11 seconds properties – how far they are?

To Mini,
You mentioned depreciation in your answer to Leonid ,do you often consider depreciation when looking at a property.(Steve says dont)Thanks for your posts ,they are very informative,especially NZ.

Karen and Colin []

Hi Guys,
This is my first ever post! I am only 20 years of age and realy excited about a future of investing in property, hopefully + cf properties. It is still very early days however, but I was just wondering if anyone could please clarify exactly what the 11 second rule is and how you apply it
Thanks heaps, Justn[]

quote:

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Hi there

I live in Sydney city and there is no way i would be in the property market if I could only buy where I live.

OK so I go far. how far? Close enough to be able to visit at fairly short notice if I need to. No, i don’t inspect the properties. i have a builder do that. I only need to see pictures of the inside and out and beyond that professionals tell me in an 8 page written report the exact condition of every single physical detail of the property as well as other more ’emotional factors’ that I ask them about on the phone, basically they are being my professional pair of eyes.

If there are issues with the property I ask them about ball park figures to repair and then go from there. Either do it now or put off until next year, kinda thing!!

2 out of 3 times the properties i’ve bought have been ‘severely cosmetically challenged’. So either me or my partner has gone there, done the first few days reno work painting (with the help of labour) hiring the tradesmen , get the quotes for the things that will happen after you leave i.e. floor polishing etc.

a project manager (I use the building inspector) instructs and oversees things from there, making sure things get done, and being the man ‘on the spot’ which you definitely need if you’re not there yourself.

Yes you could do a renovation by remote control, but you’d be getting quotes and proceeding at top dollar, and you’d need someone to inspect the work and keep and eye on the tradesmen as well as be paymaster etc. Then it might not be as cost effective. property managers will take care of certain work but not usually anything as major as renovations.

then of course it’s not usually practical to let the place and manage the tenants if you’re not local so I farm that out too.

If the property is cashflow positive even if only after tax and depreciation etc don’t forget it’s going to get better over time as the house goes up in value and the rents should be indexed for inflation.

cheers-
Mini

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Good points Polar,

I agree that you should not be contrained by your own “rules” of investment. I look at them more as guidelines. And yes Steve’s book is a great read, and the information contained within it is worth significantly more than $30 you pay for it. I took the book with me recently on a 3 day trip to buy property so I could refer to it. But I also took one of Margaret Lomas books and Dolf De Roos “Real Estate Riches”

If you stick to any “rules” then you most certainly exclude yourself from opportunities.

For example if you found a property for $90k and it was returning $165 p/w, that does not fit the 11 sec rule. But what if you had bought the property WELL below market value and it was actually worth $110k and simply by adding air conditioning you could achieve $220p/w, would you still turn down the opportunity to make $20k on the deal and turn it into a positive cashflow property?

Battz,

P.S. Mind you I dont think Steve means use the 11 sec rule as a “hard and fast rule”, but i can imagine some people would.

Thanks Navymt,
In fact I went down to my local book shop to buy Steves book but of course it was sold out, I hope to be getting a call soon so I can pick up my own copy, then once I get stuck into reading it I should learn alot more about property investing![]

Fudge111