bundalee, there is a huge capital gain to be made long term, so...

bundalee,
there is a huge capital gain to be made long term, so what if growth was a bit slow, or sideways for 2 years, it will go back to the long term norm in the end...

I am the bull that counts on the great history of capital gains...and growth for the past 100 years....I do not expect that to change...there is no evidence that it will....

the other point that I harp on about is...take a look from the other side of the coin....
it is not houses rising in price or value...it is really showing you a picture of the way the dollar has been devalued over the same period of time...
last time I looked some time ago....100 years ago, $100 bought you $100 worth of goods or service...that same dollar today buys you less than $5 worth....you need to find another $95 to obtain the same goods...


the rental income is simply holding costs...it is neither here nor there, but if you are paying off capital it will eventually be cash positive...


while the asset is an inflation beater, and while the world is madly printing money, your asset will not deflate the same way, cash will, as cash loses it buying power

some of us hold multiple properties, we do not break our necks to pay down the loans, we are more than happy with the performance of capital growth, and rent increases to cover the costs....we allow for one or two properties to be sold, to pay out all the other loans at the end of the day, or term of the project...average lvr is between 30-40%

going back to the topic of devaluation of the dollar.

say the standard house price was $5000 in 1940, it is the same house valued at $500,000 in 2011, apart from some updating to modern trends, and normal care and maintenance costs...

if one had left the $5000 in cash, (we are ignoring earnings and expenses in this exercise for both assets) rather than buying a house in 1940, you can see what the same house would cost today....therein lies the difference...as an inflation fighter, versus devaluation of the dollar

I recall a story on hc some time ago, a poster said his elderly dad worked his butt off, paying down the loan on his principal residence, on the north shore, in the early 50's...he worked overtime and weekends, worked his butt off...looking back in hindsight, he regrets that move...
say the house cost $5000 in those days, it is worth 2.5 to 5 million today...
most people here today, could relate a similar story from their own parents....with homes worth 500-600k plus today, after buying for the going rate in those earlier years...

if you were to cash it in now, do not expect deposit rates of 6%, they will be lower....I had money on an internet account, that pays higher than term deposit rates, without warning they dropped the rate to zero... unbelievable....they may have published the rate...but they dont send you a letter stating they are dropping the rates...to go to zero , wow...and boy was I mad...

there are 3 to 5 year fixed loans at 6% or below now...that is the future the banks are declaring to you....so expect deposit rates to be much lower

stay your ground, you are on the right track
cheers
ps my family paid around $5000 for a house on 2.5 acres plus 10 acres in 1940, the 12 acres were subdivided and sold off into 1/4 acre blocks...the whole property is worth $7,500,000 in todays value, that is land only value
48 blocks at $150,000, plus the original house $300,000

that is rather good retirement, investment, or play money