Gidday guys, Just a dumb question can someone explain the 11 second solution?? And why it is set out the way it is?
cheers
Hi,
The 11 Second Solution is a form of due-diligence over the numbers of a property (seperate from due-diligence on the physical property itself, and the potential/current tenants).
Essentially you take the rent achievable on the property, divide it by 2 and multiply it by 1000. The asking price for the property should be less than or equal to this calculated figure. For example: a property advertised at 85,000 renting for $190 week – 11 second solution would be 190/2*1000 = $95000, so based on the figures alone would qualify for further investigation.
Hope this helps! [
]Thanks Roofarmer, now I understand
Most of the books I’ve read mention that a bank will value a property at weekly rent x 1000 (for houses, anyway). Why is there such a large discrepancy between the 11 sec rule and the above calculation?
Hi,
Welcome to the forum!
One value is for positive cashflow and the other value is for bank lending purposes (ie. it has to do with acceptable bank risk vs. cashflow returns)
Bye
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
I know I’m ignorant but who would pay $190 rent on a $85,ooo property?
Likewise, this 11 second rule would translate into a $175,000 property attracting $350 rent per week. Does this actually happen?
quote:
I know I’m ignorant but who would pay $190 rent on a $85,000 property?
Likewise, this 11 second rule would translate into a $175,000 property attracting $350 rent per week. Does this actually happen?Hi Kirby,
In a word, Yes – it does happen.
A while ago, I was a ‘disbeliever’ too. It didn’t matter how hard I searched the local papers, I couldn’t find a single property which stacked up to the Eleven Second Solution.
I spent hours at it too, and I can’t tell you how frustrated I got.
A few weeks later, I took advantage of an opportunity to be at Steve McKnight’s first seminar, and it really opened my eyes.
My problem was that my scope wasn’t broad enough. I was looking next door for the positive cashflow deal of a lifetime, and it just doesn’t happen often in suburban Melbourne.
Well, I started looking in other places, and sure enough – positive cashflow properties did exist!
What’s more, you can find them all over Australia.
Some deals are just straight and simple buy and holds. But some some require a little creative thinking and the implementation of a cunning investment strategy.
(Such as the ones found at https://www.propertyinvesting.com/strategies/)But you are right – in most cases if an $85,000 property doesn’t generally rent for $190 per week, why would anyone pay more than they have to?
Why? Because it’s a win-win deal.
Warm Regards
Brent Hodgson
PropertyInvesting.com TeamThanks for your answer Brent.
I’m still a little confused though. I mean, I read through these Boards and i see people say “it works for me” but I’m struggling to find specific scenerios.
Can someone give an example of how this has worked for them. I dont need names, just a real case study example to help me understand better. I’d really like to know why someone would be prepared to pay such high rent on a $85,000 property and how they would “win”.
Many thanks.
Hi Kirby,
Mike Robinson made a post about his success a little while ago. You can find it at https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=604
Warm Regards
Brent
Hi Kirby,Mike Robinson made a post about his success a little while ago. You can find it at https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=604
Warm Regards
Brent
Thanks for that link.Here are some real numbers I did on a deal I completed last month.
https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=684
Hope this helps.Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David BrinkHey Kirby,
As a renter myself in Melbourne I first thought like you are – who in their right mind would pay $500/wk rent a $250k property, especially seeing as I live in a brand new townhouse for $280/wk valued at $380k!
Anyway, here’s the $$ on a couple of properties I came across recently on a trip to QLD that might motivate you a little to keep looking.1. A 3 bed ‘duplex’ (2 lvl townhouse which can be rented as seperate lvls or together as 1) in the heart of Surfers Paradise, 50m from the beach and on the Indy track
Property is rented (to full time tenents not holiday rental) for $650/wk
Last sale price was $220k 8 years ago
Property is a bank repo on the market for $220k! (my thought would be previous investor has defaulted on an interest only loan?)
Could anyone guess the current market value????
Unfortunately I missed out on this one [}
]2. Several 2 bed properties on the market for around $70k each in outer Brisbane. Well rented at $140/wk. Properties are 5 yrs old, in security developments with around 40 others. Developments include pools, tennis courts, gardens & BBQ’s.
Hope this helps, sometimes you just have to open your context to ‘maybe not where I live, but…’
PS. The capital growth in example 2 last year was estimated at 25% (suburb is under renewal).
A question to everyone out there ‘is the QLD property market at a different point in the investment cycle (boom/bust) than Melb & Sydney?’
PS. The capital growth in example 2 last year was estimated at 25% (suburb is under renewal).A question to everyone out there ‘is the QLD property market at a different point in the investment cycle (boom/bust) than Melb & Sydney?’
Leigh, Hi, I live in Qld Don’t know about 25% increase on a property like you described. Brizzy is still going ok, they are talking about prices continuing to increase over the next 3 -5 years. I have experienced 20% growth on $260k property in the last year. ental on;y $280 / week. Hope this helps.
Johnno
Hi Leigh,
In answer to your qwestion I feel Brisbane is at a differnt point on the boom bust cycle.
With property becomming unaffordable in the cities of Sydney and Melbourne home buyers and investors alike have flocked to south east QLD, causing steady growth which is spreading further from the cbd.
The -ve geared hirise market, in which I find my self employed(construction)has taken off . This is great for me, but I wouldnt touch one of these propertys with a ten foot pole as even though rental demand is high at the moment for these propertys I feel there will still be a glut of unrentable -ve geared units within 2 years.
In the lower end especially the outer suburbs I feel that there is enourmous growth yet to be realised. This is only my opinion based on my limited research. Any input would be appreciated, also will the downturn (that I feel is comming) in the hirise market, affect the whole of the brisbane property market or will the demand for suburban houses sustain the market?
hope Ive been of some help or will sitmulate someone who can be to guide us both.Regards
ScottThanks for the replies and links guys. [
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