritizing cash flow and future potential 16:00 A real world example 19:30 Overcoming the mindset 23:00 Call to action
For more information, visit
For those that prefer to watch you can also catch us on YouTube. Want help with your investment strategy? Reach out to us for a free, no-obligation initial chat with our team and see how we can help you with your investment journey. Book Now Join the Perth HMO and NDIS High Cashflow Investment Properties Facebook Group.
The HMO Property Co
Website: www.thehmopropertyco.com
Instagram: @the_hmo_property_co
FaceBook: The HMO Property Co
LinkedIn: The HMO Property Co
YouTube: The HMO Property Co
TikTok: thehmopropertyco_
Spotify: The HMO Property Show
Apple Podcast: The HMO Property Show
Living Rooms - https://livingrooms.com.au/
Disclaimer
Nothing on this channel should be considered tax, financial, investment or any kind of advice. Everyone should do their own due diligence as only a professional diagnosis of your specific situation can determine which strategies are right for your situation. Our goal is to frequently feature edgy and actionable value, thought leadership and property/investment strategies.
This episode discusses the sunk cost fallacy and how it can negatively impact property investors. The sunk cost fallacy causes investors to continue investing in ventures that are no longer beneficial due to the resources already invested.
Common examples of how the sunk cost fallacy shows up for property investors are holding onto underperforming properties for too long or continually putting more money into a failing deal. Emotions like not wanting to admit a mistake or cut losses can keep investors stuck.
Understanding opportunity costs and alternative uses for resources is key to overcoming the sunk cost mindset. Selling an underperforming property may unlock equity that could be better used elsewhere. Cash flow should be prioritized over vanity metrics like portfolio size.
Breaking free involves making objective decisions based on future potential rather than past costs. Small strategic changes like selling one deal to buy better cash flowing assets can drastically improve an investor's position and get them closer to their goals. Knowing when to cut losses is an important skill.
A real world example is discussed of an investor with a $7M portfolio but negative cash flow of $35k annually. Selling some properties could fund buying cash flowing assets with no debt. This would transform their situation. Overcoming emotional blocks and the sunk cost fallacy is possible.
Viewers are encouraged to reach out for a portfolio review if stuck. A strategist can identify holdings holding them back and suggest tweaks. Understanding this concept can help maximize returns and avoid common psychological investing traps around past costs.
Keypoints
The sunk cost fallacy causes investors to continue investing in ventures that are no longer beneficial
Emotions like not wanting to admit a mistake keeps investors stuck in underperforming deals Understanding opportunity costs is key to overcoming sunk cost thinking Breaking free involves objective decisions based on future potential Small strategic changes can drastically improve an investor's position
Chapter markers:
0:00 Introduction 4:30 What is the sunk cost fallacy? 8:15 Emotional traps that keep investors stuck 12:30 Prioritizing cash flow and future potential 16:00 A real world example 19:30 Overcoming the mindset 23:00 Call to action
For more information, visit
For those that prefer to watch you can also catch us on YouTube. Want help with your investment strategy? Reach out to us for a free, no-obligation initial chat with our team and see how we can help you with your investment journey. Book Now Join the Perth HMO and NDIS High Cashflow Investment Properties Facebook Group.
The HMO Property Co
Website: www.thehmopropertyco.com
Instagram: @the_hmo_property_co
FaceBook: The HMO Property Co
LinkedIn: The HMO Property Co
YouTube: The HMO Property Co
TikTok: thehmopropertyco_
Spotify: The HMO Property Show
Apple Podcast: The HMO Property Show
Living Rooms - https://livingrooms.com.au/
Disclaimer
Nothing on this channel should be considered tax, financial, investment or any kind of advice. Everyone should do their own due diligence as only a professional diagnosis of your specific situation can determine which strategies are right for your situation. Our goal is to frequently feature edgy and actionable value, thought leadership and property/investment strategies.
18 min