How Loss Aversion Affects Real Estate Investing - YouTube

Let's talk about loss aversion for a moment. The way our minds work. We

all have this in common because we're all essentially at the end of the day

wired in the same way right?

So with loss aversion, people are far more

motivated by a desire to protect what they have than to gain something new but

what is the something new? We don't know because it's a dog that doesn't bark.

We don't know for example that if we were to take another path or do another

action we don't know what it might lead to we don't know what opportunity it

could have brought I mean how many of you are married? How many single? I mean

you're not sure yeah most people eventually get married

except for me but I want to so be on the lookout for me will you?

okay I'm where I'm willing I'm willing to do it okay, I'm willing to do it. I'll

give in. I'm kidding about that, I think it's a great idea, okay so so so here's

the thing. How many of you were kind of surprised the way you met your spouse? So

but see like are there so many roads that could have been different where you

might have never met right? I mean you know like a chance you know every time

something happens maybe especially something that you're frustrated with

right? Like I will use the example of the airplane right you know so your flight

is canceled and now you got our rework it but you get on another flight and you

meet Mr. Right. That wouldn't have happened right? It's a dog

that didn't bark but just happened by accident.

Synchronicity right? luck luck is definitely I think I think it exists

okay and I'd rather be lucky than good any day,

because I always say right but you know when when when you miss that plane or

you know or the flight is canceled you're upset because you lost something

right you lost what you thought you had, "oh I got the flight booked everything

will be fine I'll just get there bla bla bla" but then you gain something else

that you didn't know was available until you lost something.

I just really think this dog that didn't bark concept is so important and the way

we treat loss aversion is just hugely important. I mean nobody ever says,

How many of you own income property in the room? Okay that's a good

75% of the room right? How many of you had the last time rents

were due how many of you had the tenant pay the rent? Okay well okay so they

shaved some off right over some repair issue or something yeah okay all right

so pretty much every hand went up right Well how many of you had a celebration

when you got the rent? Nobody, you just expected it right but if

you didn't get it you would be mad right okay so it's just a funny way that we

treat things it's a way our psychology works you have $10,000 and you lose it

you will be upset but if you didn't gain $10,000 you weren't upset because it's a

dog that didn't bark you didn't know was there okay so it's very important to

understand our own psychology if you look at every really really successful

person in the world they were they were getting opportunity they didn't care as

much about what they might have lost as the risk they were willing to take to go

and gain something and there's an old saying I say it all the time, "Nobody ever

got rich saving money." Nobody ever got rich saving money.

That's certainly true right so if we look at the world like let's protect

what we have let's save save save we're gonna live a

very meager existence okay rather than looking at it with opportunity you know

what could I gain? What could I gain? And mostly we only know what we could gain?

By looking at someone else and what they've done okay so the really

really highly highly successful people though in the world they don't even look

at someone else they completely blaze a new path there's that that old saying

it's great, "Don't go where the path may lead, make your own path," or something

like that right I don't I just wrote that huh

they're like you know you look at the late Steve Jobs right it's a good

example because he thought of things that nobody had really considered or at

least not implement okay there's a who's that I think it's a George Bernard Shaw

quote he says, "Some see things as they are and

say why? I dream of things that never were and say why not?" Our minds do not

work that way. We've got to train our mind to work that way. So one of the action items is every

month when you get your rent on your properties, you celebrate. What do you

think about this idea right okay because you don't pay attention to that most of

the time right when things are working it's just expected that's how it should all

work right but that that's a dog that didn't bark. There was no problem

everything worked okay good for you right so we will we will do more to

protect what we have then go and gain something else.