Hi,
I’ve always used this rule : purchase price divided by 1000(knock off three zeros) times 2.5 = weekly rent. eg $100,000 rent at $250 pw, $60,000 rent at $150pw. etc.
This is abit simpler than the S.I.S rule, after all it is only to knock out properties that arn’t worth looking at in more closlylazyboy,
Do you think there are many places for 60K that rent at 150pw these days? Actually, the 15% yield would be more like $180 a week. Seems a bit far fetched to be able to reach this new rule.
What happens if interest rates reach 15%? Will we be having the 30% rule? ie a 100k house that rents at $600 a week? Seems like a lot of improvements would be needed to gain such a yield.
kay henry
Hi Guys,
Aiming for 15% returns is gonna be quite hard in this market, the sis rule is designed for finding +ve cash flow properties that will put money in your pocket.
Even in this market, i will admit it is alot harder to find them and that i have only found a very few in the last few weeks that come near or just past the sis rule, but nothing as yet, as high as 15% in this hot market with hot raising interest rates.
though what ever rule works best for you, and finds your property deals, must be a good rule. But the sis rule is intended to help filter positive cashflow properties that are now working against interest rates of 7%.
cheers
s.i.s“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtmlHi Kay,
In NZ properties that meet my 2.5 rule can still be found quite easly !!! it’s just a matter of picking locations that will give low vacancies and better growth prospects. Happy hutting[
]Some thing between lazyboy and SIS rule is good! [
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PropertyGuRu
Who want to be billionaire?
Some thing between lazyboy and SIS rule is good!Mabye we should call it the Guru Rule! [
]Matt
“If you do what you have always done, you will get what you have always had.”
“Isn’t it time for a change?”
It’s true 15% houses are hard to find but it is obviously worth the hunt. As many of you may know Dolf de Roos advocates the 100:10:3:1 rule. See 100, offer on 10, be accepted by 3, buy 1! I have a friend who invested in Invercargill in NZ; he received a 23% yield, no vacancy, and some of the highest capital gains in NZ over recent years!
regards,
SiHi Si,
just becareful on caculation yeilds, as they dont give a true return on a property. Much more effective ways of finding out current returns is by either caculating the CoCR or IRR. I much prefer the IRR, though caculating returns becomes iffy if you are also purchasing -ve geared properties for quick capital gains.
cheers
s.i.sHi SiS,
I wholeheartedly agree that the CocR or IRR are whats important, but a 23% yield with handsome capital gains is hard to sniff at! In this particular example I believe my friend was getting something in the vacinity of 100% CoCR (~$4k down with net cashflow of a similar figure), excluding any capital gains.
Regards,
Si
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