The 11 Second Rule

Hey all,
Just a thought. I noted you were saying the 11 second Rule. It is good to remember that it is the 11 second Solution. I am being pedantic ? No for me it’s a way of understanding it’s application. One of the tools I use when looking at property is the 11 second solution. If it passes this test then it fits a certain investment criteria. Rules are hard things to me. Concrete in nature. The 11 second solution though is a great tool. Use it wisely to help you invest but never get hung up on individual tools as there are so many ways to make money in property. If it doesn’t fit the 1 second solution then maybe you could Wrap it, or Reno it or………

Enjoy
AD [:0)]
(Andrew)

“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert Einstein

I think people are tiring of answering this question.

Just do a search on “11 second solution” and all will be revealed. []

I have pinched this from another forum for other newbies like myself….
“The 11 Second Solution is a form of due-diligence over the numbers of a property (seperate from due-diligence on the physical property itself, and the potential/current tenants).

Essentially you take the rent achievable on the property, divide it by 2 and multiply it by 1000. The asking price for the property should be less than or equal to this calculated figure. For example: a property advertised at 85,000 renting for $190 week – 11 second solution would be 190/2*1000 = $95000, so based on the figures alone would qualify for further investigation.”

Knowledge is power.

Hi Vincent
It depends on how you think it should work!
The 11 second solution is not a guide to what your existing rental property should be paying, it’s purely a quick formula you can do in your head to determine if a property has a good chance of being cash flow positive.
Reality is that very few properties in capital cities have fitted this solution for a long time (and that’s probably where you have your rental property) because cashflow positive (mostly) has been found in regional areas. With the recent rapid growth in prices in regional areas, however, it’s not quite as simple to find cashflow positive property there either. But if you look, you’ll find it.

Keep smiling
Felicity

Multiplying by 1.6 may guarantee it’s positive, but only if interest rates don’t go up much. This is a yield of somewhere near 7%. Better than average but not enough for some.

To me the ’11 second’ thing is just fancy jargon for a yield a bit over 10%. With this interest rates could rise a bit and you’d still be cashflow positive. Or you could put all your rent into your loan and pay it off in nearer to 10 rather than 30 years.

Peter