All Topics / General Property / **PropertyGuru**&S.I.S New Positive Cashflow Rule!

Viewing 16 posts - 1 through 16 (of 16 total)
  • Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    http://propertyinvesting.com/forum/topic.asp?TOPIC_ID=6190

    SIS Rule no.7 as follow

    (Selling Price divide by 769) x 2 = 13.52% Gross Yield Return.

    No matter what the selling price is, this will show what the weekly rental must be to achieve a 13.52% GYR, which is now applicable for +ve cash flow properties at 7% interest rates.

    An easy rule to calculate mentally for a 15.6% yield is divide rent by 3, multiply by 1000 to get the house price.
    These houses are out there. so this may help with easy calculation.

    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 closly

    and the 11 seconds Rule.

    If you consider all this rule they all try to make money. where the 11 secs rule is the one that make less money. I am already struggle to find property with 11 seconds rule. By introducing more rule which will close to impossible to find one property to match it. But it’s still possible.

    Currently I am also looking for property returning as low as 8.8% and still happy with it.

    Good luck with the new rules.

    Warm Regards

    ChanDollars
    [Keep going, you’re nearly reach the end of financial freedom]

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    Do you know, before I was introduced to this site, and Steve’s book (in that order), I’d never heard of the 11 second rule. Interest rates were at 6%, and I wouldn’t buy any property with a return of less than 6.5%. I think that shows my -ve gearing focus, but I also did my calculations on rent vs interest, rather than taking into account all other costs as well.

    I suppose it’s cos I had a job that I intended to stay in for at least another 10 years.

    Cheers
    Mel

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    Melbear,

    Back in 2000 I was so happy when I got a 5% rental yield. I got no ideas about 11 secs rule as well. Sine I was introduce to this site (still don’t remember how) I keep an eye on property using 11 secs rule.

    Warm Regards

    ChanDollars
    [Keep going, you’re nearly reach the end of financial freedom]

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Hi Guys,

    The sis rule is just a real accurate equation for someone who is looking for +ve cashflow property on 7% interest.

    Though i thought i would share some other rules that most people dont know and other formulas and caculations.

    1. The Golden Rule
    2. The 1.6 Rule
    3. Whats your rent rule?

    These are just 3 more rules though, they are pretty dam accurate as well.

    Cheers,
    sis

    People 4get that by saving just $3 a day & investing it sensibly
    over a working life, you’ll end up with around $1 million

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    S.I.S,

    Please explain each of these rules.

    Warm Regards

    ChanDollars
    [Keep going, you’re nearly reach the end of financial freedom]

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Explanation of Golden Rule Only used on I/O

    I found this somewhere but im not sure who to give credit for this, but here is the Golden Rule.

    Rent = min 1.4 x interest cost
    If rent is $200 pw = $10,400 then Golden Rule says pay max of $106,122 (Yield Return is 9.8%)

    eg. $106,122 x 7% interest = $7,428 x 1.4 = $10,400

    Though the purchase price will adjust dependant on what the interest rates is used on the calculation.

    Cheers,
    sis

    People 4get that by saving just $3 a day & investing it sensibly
    over a working life, you’ll end up with around $1 million

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    The 1.6 Rule

    (Weekly Rent x 1000) / 1.6 = What the Maximum purchase price should be.

    Eg. Weekly Rent = $250 pw

    ($250 x 1000) / 1.6 = $156,250

    $156,250 at 80% loan = $125,000

    This equals a +ve cash flow property due to its 20% cash deposit.

    Cheers,
    sis

    People 4get that by saving just $3 a day & investing it sensibly
    over a working life, you’ll end up with around $1 million

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    S.I.S,

    What I see from all the above Rules is that I have to carry my calculator everytime I am hunting down for IPs.

    Anyway, Thank you for the explanations. I will try to use it in the future.

    Warm Regards

    ChanDollars
    [Keep going, you’re nearly reach the end of financial freedom]

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Whats your Rent Rule?

    Purchase Price / 1000 = The minimal rent. Though you must put a 20% cash deposit to keep the minimal rent on the purchase price.

    This rule only applies to -ve geared properties, so the minimal rent you can achieve if you are try to achieve capital gain.

    Though the loan must be over 30 years and the loan must be I/O.

    eg. $250,000 / 1000 = $250 pw

    $250k @ 80% LVR = $200k

    So your rent must be a minimum of $250 pw on a I/O Loan. If try to achieve capital gain.

    Cheers,
    sis

    People 4get that by saving just $3 a day & investing it sensibly
    over a working life, you’ll end up with around $1 million

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    Damp I just relied I done nothing at all at work today.

    Warm Regards

    ChanDollars
    [Keep going, you’re nearly reach the end of financial freedom]

    Profile photo of johngjohng
    Member
    @johng
    Join Date: 2005
    Post Count: 10

    Where do you find IP with a 10% return?

    Profile photo of flashflash
    Member
    @flash
    Join Date: 2003
    Post Count: 140

    Travel back to 2004!!!!!!!!

    Sorry couldn’t help myself.

    Profile photo of flashflash
    Member
    @flash
    Join Date: 2003
    Post Count: 140

    It’s not uncommon to get a 10% return in Newzealand or US at the moment without trying to hard.

    Also people will tell you to think creatively like create another bedroom,renovation or subdivide.

    Or another option is looking into listed property trusts etc.

    Cheers.

    Profile photo of danandangdanandang
    Member
    @danandang
    Join Date: 2006
    Post Count: 11

    What I have done is develop a comparison page set ou as below
    Property costs
    Stamp duty
    Lenders Fees
    Soloicitors Fees,
    Building inspection
    Other
    Total
    Deposit
    Loan amount
    Loan Repayments
    Rates
    Body corp
    Insurances
    Maintenance
    Vacancy
    Agents fees
    Other
    Total out goings

    Rental income
    Net Income (Loss)
    Net income / Property cost
    Tax deductions first year
    Tax deductions other years
    Tax advantage
    My income (costs) per week

    This little page sorts out really quickly which properties make or loose money. You have to know the scales of such things as stamp duty , interest rates, and your own tax advantage.

    Each property has its own dimensions and it is hard sometimes just use a simple rule. However they are a good starting point

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    Jaffasofts link at the base of my post is great for assessing IP’s also..

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of ecattecatt
    Member
    @ecatt
    Join Date: 2005
    Post Count: 40

    Thanks guys… its good to double check your numbers with other peoples rules…

Viewing 16 posts - 1 through 16 (of 16 total)

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