I have been doing sums on a few properties and Ive found that whilst they appear to be close to fitting the 11 second solution and look like showing a positive cash position, once I add in rates and body corporate fees any profit is out the window. How do yo handle this – do you include these sort of expenses when calculating a + IP ?
albyHi alby,
Yes those expenses are added to show the true reflection of the profitablity of the investment. The 11 sec rule is only a “filtering” tool. Imagine doing the sums on all the properties that were being advertised. As Steve says use it to leverage your time. As for a profitable property, this will depend on what you are using in your calculations. Eg are you using P&I or IO repayments, are you adding decpreciation allowances etc. This will affect the overall profit/loss outcome of your investment
Hope this helps.
Cheers,
Jay
**********************************
You must stay pOsitive
…then the cAsHfl0w will come!
**********************************Thanks Jay,
I think im taking the 11 sec rule to literally. Basically I am calculating actual expenses v income and not factoring in depreciation , capital gain etc etc .Hi alby,
Depends on your investment strategy what you allow in your calculations. If you were aiming for a positively geared investment, then capital gains may not be a major factor whereas if you were negatively gearing then the projected capital gain would be a major part of your calculations and overall profit outcome.
Cheers,
Jay
**********************************
You must stay pOsitive
…then the cAsHfl0w will come!
**********************************Hi Alby,
you could put a higher deposit down – say 20% instead of 10% to make it +CF. But like Jay said, don’t let it be the benchmark on which you purchase properties.
Kind Regards,
George.“If You never never ask, you’ll never never know”
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