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Bryce Holdaway Blog post by Bryce Holdaway

Why is it so hard to build a passive income?

Today I want to talk about one of the reasons why I think it’s a little bit difficult to build a passive income for a lot of people. For me, it’s about setting the goal in the first place.

I’ve got a virtual mentor, Michael Hyatt, who talks about how to set goals. He talks about goals being in either the comfort zone, the discomfort zone or the delusion zone.

For example: I like to keep active; but if I was to set a goal that I want to play in professional sports, like a basketball or AFL football this time next year … this is in the delusion zone for me. Because, given my stage of life and how my body’s going, I probably wouldn’t be able to stand — well, I wouldn’t be able to stand — up to the rigours of professional sport. I could set the goal in that zone if I really wanted to; but, to be honest, I would be a bit delusional. Secondly, if I set the goal maybe to walking from my front door to my little box to pick up the mail and then walk back in — and that’s my idea of exercise — this is well and truly in the comfort zone. I’m not really stretching myself. But what if I was to say, “Hey look, I want to compete in half a marathon and I want to do it in 12 months’ time.” This would actually stretch me, it would actually put me into my discomfort zone; but with the right preparation, I think I could do it. So, I think it’s important to understand these three zones.

Because when it comes to building a passive income and setting a goal, we have to make sure that we set the goal in the discomfort zone.

We’ve written a book that says how to retire on $2,000 a week — for a lot of people that’s actually achievable, but it’s a bit of a stretch. So, for them, it’s actually in the discomfort zone, versus someone who says I want to be on $10,000 a week, but I’m currently on $2,000 a fortnight. To me, that’s probably a little bit delusional because we don’t have the resources to do that.

What you need to do is set the goal in the discomfort zone, but make the next step towards achievement of this goal in the comfort zone.

For example: if I wanted to run that half marathon, what I need to do is ask, “What’s my next step?”
My next step is probably to go on the internet and research the people who are like me — who have actually gone from not running half marathons to running marathons and find out what they did to prepare for this exercise. This is actually in my comfort zone — I can actually do this. When I’ve achieved this, the next thing will pop up — maybe reach out to a club who support these people —that’s, again, in the comfort zone.

So each incremental step is getting me towards that discomfort zone goal; but every step I take is in the comfort zone.

So, what has this got to do with building a property portfolio?

I think it’s exactly the same! A lot of people say. “I want to build this future goal for retirement” — and it seems overwhelming. But, what I’m saying, is just take the next step in the comfort zone. What does that look like for a property investor?

Well, number one: go to the library, get a book and read it. That’s pretty easy to do! That’s not going to stretch anyone, and it will show you exactly what someone’s actually done — so it will start the vision, it’ll build the wire; it’ll actually give you the vision you need to strive towards. Once you’ve done that, what’s the next step in the comfort zone? Well, maybe find a mentor. For some people, they can’t actually get a real mentor — so it might be a virtual mentor. Do some research online, and find someone who’s actually done what you want to do. Listen to what they say, or read what they have to say about it, so that you can start to build your knowledge base. There are so many podcasts out there. We’ve got one — The Property Couch — but there are others out there where people are very willing to share what they’ve done so that you can do what they’ve done to get you to the next step. Again, very much in the comfort zone. The next one would be to research an investment savvy mortgage broker who can help you see if it’s actually possible for you. Once you’ve researched someone, reach out to them and make an appointment. And then, once you’ve made an appointment, you can see that it’s possible.

The next thing is, you develop a plan and once you’ve developed the plan you follow the first step, which is actually in the plan. When you’ve done that, you review it, and then you implement the next step.

Suddenly you’ll realise that you’ve made these incremental steps towards your ultimate discomfort goal.

Before you know it, 20 years later you’ve actually enjoyed the benefits of compounding — the portfolio has grown as you thought it would! The textbook said that this is what you should do; but you’ve well and truly stretched yourself to strive for something bigger than you — but you’ve kept each incremental step in your comfort zone.

That is why I think why it’s so hard for people to build a passive income … they have this big, audacious goal and they’ve got no idea how they’re going to go about achieving it.

So, break it down. Make it very, very simple. Action has to be in the comfort zone.

And, before you know it, the 20 years will pass — whether you’ve done something or not.

So it’s clearly better that you take some action, and it gets started today so that you can achieve the passive income you’re looking to do through investing in property. But make sure you don’t make it scary.

My message is very, very clear: one of the reasons people don’t create a passive income is because they haven’t broken it down into small, incremental steps that are achievable in their comfort zone.

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