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HI, I have been reading many messages and keep reading about the 11 second rule?
What is the 11 second rule, how does it work?Thanks
StrawberyWhen you see a place – you know within 11 secs if its the right place for you to purchase.
If that does not make sense, then read the Book – “From 0 to 130 Houses in 3.5 yrs”
Its the premise of the Book.
Strawberry Babes, no doubt there is info on the 11 sec solution in the Strategies section of this site.
But just so’s you know, it’s a filter tool used by Steve to ascertain whether or not a property will be positive cashflow. It is not the be all and end all, but it can eliminate a lot of properties quickly to stop wasting of time.
To do this, take the purchase price of the property, (say $100K), divide by 1000 (= $100) and multiply by 2 (=$200). So you should get $200 pw rent for a $100K property.
Alternatively, if you have a rental of $120, divide by 2, $60 and multiply by 1000 = $60K. So you don’t want to pay more than $60K for this property.
Of course, you then need to factor in your interest rate, and rates, land tax etc. etc.
Cheers
Melbut hang on guys,
its takes me 10 seconds to think, what i gotta do, about 30 seconds to find a caculator and then another 15 seconds to punch the numbers in and then another 4 seconds to get an answer.
that took 59 seconds…
…. oh wait… no wonder im still in school [?]Cheers,
sisSIS, you’re a dumbass [
]. It takes a heck of a lot longer to type it, than the simple conversion in your head. ie, drop off the zeros, and double the number!!Cheers
MelHi Melbear,
but wait… it really does… [:p]
oh hang… so thats how the 11 second solution works
…. and all this time, ive been using a caculator…. [?]someone could have at least told me… [
]Cheers,
sisThe 11 Sec rule …. is more designed for Rental opportunities … however it does give you food for thought when you can see other options that may increase your chances of getting to this formula. I must admit I have found dozens of properties that have met this rule…. but either the towns were to small(my threshold) or the vacancy rate were way too hi.
There are a myriad of options to get things to cashflow favourably…. just need to get out of the box I am thinking in and look from the outside …. this way you will get a different spin on things and find a way to do it …. that works for you in both comfort and income. as someone once said…. “Time is money … however some one forgot to say that you can alsways make more money … .but time …. that is lost forever”.
Cheers[:p]
Kiwi![biggrin]Thanks for everyone who replied!!!
To do this, take the purchase price of the property, (say $100K), divide by 1000 (= $100) and multiply by 2 (=$200). So you should get $200 pw rent for a $100K property.
Alternatively, if you have a rental of $120, divide by 2, $60 and multiply by 1000 = $60K. So you don’t want to pay more than $60K for this property.
So if you have a property worth $380,000 then you should charge rent $760 per week? Seems very very steap. Why bother renting when you can put that amount to a morgage. So many people must charge less then that theory for their renting property cos i would’t pay that much a week on rent!!! Must be hard to crack…
StrawberryBabes,
The easyiest way to understand the 11 second solution , it is a 10% return roughly . Just a easy way for some people to access a deal. I personally half the weekly rent and add 000 to the back of the number to work out a 10% return.
e.g $200 a week rent
Half $100
Add 000 to the back of the numberTotal $100,000 = 10% return roughly
Monopoly, my favourite game
These figures use to be easy to achive once a pon a time. You need to look differently now to achive these figures . Im about to sell a property in melbourne for about 400k that returns about 44k a year but it is a rooming house with 7 bed rooms that are rented out seperately this gives me a good return . But requires about 2 hours of my time every week. So it is not as easy as if I rented it through an agent for $300 a week rent but it that case I would only get a very small return on 400k about 4% return , not even enough money to pay the interest bill.
Think a little different and you will be able to find your cash flow propertys.Cheers Rick
Monopoly, my favourite game
“Seems very very steep…cos i would’t pay that much a week on rent!!! Must be hard to crack…”
Ah, one of the main reasons why we’ve given investing in RIP’s the big flick. The rent is so personal to so many people, and seeing as though they get no help from the govt in terms of tax deductions for it, it is a big nett expense for them.
Hey Strawberry Babes, what would your attitude be if the Landlord not only asked you to pay $ 760 p.w. for renting their 380K prop, but also demanded you pay for all of their rates / water rates / land tax and insurances. And on vacating, you had to replace the carpets and paint the place top to bottom.
Are their any residential tenants out there currently renting that would be happy to pay for and do all of the above – to the Landlord’s satisfaction at your sole expense ??
If yes, give me a call and I’ll sign you up, if not, I’ll stick with my alternative strategy.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
In cities rent is easily calculated at purchase price divided by 1000 (drop three zeroes). If you hold a property long enough you will increase rent so it abides to 11 sec rule. To purchase properties that abide to the 11 sec rule you need to find cheaper propertie in the country. Read the book by Steve McKnight. Trick is to ensure rent is regular and property is accessible to your base location. Some commercial properties are more suitable and come with long leases.
But first read the book.H Chalmer
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]. It takes a heck of a lot longer to type it, than the simple conversion in your head. ie, drop off the zeros, and double the number!!
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