Hi,
With the 11 second rule being (rental/2)*1000 giving us a 10.4% annual return.
Example: rental at $340/wk house price should be around $170,000.What will the formula be 5% annual return? will it be (rental/2)*1500?
Example: rental at $340/wk house price should be around $255,500.Can someone help me out at this, also I’m very grateful to a person on this board, who early pushed me not to buy a new car when out of uni and rather go for a good debt..ie a house!!!
Thanks
Camel_81
Hi Camel,
To clarify… (using your figures)
The 10% rule is basically worked out like this:ANNUAL RENT
DIVIDED BY
COST OF THE HOUSEthat is. 17680 / 170,000 = 10.4 %
Therefore,
17680 / 255,500 = 6.91 %If your question is:
“What would be a 5% investment if rent was $340pw?”
The answer would be $353,600.Steve’s 11 second solution is a good guide…
However even $100K renting at $170 is very good.Remember it’s all about being creative…
Just do what 9 out of 10 people wouldn’t do
A rough rule for 5% return is [weekly rent x 1000]
In your example, for rental of $340/wk house price will be approx. $340,000.
Note. This rule gives you a return of 5.2%Hope this helps
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hey all,
just knock off three zeros and halve what left thats the rent for 5%
easy
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