We have just attended the Perth Masterclass and are working through the notes/homework. We are still confused about the new 11 second solution and its application. We understand how to achieve the rent return % and also work back to purchase price, but how is this formula used to assist with decision making, how should it be applied?
Natasha & TrevorI was at the Masterclass and my understanding is that the new formula tells you how much money can be spent on a problem property, before you are in too much debt to be able to sell and still profit from the deal.
BJTarbotton
If you know or work out the average yield for a type of property in a given area and you work out the yield for a property you own, then you can work out if it is over-performing or under -performing and what would be a good yield to sell at. Similarly, you can work out the yield for a property you are thinking of purchasing and then decide whether it is performing well compared to the rest of the market and find out if it is worth buying.
For example, on page 58/59 of the notes, the rental yeild is 8%, the current yield is 10%, so you would sell at 8.5% as although the yield has fallen, it is still above the market.
I hope that helps or have I not properly understood your question?
Hi Natasha,
My understanding of the formula is that it provides a quick comparison of the property you’re looking at with others in the area.
If the % is much higher or lower than other similar properties in the area, it may imply a sign of opportunity and prompt you to investigate further. However, the final decision should not be based on this rent return %(RR).
Also, you can work out the minimum RR % in order to have positve cashflow, which set the minimum (total) rent you need to achieve if you’re going to buy the property and to have +ve cashflow.
From FUN
Sounds like it`s taking a lot more than 11 secs.[blink]
Hi guys,
I’m interested, what’s the new 11 second solution?
I’m a poor single parent so I couldn’t justify $500 for a ticket, even though I would have learnt so much.
Thanks guys
easymoney
this seminar in Perth was my first and it seemed like a lot of money but once attended you realise that the value learned will make or save you far more in your first deal let alone the many you will make afterwards
Hi easymoney
In short, I think the new 11 sec solution is a formula that can be used when you know the current rental yield percentage for your property. It works out what your property might sell for.
I attended the recent Perth Masterclass and this is my rough understanding.k.j.m
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