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From: Gail H


I'm not too sure about the assumption that it is capital growth that pulls the rents up. Many cities with high capital growth have very average yields (too many investors competing I guess).

The main danger that I see with low capital growth is that once you've loaned to your max it may be hard to finance subsequent IPs as you can't generate much more equity to raise the deposit against.

I've recently bought flats in a town with really high rents, but rockbottom prices. The problem is that the prices might stay rockbottom (while rents are on the way up). But boy can I get a lot of property (and rent money) for my dollar! Personally I like it that way, as I don't want my IPs to be too much of a drain and this way I am acquiring the properties for free. Now, that can't be too bad, can it?

Gail
 
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From: Gail H


Sorry, this was meant to be a reply to Steve and the topic Negative/Positive gearing.

Gail
 
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