Yea I think its about building relationships with good honest and reliable agents and developers where you can all bennefit by from an ongoing business relationship.

Certainly I think we see beyond the 11 second rule.

I would prefer to see it as a partial filter or filter combinatorial element, that when combined and appropriately weighted along with other filter elements, contributes towards an overall threshold and hence assessment of the fitness of the sample.

I think we clearly agree on this aspect, as I expect Steve would also agree. None the less for the benefit of those less familiar with such matters, worthy of mention.

Well extra rent verses extra cost. So long as incremental revenue exceeds incremental expenses, your cash flow position will obviously improve. I guess the challenge is in finding how to generate extra revenue or rent in excess of cost. You could do the furnishing trick with a net gain after tax and depreciation, but then you may narrow your market appeal, thus with more risk. I mean most properties rented out are not furnished, thus this represents a bigger part of the market and thus arguably less risk from that standpoint.

I expect it to some degree depends on the type of property, the value of the property etc.. There are so many factors to consider. I think at the cheaper end of the market, fully furnished may have broader appeal, but that’s just a hunch based on the notion that cheaper properties may attract lower income tenants, who may be less likely to be able to afford reasonable quality furnishings and may not possess many furnishings of their own. I think this is a more risky end of the market in many ways.

Rather than furnishings, I would look at doing things that may attract tenants, without fully furnishing the place. Such as adding Air Conditioning, new curtains or blinds or carpet, paint job, new fixtures and fittings etc… these could be done even while you have tenants in place. You could negotiate via the estate agent for a rent increase if you add these little extras which you then claim on tax and get better rent for. End of day though you just have to do the numbers and see if it works and speak to an accountant who specialises in property

I understand Stamp Duty as a capital aquisition cost and part of the loan. So the interest on the loan is deductable. So in effect the interest on the Stamp Duty component, can be deductible in effect, but Stamp Duty is not directly deductible as an expense item per say

Yeah, hopefully there will be light at the end of the tunnel

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wrapping seems high risk and allot of extra work toi me. I prefer to just let an agent manage my property.

” The 11 second solution says that if you take the rent, divide by two and multiply by 1000, this is the maximum you should pay for the property. “

For the benefit of the less experienced or aspiring investor ( including me ! ) I add the following. If life was as simple as an apple falling on your head, we could all be Rhode Scholars, by sitting under an apple tree in season and waiting for our number to come up.

I thought about the 11 second rule for about 11 seconds and then realized that man had developed another rule well before property investment came along. A rule that has stood the test of time and evolved with man over thousands of years. That rule is;

The Rule of Thumb ! An intrinsically evolved measure incorporating a range of human thoughts and considerations and experiences, that could not be encapsulated by such a simplistic formula on its own, without considering broader complexities that may have the potential to impact on the process.

More seriously though, I think the 11 second rule per say, is a phurphy, overly simplistic and at best an arbitrary measure not to be taken that seriously. If you look at the vacancy rates and other factors you find that the majority of properties fail this rule and then turn it on its head and people still make money from the investments. Quite simply it seems absurd, when considered in isolation to all other variables.

So I have a new rule, which is; Never spend more than 11 seconds thinking about a rule which took 11 seconds to devise. And then use your common sense and realize that there are so many more variables to consider, that will likely effect the viability of any property investment or any other type of investment or other life decision for that matter.

I would not be surprised if the vast majority of properties that meet this 11 second rule are in areas with poor if not negative capital growth. I doubt you would find many properties in areas of high demand that would meet such a rule.

Perhaps if you invested in an area prior to the commencement of a boom growth cycle, you may be able to find a property that meets this criteria. But I’m not convinced the 11 second criteria alone, could be solely relied upon as an investment viability benchmark.

I accept that the 11 second rule I suspect, is really meant only as a rough guide, and not be considered in isolation of other factors.

By the way, I have my fire proof jacket on, so feel free to flame away.

” Dare to question even the greatest ideas, as those ideas of most merit are the beneficiaries of such scrutiny, as are those who embrace them. ” dwh 25 June 2003

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