then you do the math…
it doesnt fit the 11 second rule….but its making just enough to cover repayments and and a little left over for maintenance. The area is destined for growth….later rather than sooner tho, and the house has 12 months guranteed rent.
Is this the time you ignore the 11 second rule…make a few adjustments to your calculations..and buy the house?
Or do you just say screw it…doesnt fit THE 11 second rule….Ill keep looking?
Anyone?
Hi Pinky,
You’re going to hate this answer but “It Depends”.
Really you need to balance out what your aims are at this point in your investing life. If it fits your aims and you’re confident of the growth potential and willing to fund any losses (though with various deductions these may be ver small) then go for it. If it doesn’t fit your criteria then move on to something that does.
Personally, I’ve done very well out of some -ve geared properties that I’ve got, these have given great capital growth. I’m now using the equity in these for +ve cashflow IPs as I can’t keep buying -ve ones (the bank won’t let me).
The 11 second rule is just a filter. At the moment if a property doesn’t easily pass it I won’t buy. However IPs I’ve bought in the past don’t qualify and I can certainly see that I will buy some in the future that don’t pass either.
Rod.
>it doesnt fit the 11 second rule….but its making just enough to >cover repayments and and a little left over for maintenance.
how much maintenance will you be up for? Have you had a builder’s report? If not, what will you do when you find out you have white ants/sinking stumps/plumbing problems/need new wiring/etc etc etc??
(just painting worst case scenario!! Sorry!!! Thank me later!)
>The area is destined for growth….later rather than sooner
but almost any area would qualify for this lame criteria….
(sorry…being devil’s advocate here….)
>and the house has 12 months guranteed rent.
could be good, could be bad. good because security. is there a catch?
>Is this the time you ignore the 11 second rule…make a few >adjustments to your calculations..and buy the house?
when you say ‘i can’t do better than this deal.’
>Or do you just say screw it…doesnt fit THE 11 second >rule….Ill keep looking?
how long did it take you to find this deal? How much looking?
Did it give you hope that at least you’re getting closer? Did it give you any clues as to what areas you can find these kind of deals in?
Can you negotiate the price down any? You could always try making an offer 20 percent below the list price and see what happens…after all you are a sophisticated investor and if the numbers don’t work out, you’re gonna walk away, right?*anecdotal story from personal experience*
January. Read dolf de roos who says look at 100 properties. looked at 100 properties (in person!!!) Found a cashflow positive property (63,000, renting for $130.)
11 percent return!!! WOW!!!! Got excited. Stitched it up for 58,300 subject to builder’s report. builder’s report came up LEMON!!!! TOTAL lemon!!!! (poor little old lady got ripped off by rapacious tradesmen who did a Sh*^$*&$t job, basically) pulled out. Depressed.Started looking on the internet. Found deals returning 20 percent plus! Bought three of ’em for the price of one of the above, just about.
Wouldn’t have found the deals on the net if i hadn’t got out of the paradigm of having to look at the houses in person.
Because when I did, it didn’t mean anything – i still couldn’t tell a lemon from a plum, and just got emotionally involved, anyway.moral of the story.
especially for you women out there who I think may have the tendency to get more excited/emotionally involved than the guys. (not being sexist and offensive, i hope???)if the numbers don’t work out you may end up seriously out of pocket waiting for that holy grail of capital growth to materialise.
I say forget the 11 second rule. You can’t be ruled hard and fast by such a limiting guide. It’s a rough estimate only and not the only tool in the shed.
If it covers repayments and is a decent property I’d jump on it. But that’s based on my philosophy for investing – I have no interest in sub $50k cheapies in the town of Bumfluff, population 12 people. I go for mid-range property in areas of at least 30-40 thousand people, better suburbs, rent covers payments.
Pinky – I’d suggest you need to decide what your own philosophy for investing will be and decide on your own rules (then break em!)
PB.
its great to get this kind of feedback
As for rules…it seems Im VERY good at breaking them….hahaha
~ Heaven doesnt want me and Hell is afraid I will take over! ~ :þ
Pinky,
But remember, if you dont use the 11 second rule, as rule of thumb, then you may find that the rental you get from the tenant, most likely will not cover the repayments for the loan. Ie. you will be making a loss -ve gearing, so you will stuck forever putting money into the property.
[]Regards,
Arty.[
]
“Why work to the age where you cant enjoy
what you have worked for !.” (Author: Me)I think there is a similar post where someone suggested to wrap it or see if you can do some inexpensive improvments to the place even convert an attic to another bedroom for a higher rent?
think creativly.
no pinky not about oiled man slaves about houses [
]ahhh cam…..u know me too well!! [
][][]~ Heaven doesnt want me and Hell is afraid I will take over! ~ :þ
]
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