Hi
Just wanted to get some opinions from any of the forum members who have a feel for this?
When we are doing our searches, one of the things we take into initial consideration is the 11 second solution.
In your opinion if it doesn’t meet this test should I go to the next property in the list?
Does it mean that this property that doesn’t meet the test will not be suited for any of the positive cashflow strategies and approaches?
Can someone give me a picture of how a property that doesn’t pass the 11 second test, can be turned around through renovation, lease-option, or wrap?
thanks all!
Alex
Answers come from the courage to ask
Hi Alex,
Great question, and one that we are still working out the answer to. At the end of the day, it all depends on what your strategy is. If you are going by Steve’s methodology, I would suggest that the 11 second solution is a great start point, but in the current market you will be hard pressed to find a deal that immediately meets this equation. Of course, if it does – fantastic! You can immediately go on to doing your further due diligence on it.
If it doesn’t quite meet it, but is fairly close (like say 8-10% yield), then we will always have a look at it and just try to get creative to “get it over the line” so to speak. This is where you look at getting creative – subdivide, reno, vendor finance, improvements in order to increase rent, etc etc. You are limited only by your imagination.
As Steve says in his 2nd book, the 11 second solution is probably a bit outdated in the current market (he makes the analogy of “Beta” vs “VHS” in the 80s – with 11 second solution being the “Beta”. Great concept, but we’ve moved on to other things). The equation he advocates now is “Problem plus Solution equals Profit”. And that is what we constantly try to emulate. Every time you look at a potential deal, ask yourself “what problem is there in this deal that I can solve?” And then really rack your brains and look at it from every angle!
Anyway – my two bob’s worth. I hope it helped.
Best of luck!
Adam
Don’t let life get in the way of living.
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