hey everyone i was wondering does anyone know about the 11 second solution? because from what i try and make of it,it doesnt work.so if you buy a house for 200 thousand and expected rent is 160 dollars a week you halve it making it 80 then multiply by 1000 making it 80,000 dollars.meaning if you want to positively gear the house you shouldnt be paying more than 80,000 dollars for it.just wondering if the solution still works? i try it with heaps of propertys and cant seem to make it work to positively gear it.would love to get some feedback
thanks matHi Mat,
The 11 second rule is kinda outdated and is no longer applicable in today's property market.
It's just a fancy (or complicated) way to say "10% gross rental yield"
It made a good story at the time but 10% yields in todays market are generated by creative strategies not purchased from newspapers!Is there a new similar tool that allows for a quick assessment to filter out properties based on your goals?
Cheers – first post
turtie22 wrote:The 11 second rule is kinda outdated and is no longer applicable in today's property market.So that would make it a "guideline" rather than a "rule"?
I'm curious, does anybody have a credible explanation of why the 11 second rule used to work but now doesn't?
Yes F;
once upon a time, in a far away galaxy, there were properties for sale for around $50k with a rental yield of over $5k per year, and in an area that not many people knew about.
Then it became public knowledge through a book and the universe rejoiced.So what do you reckon Marc, was that time an aberration before a return to the normal situation we’re in today? Or is today the aberration, and will the 11 second rule work again at some point in the future? Or (third and final option), have we reached another “permanently high plateau” such as the one celebrated by Irving Fisher in the early part of 1929?
In the case of the first or third, wouldn’t the right action for Mr McKnight be to withdraw his book for sale?
F;
I think back then it was a case of a country town that no-one really knew or cared about, and the freeways weren't built and Steve's book hadn't been written. In country towns like that (Ballarat) there was traditionally not a lot of cap growth, but the rents still continued to creep up with the CPI, so by the time Steve arrived the rent returns were rather healthy. I reckon this was the norm for those towns in that day and age.
I don't think it will ever return as the interest in property investing is a lot more widespread than it was in the late '80's, early '90's when Steve was running amuck in Ballarat.
I'm even seeing cap growth in places like Deniliquin (where my Mum lives) as investors start to snap up the cheaper properties because of the half decent rent returns that used to be there, whereas for the last 30 years not much has really happened there.
An area that has cheaper, affordable properties with decent rent returns gets quickly noticed thanks to forums and r/e websites that spread the news in nano-seconds, and with so many more investors around now than there used to be thanks to the spruikers and all the books and videos/dvd's, the increased interest drives up the prices very quickly, thus spoiling the great rent returns we are all seeking and which attracted us to those areas in the first place.
It's getting to the stage now where almost any areas that have cheaper, affordable properties are being swamped by investors desperate to get into the market as the affordability disappears, thus driving up prices and producing (false) cap growth even in areas like Donald, Vic.
I think Steve's book should be on the shelves as a work of History rather than investment.Hi Matthew Aiken 20/6/07 – re 11 Second solution.
You guys just don't get it do you? I have 3 properties that I have acquired using the 11 second solution. The last one was purchased in Cairns for $98,500 and getting $205 per week. I have had this property for 8 months and it works a treat!!I have another property I paid $125,000 for and is now valued at $325,000 and I receive $320 per week rent. That is a very good postive cashflow property.
I have another property now worth $600,000 that I paid $220,000 for and the rent I get is $500 per week.
I have another property that had 2 bedrooms and I am enclosing the laundry with a concertina door and putting a wall partition up making another bedroom = this adds another $150 per week rent to this property as i rent it out by the room. Therefore, I am receiving $600 per week for a property that costs me $520 in repayments. Not great but making it a positvely geared property.
Nobody is going to tap you on the shoulder and hand you a positively geared 11 second solution property. You have got to get off your fat butt and look for one.
Hello – Any other questions about 11 second solution!!!??
Well done Fann.
Would you mind letting the forumites in on where your properties are so that the ones who are asking the question about where are the 11 sec rule properties are might benefit?
There has been a lot of discussion about the 11 sec rule and how hard it is to find c.f.p using it, and most people are agreed that they are still out there, but getting very hard to find unless one does what you have /are doing by adding value.
How did you know I have a fat butt; do you have a secret camera peering in at me while I type? It's not that fat really; it's only these pants that make it look fat. I promise.It sounds like fann is the only one to have read Steve's book and understood the idea behind positive cash flow properties.
In his book, Steve said "p.c.f. properties are made not found" (or something like that), so don't get so hung up on this 11 second rule. As individuals investing in property it's your job to gather as much information as you need, then decide what information to use. No one is going to hand you a p.c.f. property on a silver platter, unless you pay them a commission.I take my hat off to Fann (to reveal my shiny dome
) great job. I think we may have still missed the point though. If someone wanted to buy Fanns house that is now worth $600k and get only $500 per week rent for that outlay, it hardly fits the eleven second solution as it did when Fann grabbed hold of it……..Of course, for the more creative and time or money rich there are locations and opportunities around to make the most of, and 'create' the solution, rather than 'buy 'it…..but what happens is the first book or two many read that are starting out (such as Steve's first two….which were excellent) are full of 'bought' eleven second solution-type-properties, which as I have previously stated elswhere, simply are not readily available in most areas with any significant population any more. Always enjoy reading and hearing about many investors who have taken the property development route and seen the 'fruits of their labour' (including many on this forum) in order to make the returns they do. For what it might be worth …. Fann is right … I've just passed back a 700pw prop going at 310K … there are plenty out there if you do the research .. the value is quite different to the individual depending on what that individuals particular investment goals are … as investment dollars get sucked into the mining whirlpool about the place – and we have places renting at 1600pw in a lot of em … there be just as many nestled away in the calmer waters
) great job. I think we may have still missed the point though. If someone wanted to buy Fanns house that is now worth $600k and get only $500 per week rent for that outlay, it hardly fits the eleven second solution as it did when Fann grabbed hold of it……..Of course, for the more creative and time or money rich there are locations and opportunities around to make the most of, and 'create' the solution, rather than 'buy 'it…..but what happens is the first book or two many read that are starting out (such as Steve's first two….which were excellent) are full of 'bought' eleven second solution-type-properties, which as I have previously stated elswhere, simply are not readily available in most areas with any significant population any more. Always enjoy reading and hearing about many investors who have taken the property development route and seen the 'fruits of their labour' (including many on this forum) in order to make the returns they do. 
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