no boggle eyed spittle spraying please, page-42

Dogma,

My interest in St.Kilda and surrounds is that they are areas which have a preponderance of rentals. Elwood (adjacent to St.Kilda) has about 60% of its properties as rentals.

I don't know how much you know about these suburbs but they are inner suburban, on the ocean and have quite a young-singles demographic. Lots of professionals like to live there and if you like pretty girls these suburbs will be a joy to visit.

These suburbs have not done well in recent years as property investment has not been as attractive as the share market for investors.

This has led to a chronic lack of rental properties and vacancy rates below 1%. The effect of this is that rents in these areas are rising. The effect is slow as is everything else with property.

The result will be some attractive rental returns at a time when I think interest rates will drop, at the end of this year and into the next. I also think disaffected share market investors will slowly be returning to property investement in these areas, attracted by the better rental returns.

The result of that return will be rising capital values (but slowly to start with).

My timescale is 2009 to show good signs of improvement with 2010 - 2012 taking off.

Right now there is less competition for places and you should be able to get some bargains if you make enough offers around the place. Lots of sellers will tell you take your low offer and shove it where the sun don't shine but if you persist you will prevail.

If you try to make the same moves in late 2009 you'll have less chance of finding a distressed seller.

If you are a patient investor the extra year of waiting will be worth your while.