When I had my first 12-unit apartment building under contract, I was overwhelmed. This was a HUGE building to me, and I thought of the 134 things that could go wrong if I moved forward.
Now, an interesting thing happened. In the 3rd week after ratification of the contract, after a site visit, talking with investors, lenders, inspectors, and reviewing the financials, I became more and more comfortable with the idea of closing on this building.
In fact, I suddenly hoped the building was bigger! I found out later that it’s about as much work to purchase a building twice the size (or even larger) as it is a smaller building. In addition, the closing costs were actually less, and I could get a non-recourse loan and make more money.
As I reflect on this phenomenon of becoming more comfortable with something that was very scary just a few weeks before, I concluded that our comfort zones are proportional to our beliefs.
As I got more and more into the deal, my belief that I could purchase this building increased, and this expanded my comfort zone.
Now the question is: Is there anything I could do to proactively expand my comfort zone all the time and intentionally, rather than waiting on a circumstance to force me to?
I think the answer is “YES.” You can expand your comfort zone by exercising it like a muscle. The more you exercise it, the more it expands.
Here are 3 specific things you can do to exercise your comfort zone muscle.
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3 Practical Ways to Expand Your Comfort Zone (So You Can Do More Deals!)
This is so important; don’t skip this step. Professional athletes, for example, do this constantly. They visualize themselves performing at the highest level, beating the world record, and holding the gold metal.
The same can be true for us real estate entrepreneurs: see yourself touring the apartment building, negotiating it, and signing the contract. Visualize yourself at the closing table, signing the closing documents. See yourself meeting with the property manager to discuss the previous months’ performance. Imagine the bank account grow as the rents come in. See yourself selling the building in 5 years and getting a $430,000 check at closing.
Create a Sample Deal Package
A Sample Deal Package is a document about a deal you WANT to do. Everything in it is real: the property description, photos, financials, your business plan and projected returns. The only difference is that you don’t have it under contract.
It’s a tool that forces you to behave as if you had an apartment building under contract. You’ve reviewed the marketing package and the financials. You’ve made assumptions and projections. Behaving “as-if” makes it seem real.
The Sample Deal Package can also be used to speak to potential investors about investing in a deal you might get under contract sometime in the future. You can say, “I’m about to show you a deal. I don’t have it under contract, but it’s representative of the kind of deal I’m looking for. When I get a real deal, the package you’ll get will look substantially like this. I’d be happy to answer your questions. At the end of the meeting, you can decide how interested you might be in investing with me.”
In addition to expanding your comfort zone, a Sample Deal Package can help to create credibility with investors, sellers, and other professionals you want on your team.
Visit Larger Properties
A great way to exercise your comfort zone muscle is to visit properties that are outside of your comfort zone.
My current comfort zone with apartment buildings is somewhere between 75 and 100 units. I can see myself finding and negotiating the deal, raising the money, making renovations and making money with it.
But I have a mental block at anything much larger than that. A 150 unit building seems overwhelming with regards to the amount of money I would have to raise and the complexity of managing such a beast.
If I someday want to purchase 150+ unit properties, one thing I can do to expand my comfort zone is by visiting properties like this, analyzing them, and making offers.
I’m currently working on a 154 unit deal that requires substantial work to stabilize. It’s definitely a long shot, but I’m going through the process. Even though I may not end up purchasing it (but maybe I will!), I’m behaving as if I were going to purchase it. Once I’m done, the idea of taking a swing at the next 150 unit property might not be so overwhelming.
You should ALWAYS be exercising your comfort zone muscle. You can wait for circumstance to do it for you, or you can be more intentional about it. Visualize what you want to do as if it has already occurred, create a Sample Deal Package, and visit properties that are outside of your comfort zone. If you do these 3 things on a consistent basis, you will be amazed at what you’ll be able to do.
What have you done that’s outside your comfort zone? How did you feel beforehand and how do you feel now?
Don’t forget to leave a comment below!