Having troubles with 11 second rule

Don’t just look in Mildura. There are plenty out there. Try other states, or more remote towns.

11 second rule may be hard to find but if you put 20% down as a depostit that may give +cashflow.

Nu Gen

Just to throw in something we’ve learnt slong the way – some lenders will only lend 65% in rural locations so check this out before making any offers.
You’ll find something. We looked and looked for months which is frustrating at times when you are new and eager to get going. The challenge is worth it when you find your first property though.
[] Diane

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I have found a property that I would offer $85,000 for that has a tenant paying $145 pw.

Can someone tell me if this is a good deal or not?
The house is neat and low maintenace.

Like you Andrew I am not sure when to step outside of the 11 second rule and to what extent.

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Here to help. Cherly first up i caculated this for you.

$85000 at 6% interest over 30 years would equal a weekly repayment of $127.60

so in hand you would have $17.40 a week more, but do remember you would have to add your mortgage protection and insurance to this so minus approximately $10 for that everyweek,

in actually fact you would be left $7.40 in hand a week.

From my personal experience i would call this a neutral geared property – meaning it just pays it self off.

but lets say if interest rates were to rise to 7 percent which i believe they are forecast to at the end of this year and early next year.

This would be how much in hand for you.

$85000 at 7% interest at 30 years = $141.25 a week loan repayment, so in hand you would recieve only $3.75 but you would definitly have to pay out of pocket expense for mortgage and insurance protection, though these are claimable on tax.

Thats my 2 cents

Hi Andrew,
There are definitely 11 sec rule properties out there. It just takes alot of work, and as others have said, don’t limit yourself to your local area.

Also, don’t ignore something if it is outside the rule. I just looked at 2 units for $140,000 ($70,000 each) and rented for $110 per week each. I found out tenants in both units had been there for 18 months and wanted to stay on. They also said that the rent hadn’t gone up in the 18 months and they expect it to go up with new owner. I can increase rent to $125 now with rent review every six months. I also got the units for $130,000 ($65000 each). Just outside the rule but only for the first six months by $5 per week. Also the market has risen by over 30% in the last twelve months and still climbing.

Regards,
Steve

another thing too, see if you can get that $85,000.00 negotiated, paying a little less for it can make a big difference

Hi everyone, I am having trouble too, I have looked up and down and in the west from cairns to melborne and cannot find an area that has low home prices and reasonable rent. With a market so hot as if you are going to get a place valued 20 – 50 K lower than other homes and still get the same rent. I am getting a bit bitter about this 11 sec rule, I have looked in about 20 rural towns and nothing is any where near the mark. The other thing is please correct me if I am wrong, but does this Pos Cash flow investing only work if you are buying a property for under 80K?????

Cheryl that property you found for $85,000.00 dont just go all off about it talk to the agent and see if you can get the price negotiated or to save up more finance speak to the agent and ask if they can put the property into a 2 month settlement agreement either way you still have a chance to save more money and you dont know you might just be lucky.

cheers

still in school

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quote:

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I have found a property that I would offer $85,000 for that has a tenant paying $145 pw.

Can someone tell me if this is a good deal or not?
The house is neat and low maintenace.

Like you Andrew I am not sure when to step outside of the 11 second rule and to what extent.

---

Here to help. Cherly first up i caculated this for you.

$85000 at 6% interest over 30 years would equal a weekly repayment of $127.60

so in hand you would have $17.40 a week more, but do remember you would have to add your mortgage protection and insurance to this so minus approximately $10 for that everyweek,

in actually fact you would be left $7.40 in hand a week.

From my personal experience i would call this a neutral geared property – meaning it just pays it self off.

but lets say if interest rates were to rise to 7 percent which i believe they are forecast to at the end of this year and early next year.

This would be how much in hand for you.

$85000 at 7% interest at 30 years = $141.25 a week loan repayment, so in hand you would recieve only $3.75 but you would definitly have to pay out of pocket expense for mortgage and insurance protection, though these are claimable on tax.

Thats my 2 cents

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Hi Still at school.
Don’t know how you worked out your figures. It seems to me that this property would cost about $30 a week pre-tax at 6% P & I. Do you include stamp duty, repairs & maintenance, rates, and property manager’s commission in your calculations?
Terry

Terence McMahon
HomeWin
Finance

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hi saskatoon,

i just worked the information based on how much the sellin price of the property is.

Other costs i just assume that will be paid in cash, and only the loan for the full amount of the purchase price is required.

thanks

still_in_school

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Hi still_in_school,
yes, but where does the cash come from? I don’t consider that if you are tipping in cash then the property is paying for itself. Five properties like this would be costing $150 a week…
Terry

Terence McMahon
HomeWin
Finance