If the 11 second rule works out in your favour for a particular property, what other checks should be done to make sure it is a worthwhile +CF investment?
ie…..obviously a building inspection, pest inspection, checking if the area is ok etc etc…. but what else should I be looking for?
Thanks in advance.Hi If your buying something showing the 11 sec rule (10.4%) the other things you need to check are
1. just because it shows a 10.4% retrun doesn’t mean it is cash positive, check all other costs eg rates , body corp etc. Sometimes 10.4% means cash Neutral.
2. check that the area has the chance of going up in value , don’t buy areas that are going backward with no hope of turning it around.
3. check that the rental assessment is accurate, ask an independant property manager to inspect the home for you.
that will do from me i’m sure others would like to comment.
regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Thanks heaps for your reply Westan.
Just as a quick response, and so you can help me do some number crunching……Property Value – $109,000 Neg
Rent – Currently $210 per week until 12/10/05
Council Rates – $922.14 per year
Water Rates – $149.50 per year
Stata Levy – $97.14 per quarter
Unit is 8 years old and in a secure complex of 21 units. It has 1 bedroom and 1 bathroom.Does this sound like a good investment or not?
Try Here, they have a +cf calculator, this should help you a little [biggrin]
I live in Karratha and for a fee find quality cash positive deals there, email me at [email protected] to join our database
Originally posted by Bonnie:Just as a quick response, and so you can help me do some number crunching……
Property Value – $109,000 Neg
Rent – Currently $210 per week until 12/10/05
Council Rates – $922.14 per year
Water Rates – $149.50 per year
Stata Levy – $97.14 per quarter
Unit is 8 years old and in a secure complex of 21 units. It has 1 bedroom and 1 bathroom.Does this sound like a good investment or not?
That sounds very much like a small unit in a well-known large WA mining town with which I’m familiar!
If I’m right, then that rent figure quoted will be for a fully furnished unit.
Your figures do not include property management (10% minimum – more like 12% for a fully furnished place) and contents and landlords insurance (which you’ll need especially for fully furnished).
Buying in a large complex means that you are only one voice on the body corporate and have limited ability to add value. Also at any one time one unit will be To Let and another will be For Sale. This limits the abilty to set your rent (or sale price).
Consider your rental market and that you want a long-term tenant to get steady cashflow. An unfurnished unit might be better in this regard. Also will your unit appeal to just mine workers, or others such as nurses, teachers, retail workers, etc? If those 1br units are where I think they are, then they might not be as conveniently located to town as other properties.
Why pay $109k for 1br when for little or no more you can buy an unfurnished 2-3br unit in a smaller complex (or none at all) and get a rental return that’s almost as good?
So whether it’s a good investment depends on much more than the figures. Personally I would pass and buy a larger unit in a smaller complex, well-located and unfurnished to attract longer term tenants.
Regards, Peter
Originally posted by Bonnie:Property Value – $109,000 Neg
Rent – Currently $210 per week until 12/10/05
Council Rates – $922.14 per year
Water Rates – $149.50 per year
Stata Levy – $97.14 per quarter
Unit is 8 years old and in a secure complex of 21 units. It has 1 bedroom and 1 bathroom.Does this sound like a good investment or not?
Personally, this doesn’t sound like a good investmenst to me. Beside the fact that it doesn’t meet the 11 secound guide your after,
– It’s a unit amongst many others which tend not to appreciate in value
– Your rates are fairly high
– What are your other rates, Sewarge, Body Corporate, Gas, Electricity etc.
– It only has 1 B/R and 1 bathroom.anyway, hope this helps
kind regards,
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Thanks so much everyone for your replies.
You guys are awesome and have certainly helped me a great deal.
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