I have two questions here for anyone to answer.
First, in todays market is it realisitic to apply the 11 second filter when searching for investment properties considering that the prices of property have disproportionally increased in the last few years compared to rental rates?Second, what means could one use to hedge against hiking interest rates? We are currently sitting at approx 6% and we can base our investing strategy on this, but what dow we do in 5 years time if interest rates have for instance increased to 8-9%?
Anthony
What exactly is the 11 second rule??? if you don’t mind explaining…. [
]Regarding strategy, to anticipate any interest rates or if they change you might want to consider a particular portion or if not the lot fixing it say 3-5years or say 2/3 of it, therefore you can have say 2/3 fixed at that particular rate and the remainder variable i/o, i think thats a decent enough hedging strategy, otherwise pay it off as fast as possible whilst interest rates are down.
N-e-ideas [
]Anthony
What exactly is the 11 second rule??? if you don’t mind explaining…. [
]Regarding strategy, to anticipate any interest rates or if they change you might want to consider a particular portion or if not the lot fixing it say 3-5years or say 2/3 of it, therefore you can have say 2/3 fixed at that particular rate and the remainder variable i/o, i think thats a decent enough hedging strategy, otherwise pay it off as fast as possible whilst interest rates are down.
N-e-ideas [
]The 11 sewcond rule is onr that Steve McKnight refers to in “From 0 to 130 Properties in 3.5 years” pp30-32. He uses this rule as a filter to farm out properties that return approx 10% gross return on investment.
(1)Likely rent divided by 2
(2) Multiply (1)by 1000
(3) Compare price to asking price.
The price ascertained at (3) will give you approx 10% Gross ROI. If the asking price is lower than (3) then you are looking at good investment.In todays market though is this applicable?
I needed to use the reverse of the 11 second rule to go backwards… (-11 second rule)
ie. If you know the asking price is $230,000, what weekly rent would you need to collect to make it worth while ?
And to compare the rent amount to the average for the area.(1) Asking Price $230,000.
(2) remove the 000’s (divide by 1000.
(3) double it ($230 x 2)=$460pw or better to make +ve gearing work.Well it makes sense to me anyway…
Regards,
Arty.[
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“Why work to the age where you cant enjoy
what you have worked for !.” (Author: Me)
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