slumlords are a symptom of an ailing system, page-77

damien,

if the rent doubled, the property price would have doubled to, so still 4%

here is debt to rent ratio for you..


$270K loan $30K deposit = $300K house


Start
$300K house = $12K rent = 4%
$270K loan = $27K interest = 9%
Net yeild = -$15,000 (minus other costs) negative gear

fast forward 10 years, add approx 50% inflation

Middle
$450K house now worth = $18K rent = 4%
$200K loan = $18K interest at 9%
Net yield = $0

Fast forward another 10 years, add approx 50% inflation

Near End
$675K house = $27K rent = 4%
$100K loan = $9K interest = 9%
Net Yield = $16K (equivelent to $5,000 in todays money)