Hitting that Plateau

I purchased 2 houses in Goodna (west of Brisbane)and 2 units 5km from the CBD in 98, for which I was receiving about 7% Gross Rental Return for the houses and 6.75% for the units. I had more depreciation deduction than I needed in that year, so I switched them all to Prime Cost. This has given me a good deduction each year since, and I assumed when I bought them that rent would increase to compensate when the depreciation ran out, and when the depreciated things needed replacing! I’m now getting about 9%GRR with the two houses, but one unit is getting $5 less pw than when I started! The other has just gone up now by $20 pw. I’m starting to get a bit nervous about the cutoff date for my depreciation, which as prime cost stops dead (except for the building at 2.5%) in two or three years.
I’ve been very reluctant to invest in another IP, having seen my rents stay stagnant for so long, and seeing that it is very difficult to get anywhere near the GRR I obtained. 5% or less seems to be the norm in Brisbane now.
Steves book has given me new hope, and reaffirmed what I have come to believe after 5 years: Negatively geared IP ain’t what its cracked up to be.
A couple of things that Steve doesn’t really mention in his book: 1: The new GST based tax brackets have delivered a body blow to the negative gearer (about $2,700 out of my net bottom line per year) basically because a lot of my deductions are all sitting in a lower tax bracket and 2: The new Capital Gains Tax rule (taxed only on 50% of gains if > 12 months) sounds good but we were probably a lot better off long term with the compensation for CPI increase instead.
There is however one big factor in the lack of enthusiasm I now have for IPs, which trows all all of my careful mathematics out the window, and its summed up with one very ugly little word: termites!
One of my houses in Goodna was attacked by termites when it was less than two years old. I’ve since had an(other) expensive chemical barrier put in ($2,300) but my house has been attacked twice since. There is now considerable damage to the walls and I dread to think how much it is going to cost to fix. If I ever build another house, it will be made of steel. I’ve no faith in the moderen chemicals they are allowed to use.
I also put another new barrier around the other house for a similar cost, as it was built by the same builder who used THAT pest controller.
What does everybody else do about termites? It costs the equivalent of $40/week for a year just to put the new barrier in, and it is supposed to be replaced every 5 years. How do you keep that fine profit margin of $50 per week for your older country properties if you have to deal with termites Steve? Perhaps all your older ones are on stumps (slabs on the ground are bad news as far as I’m concerend) or perhaps they were made when they could use more effective (deadly) chemicals! If I’m ever to rise above this “Plateau” (topic in Steve’s book) then I need to have an answer to termites.