All Topics / General Property / 11s rule

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  • Profile photo of molkenrmolkenr
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    @molkenr
    Join Date: 2003
    Post Count: 15
    October 13, 2003 - 1:22 pm

    what is this 11s rule? please could someone enlighten me.

    thanks[?]

    Profile photo of steveodsteveod
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    @steveod
    Join Date: 2003
    Post Count: 28
    October 13, 2003 - 2:16 pm

    Basically it is a guideline for buying positive geared property and works like this.

    Divide the weekly rent by 2 and then multiply by 1000. The figure that you come up wuth is the maximum that you should pay for a property and gives you a 10.4% return P.A. on purchase price.

    Example:
    Rent = $100/2 = $50
    $50×1000 = $50000 max pusrchase price
    Return: 52 x $100 = $5200 (10.4% Return)

    At the end of the day YOU have to decide what return you are comfortable with, but this is what Steve recommends in his book and he’s done OK [:D]

    Cheers.

    Profile photo of grumpy66grumpy66
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    @grumpy66
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    October 13, 2003 - 11:32 pm

    How valid is the 11s rule now that prices have gone through the roof? I have started looking after buying the book and all the prices I have worked out using this rule are approx 50 to 75% of the asking price. The absolute best/worst I have seen is 105 from the rental return/11s rule and the ad invited offers of 280 plus, meaning that the property would probably go for over 300. Am I looking at the wrong properties or in the wrong place?

    grumpy
    It is impossible to make things foolproof because fools are so ingenious!

    Profile photo of steveodsteveod
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    @steveod
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    October 14, 2003 - 1:17 pm

    As I have found out since joining this forum, they are out there. It’s just a matter of a lot of time and effort and you will find them (I think that maybe this applies to anything worth having[8D]).
    My family formed a syndicate two weeks ago and we have offers in on six properties that meet the 11 sec rule [:D]

    Cheers

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024
    October 14, 2003 - 11:39 pm

    I agree with Steve if you are using the 11 second rule as a guide to purchasing your next investment they are certainly out there.

    Cheers Richard
    [email protected]
    http://www.fhog.com.au

    There is no such thing as a problem.
    Just a solution waiting to be found

    Richard Taylor | Australia's leading private lender

    Profile photo of NaughtyJonnyNaughtyJonny
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    @naughtyjonny
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    Post Count: 33
    October 15, 2003 - 1:14 am

    I think the thing with the 11 second rule is that you look outside the capital cities. Finding a place in Sydney, Canberra or Melbourne that fits the rule would be (I imagine) almost impossible to do in the current climate.

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