Given the recent increases in property prices and the apparent slower rate of rental increases is the 11 second solution still a valid tool to use?
Wingnut
Am new to the forum. Where can i find the 11 sec test?Sometimes lost in the forest, needing guidance.
Wanting to be wealthy, not rich.
It may be just me but I am finding the method may have been relevant before the recent upsurge in proprty values. However with low inflation, rent although rising is not keeping pace with capital appreciation. Therefore the properties that do meet the criteria (and I have not found one yet) are in scarce supply… or maybe I am not looking in the right areas..
Originally posted by Panna Pete:Am new to the forum. Where can i find the 11 sec test?
11 sec guide:
take the rent, divided it by 2 then times it by 1000. this is the guide on which you should purchase the property for +CF
ie. rent – 200 per week
divided it by 2 = 100
times by 1000 = 100k – this is the guide for +CF
there are plenty around – u just have to look harder and create creative deals. If you still can’t find any, pay someone to find them for you.
Kind Regards,
George.I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
The 11 second rule is a guide to find cash flow positive property. If a property rents at $100 p.w, and sells for $50,000 the gross rent is 10.4% of the purchase price, allow say 1/3rd for expenses rates, insurance and repairs and you’ll probably meet the mortgage payments with the other 2/3rds.
The 11 second rule is a quick way to make a calculation without needing a calculator.
If you are unable to find a property that is giving a postive cash on cash return, then possibly a property with depreciation benefits might help. Margaret Lomas is an advocate of those and ahd some articles in API some time ago
The lazy person’s rule is: Price of the property, then double it for rental yield…
50k prop = $100 rent a week
100k prop = $200 rent a week. etc etcThat’s my way, and it doesn’t exactly = the 10.4% thing, but it’s close. It also take me 1 second, so I have 10 more seconds to sit and do this: [tired]
There are 10.4% yielding properties around, but not of the same calibre or type as when Steve bought. In Australia, you’re often looking at more rural houses (as opposed to suburban regional houses), or mining towns.
Cheap houses don’t always mean you’ll get 10.4% rent though. You could buya 50k house and only get $75 a week rent… then you have to pay rates,a PM, landlord insurance, any repairs, interest on a loan, costs of a loan etc. That $3750 annual return you get can pretty soon be eaten up with costs. So your cheapy house will still be negatively geared, and may not achieve capital growth. You can only get rental of what the market will pay, and in some places, rents are very low.
kay henry
Hi Guys,
11 second soloution has been superseeded… (it doesnt work in this property climate) at Steve’s Master Seminar, he introduced people to the “Advance 11 second solution”
… but personally, i dont use the 11 second solution or advance 11 second solution, it is a benchmark for sougthing out properties…. but there are other more accurate mental caculations, in finding +ve geared properties, though they are tighter on the gross yeild %, yet its that few % people miss out on and over look.
Cheers,
sisWhat is the advance 11 second solution?
that’s new to me…
i second that – What is the advance 11 second solution?
I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
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