Hi All,
I am new to the investing game, and have just finished reading Steve’s two books, and my husband and I are now eager to get investing.
We don’t have much in way of savings, as we put all our spare cash into our home loan, but because of this, we have approx $195,000 equity in our house.
I have looked at over 400 properties within the last few weeks, and have applied the 11 second rule, but to no avail. I am not limiting myself within the 10ks of the city, I am also looking in the country.
Can any one give me some pointers or perhaps expand on the 11 second rule. Am I doing something wrong, or should I just keep looking?
Ps. I live in Adelaide
A lot of people have read Steve’s book but I am sure there are not many investors around at the moment picking up quality properties under the 11 sec rule.(go on forumites, tell us if you are finding them!) It is hard to find +geared props unless you are happy to go a bit remote.I for one would not be interested in owning 20 properties returning a net of say $20 week each, all in the woop woop. I think I could make $400 a week easier and safer than that.
This would be my approach – it may not be for you.
I would first gain invaluable experience by buying locally, a very ordinary house in a decent street, doing a little reno and holding till the next cycle comes along (we hope), or even selling immediately if you can turn a profit.
This way you will learn heaps about financing, council requirements, the market in your area and much more.After that you will be in a position to work out your own strategy, one that suits you.
Some people never sell, some do renos, some look for houses on large blocks thay can develop a bit…etc..etc…
I am a big fan of Steve’s but I do not follow ALL his strategies.
i think you need to develop your own way of making a $$ out of property.A strategy that suits your own and spouses personality.[biggrin]
Cheers
GiddoGood advice Giddo! Can I add another thought?
Remember that it’s not only cashflow that’s important – capital growth can provide you with benefits too. Either live off it, use it to fund more properties or realise it by selling.
However, the trade off is usually (not always) cashflow. If you buy only properties that meet the 11 rule, then you will make a little cashflow from each. Let me tell you, it takes a lot of these properties to be able to replace a decent (and even ordinary) income. If you’re getting $20 pw you’ll need around 48 properties to replace a $50K income! Not easy!
If you want $100K you’ll need 96 of these little guys.
However, if you buy in an area with better capital growth that some of these country ones tend to get, you can make good “money” in the growth itself. Of course, you need to be able to fund the negative gearing.
There are other ways of making cashflow – Giddo outlined them – deveoping, renos, etc and there’s wrapping as well if you like that sort of thing.
Just a personal comment – I’m not a fan of selling because when you do you deplete your asset base of the value of the agent’s commission and legals etc plus forego any future capital growth. If you then reinvest in another property, you also deplete your net worth by the stamp duty on the next purchase. In my mind, unless there’s a really good reason to sell, I don’t – I simply “unlock” my profit by refinancing. It’s also tax free!!!! [biggrin]
I know not everyone agrees – but it works gangbusters for me!
But before you do anything, have a look at all the options, decide what you want to achieve and design yourself a strategy that will achieve your personal goals.
Good luck
Megan
It is good to hear someone else having problems finding properties using the 11 seconds formula.
I read Steve’s book when it first came out and became very excited with his words of wisdom and wanted to start my own property portfolio.
I also read others along the same lines. Everyone has an opinion on property investments. Ultimately we do what we feel comfortable with.
I am debating whether property is the way to go at the moment.
With a property boom behind us, residential properties are not easy to find with a decent rental return to provide a positive cash flow even after you consider the depreciation on the property.
You might be able to carry 1 or 2 properties negatively geared in the hope of capital appreciation in 5-7 years. But no empire!!
Any suggestions/advice would be appreciated on this subject.
rather than the 11 second rule… I think the new way forward is problem+solution=profit
find a property with a problem you can fix
or possibly a person who wants to buy but cant for some reason.. find a creative solution to that problem (possibly reno, possibly a wrap) and find a win win solution that makes a profitThats the theory anyway.. my partner and I are still saving…
(even that problem could be solved with a time poor/money rich money partner)
[cap]Thank you so much for all your advice!It is very much appreciated, and great that there is a forum for for time investors to access!
I have found a two bedroom home that is on a big block for an excellent price, and a good location, that has an open plan dining room and lounge room that is huge! My plan is to put up a wall, and make another bedroom, whilst still having a big enough area for a dining room and longe!Thus meaning I get more rent as there is now three bedroom, which turns this property into a cash flow positive! Thank you guys for your advice, and thank you Steve!
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