yes i agree with you i would like to see the 11 sec rule put into action and given some examples as if they just fit the 11 sec rule it seems to be negative gearing!
lizzy

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Hi Lizzy1
looking over your figures you have left out management fees on the rent. I also find that the 11sec rule doesnt always give you a cashflow +ve place. Maybe someone else can explain how hey have done it. In steves book the first property he buys the rent is 2.7 times the purchase price/1000 and he only makes $1000/y if it fit the 11sec rule he would make a loss of $621.
So if someone has a working example I would love to see it.
Erika

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hi mel
how i worked out the figures was
purchase price 90k
deposit 10% 9k
closing costs 3,550k
initial cash needed
12,550
our loan 81k
p & i loan
25 yrs at 6.5%
weekly repayment $126.14
annual cashflow out would be
loan 6,559.28c
rates 1,200
insurance 200
repairs budget 468
total cash out $8427.28

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total cashflow received
9,360
but this is not allowing for any repairs to the property.
so when the repairs are taken into consideration it would be negative
or am i wrong????

Hi Lizzy

I’m not sure how you’ve worked out your property would be negative geared renting at $180 per week, on a purchase of $90K.

An option for you to get cash in 12 months, and still wrap, would be to get it revalued at that time, refinance to pull out all extra equity, and then wrap. At a value of $144K, you could borrow $115.2K at 80% which certainly seems to cover all purchasing and renovation costs, and gives you some more cash in pocket. Then if you wrap it for weekly payments of more than your mortgage, you are well in front.

I’d check your figures, and refinance, and maybe even keep as a rental proposition.

cheers
Mel

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