All Topics / General Property / The 11 Second Formula

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  • Profile photo of bigboof88bigboof88
    Participant
    @bigboof88
    Join Date: 2004
    Post Count: 4

    G’day Guys
    The formula which was shown in steves book I have a question. What is the best way to work out the rent if not provided. Thanks[blink]

    Bigboof

    Profile photo of kay henrykay henry
    Member
    @kay-henry
    Join Date: 2003
    Post Count: 2,737

    hmmm… wouldn’t you know how to work it out if you had read the book, boof?

    The way I work it out- and it’s close enough for me… is to think of the purchase price (say 50k) and then double it to work out the rent ($100 per week)

    The 1 second solution is:

    50k property = $100 weekly rent
    100k = $200 weekly rent
    $150k = $300 weekly rent etc.

    Someone can give you the more accurate formula, but the above lets you assess immediately if it’s going to be around a 10% yield.

    kay henry

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hey Kay,

    1 sec solution – lol [happy]

    I think Bigboof’s question is a little different… it’s how to you figure out the rent base if it is not currently rented.

    Anyway, I suggest look at what similar properties go for in the local paper.

    In particular, watch out for agent’s assessments based on ‘likely rent’, as these, in my experience, have a habit of being on the generous side of the ledger.

    Another idea is to find out what the property previously rented for (if applicable) and then base it on that.

    Regards,

    Steve McKnight

    **********
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    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

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