I am interesting to apply Steve’s rule to my this year IP, but I still not sure how to use it. According to the rule = (weekly rent/2) x 1,000
For example: Weekly rent is $300, The property prices using 11 rule is $150,000.00. Therefore, if the property worth $350,000.00, means it is impossible to produce a positive cash flow return. is this right?
In that case, it is impossible to be able to find any property esp in queensland with positive cash flow return based on this rule.
Can anyone explain because I am really new to IP? How this rule really apply in real life? Every property seems so expensive to me, there is nothing below $150,000.00 esp in gold coast. Is there any other method I can determine the IP is positive cash flow before I really invest?
the `11 second rule’ is ONLY a guide. if you’ve got “From 0 to 130 Properties…..” re-read page 34 again. It will explain everything.
A method I use to determine positive cashflow is I take the first 3 numbers of a house’s selling price and then double it. That’s what the house has to achieve in weekly rent to be positive cashflow. Here’s a few examples;
House for sale at $100 000, take the first 3 numbers, 100, double them = 200, therefore the weekly rent must be $200 for positive cashflow.
House $85 000, rent must be $170
House $230 000, rent must be $460
House $735 000, rent must be $1470This method works out very similar to the 11 second solution and can be quite useful for quick calculaions in your head. But as neo25x5 said these are only guides and should be treated as such.
Hope this helps…G7
Thank you so much for this:
Yes I read page 34 but I tried to apply in real life and last night I took 100 properties and all does not produce positive cash flow. I am so frustrated!
not happy. That is why I asked how does it work? May be I missed out something.Yes G7 I understand easily on what you explained but then means there is a less possibility to find on positive cash flow property because from last night research 100 properties
let say purchase $300,000.00 and the rental is only $250 – $280 at most suburb at the purchase price range. There is no way I would be able to find one property with positive cash flow in that case. I know I am so wrong but I just don’t know how to get it right. Please help!Hi LKGK-88,
Finding properties that meet the 11 Second solution in their own right was never easy in the first place, but is even more difficult today given the property boom.
Instead of trying to buy the deal though, thesedays I try to make it by adding value and by thinking differently. This was certainly the approach I encouraged in the MAP, and you can read for yourself the approach that the mentorees took in my second book.
See this page if you would like more info on the 11 Second Solution: https://www.propertyinvesting.com/11secondsolution.html
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
LKGK,
The 11-second rule can also be seful as a way of *focussing* on rental yield and return. Prior to Steve’s book and ideas, most of the focus was on negative gearing and growth properties… and for many, the pride was in *owning* properties- but yield wasn’t paramount.
If you have checked out 100 properties, then you are obviously getting a real sense of the market in the area you are looking at to buy in- which will help you to analyse the market and allow you to work out what’s achievable.
You can’t assume you will be able to achieve 10% yield in each and every market. My approach is different to Steve’s- I am happy to buy later built properties and claim depreciation- which ups the yield and doesn’t demand a cash injection for a reno. Whilst depreciation strategies can be a problem for some (Steve has sections on this on this board), for me it is working and reducing my tax liability. Yeah,m i know- I am making a loss- hehe… however, we’re all different- some of us love losees? [biggrin]
The 11 second rule will give you a new focus on achieving cashflow- but I doubt properties will reduce to what they were some 6 years ago, so you may have to look at more regional or low population markets to find higher percentages.
kay henry
Yes Kay henry, I did my research almost everynight on few suburbs that I really want to invest. I really want to get an IP this yr but again no rush, I don’t want to make any huge mistake or regret down the track, that’s why I’ve been reading lot of books: two books fm steve’s mcknight I liked it cos it make sense but then when I tried to apply in real life I am so lost I don’t where to go. You know what I mean?
That is why I need help, and this forum is so good! I have read about 20 books from different authors. So I am very serious in IP.This is for Steve: I really wanted to attend the master class in brisbane but unfortunately is already fully booked, is there by any chance I could get just one extra ticket for myself? I can’t afford to fly over to sydney. Thanks
Quote Kay Henry: “If you have checked out 100 properties, then you are obviously getting a real sense of the market in the area you are looking at to buy in- which will help you to analyse the market and allow you to work out what’s achievable”
What I did was, I took actually more than 100 properties, and put into spreadsheet and then apply Steve’s formulae and to see whether I achieve the result “positive cash flow”. But then it appear to be all property priced below the purchase price as according to pg112. In my spreadsheet as well there are proper weekly rental from respective suburbs that I’m looking into even for those suburb I don’t really like but yet still doesn’t achieve the result.
Basically, through out the research I still can’t figure out which suburb is good to invest. So, if I can’t achieve the positive cash flow, do you think I should change plan to buy a block of land and built and sell it because probably by the time I complete building the property market has gone better and may be this idea is more concentrating in capital growth, which not that secure, am I right? What do you think?
Thank for everyone’s contribution and ideas, I really learn heaps from this forum. Thanks
LKGK-88
Have a look at jaffasofts link at the bottom of my post, you can also download his lappack for laptops if required.
If you’re looking for +CF where are you looking?
go to http://www.realestate.com.au and look in your state for the ‘lowest’ priced properties..research the areas for population growth or decline, economics trends etc and work ‘upwards’ from there [fear]
It’s a learning process and you’re on the journey by joining this forum; some of the people here have a “wealth” of knowledge.
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
not happy. That is why I asked how does it work? May be I missed out something.
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