All Topics / Help Needed! / 11 second solution

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of maysistermaysister
    Member
    @maysister
    Join Date: 2003
    Post Count: 3

    I understand this is only a 'tool' for those of us who can't do percentages, but when I applied this to a property I am interested in, I can't do the maths, for example;
     The likely weekly rent $180
    Devided by 2= $90
    Multiplied by 1000 = $90,000
    Is it the same as or lower than the asking price ($133,000.00)
    So the answer is yes ?
    Yet to get a bank loan for $133,000 I need to pay $384.25 weekly.
    It will be impossible to get this much rent for a property valued at $133,000, located in a Qld regional city on the 'wrong side of town'!
    Can someone advise me about this? This is the cheapest property available.
    I am interested in passive income from my investments.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Something tells me locating CF+ properties that meet Steve’s 11 second rule were easier to locate a decade ago as compared to now.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Be prepared to manufacture a bit of growth and more properties might then comply with the 11 second solution.  Some examples are:

    – Acquiring a house that has a massive room that you can put a dividing wall in, thus "adding a bedroom" to the house
    – Subdividing the backyard and selling it off to reduce the debt on the house
    – A quick cosmetic renovation (could be anything from an extreme clean, or might involve things like painting or new carpet)
    – Buying in an area that is about to benefit from some new infrastructure like a new freeway or train station
    – If in an area of high demand, renting the property as "fully furnished" (with low cost furniture for an inflated rent)
    – Being prepared to cop the first year on the chin and channel some earnings into the offset account, so the property complies with the 11 second solution in its second year rather than its first

    Note: while it's a good thing to tidy up yukky gardens, be careful of expenditure.  Think basic tidiness at low cost.  Gardens do not earn rent, tenants don't always look after them, and as far as I can tell are not always covered under your insurance.  Unfortunately, from what I understand, the only garden ingredient that appears to be always covered is concrete.  If anyone knows any different, do let us know!

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of grimnargrimnar
    Participant
    @grimnar
    Join Date: 2010
    Post Count: 86

    OK so feel free to pick me apart if I'm wrong on this one, because I (sacreligious) have never read Steve's books…. so am unfamiliar with the 11 second concept.

    But I just punched your no's into the commbank calculator and got a very different result.

    The weekly repayment came out at only 240/wk.
    So by the time you take off 20% deposit, it certainly comes very close to 'neutral' (about 190/wk).

    Adding buying costs like stamps etc will add a bit, but not enough to kill it, but by the time you do some gentle haggling on the price and some minor cosmetic improvements should see it bringing home a few $ every week.

    Then, going 'interest only' on the loan should take it well into the positive.

    Profile photo of find_another_slavefind_another_slave
    Participant
    @find_another_slave
    Join Date: 2009
    Post Count: 25
    orieldel23591 wrote:
    I understand this is only a 'tool' for those of us who can't do percentages, but when I applied this to a property I am interested in, I can't do the maths, for example;
     The likely weekly rent $180
    Devided by 2= $90
    Multiplied by 1000 = $90,000
    Is it the same as or lower than the asking price ($133,000.00)
    So the answer is yes ?
    Yet to get a bank loan for $133,000 I need to pay $384.25 weekly.
    It will be impossible to get this much rent for a property valued at $133,000, located in a Qld regional city on the 'wrong side of town'!
    Can someone advise me about this? This is the cheapest property available.
    I am interested in passive income from my investments.

    It works the other way around – i.e. $90,000 is the most you should be paying as a purchase price.

    Agreed with some of the other comments – those days are long gone in this country. You will need to do a bit more work, or possibly look to NZ or the US for these types of CF+ investments.

    Profile photo of RenoTeamRenoTeam
    Member
    @renoteam
    Join Date: 2011
    Post Count: 92

    Hi orieldel23591 :)

    Have you considered a cosmetic renovation to add value & better rental return?

    Profile photo of maysistermaysister
    Member
    @maysister
    Join Date: 2003
    Post Count: 3

    Thanks for all the helpful advice 'findanotherslave' and all the others . You say that $90,000 is the most I should pay! they will not go that low.
    So how about this property comprising of 2 older style flats,v good condition, and on the right side of the tracks, still can only get $220-240 wk each flat. The land is large enough to put up 5 townhouses, I don't have access to the finances to do that.

    rent=$460
    half=$230
    times 1000=$230000
    this house is for sale for $295,000
    by your reckoning its price  should be $230,000
    The owner will not go that low, maybe $270,000 .
    Iam beginning to think all the property here is overpriced,but what can any buyer do about it?

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Personally, I wouldn’t stress too much about trying to find a property that fits a rule generated in an IP book written some years back. I enjoyed all of Steve’s book and there excellent resources but I wouldn’t rule out purchasing an IP on the basis that it doesn’t conform to a rule that arguably doesn’t work today.

    I can just see it turning into “analysis paralysis” where you might forgo a number of decent deals in the search for the one that fits this 11 second rule.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of SAS BuildingSAS Building
    Member
    @sas-building
    Join Date: 2009
    Post Count: 25

    The 11 sec rule is just a quick guide you can use when weeding through the thousands of deals out there.. very rare to find a deal that instantly works with the advertised 'as is price'.
    Best to use the rule to get close to an 'acceptable deal', then factor in cosmetic makeovers, rent increases, aditional rooms, negotiating a better purchase price. Then try and apply the rule again, and you will be surprised how well it works.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Suggest you re-read Steve's book. The 11 sec rule was not the 'be all' and 'end all' of property selection.

    I clearly remember 6 years ago people coming on here thinking about buying property in Bogabilla (for goodness sake) only because it met the 11 sec rule. The 11 sec rule is the easy to do part – the harder part is finding a good property first which, then meets the 11 sec rule.

    As Jamie said – good book at a different time and place when 'suitable' 11 sec rule properties, off the shelf, were to be found. Albeit they were further out than I would buy.

Viewing 10 posts - 1 through 10 (of 10 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.