hi,
just want to clarify the 11 sec solution.
As i’ve red the formular is (weekly rent/2)*1000.
does this mean that the final fig has to be equal to the buy price of a property to make it +ve geared?? is there a range like 10%+- buy price. What does it mean exactly.
I’m currently renting a place for $150/week that cost him $100 000. if i aply the formular to this then i get $75000 – does this mean my rent is a bargin – or does it mean the owners paid to much and is -ve gearing?
Hard to say if he is negative gearing or not. He may have put $50K down on the deal and made it positive…..not the most sensible thing to do or the way I would do it.
Seriously though he is more than likely negative gearing. He is paying for the hope of capital gain.The way you explained the 11 Sec rule is correct. Just remember it is only one step in your analysis of the property. Due diligence has other process to make sure the deal works.
Enjoy
AD [:0)]Success is not the result of sponataneous combustion. You must set yourself on fire.
Reggie Leach
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