Hi all,
I just found a property that looks highly +ve.
However it’s in a very small mining town (population < 5k) and I’m thinking that the chances for capital growth are next to nil.
Would you still consider investing in a property where the capital growth chances seem impossible?
Hi OlorinSledge
give us the figures
price
Rent as is
What can be doneto increase rent
How many vacant houses in the town
If a minning town how many years left in the mine, can town survive without a mine?
I buy often where there is no expectation of capital gains, for instance i bought in St Arnaud (pop2500) Vic. 2 months ago for 27K, 5k for new carpet and paint, so say cost 36K but will rent for at least 100pw.
regards westan
price
20k
Rent as is
$75 pw
What can be doneto increase rent
Not sure – has A/C.
How many vacant houses in the town
I do know that there are a number of properities in the town being sold, with most being around the 30k+ price range. Initial glances on rentals doesn’t show anything…
If a minning town how many years left in the mine, can town survive without a mine?
I doubt it – though the town has 3 motels and about 5 hotels so it can’t be too bad.To be honest, I haven’t checked rates/insurance/mgt fees etc but at first glance its close to 19.5% gross pa. I still need to do due diligence but was wondering if its a waste of time to start based on nil/low capital growth gains…
if the figures stacked up i’d look into it. find out those other things
Property 20k loan interest 24pw @5.65%
insurance 4pw
rates 8pw
water 7pw
Agent @8% of 75 6pw
Total 59pw costs
Profit 16pw (not much in it)
Unless you can change the figures i’d say no thanks
(i’d like to put at least $25pw on a deal this small, you need it to cover repairs/vacancy etc).
But if you found out that the mine was going to expand, and put on 50 people etc, then maybe its a goer.
westanThanks for the advise westan, appreciate it.
I’ll look at getting insurance/rates/water/mgt costs and check the numbers.
Be careful with mining towns! Comming from an industry that deals with mining I must warn you that a population can increase and decrease rapidly! If the mine is doing extensive extensions and refurbishment then the population booms for a few months but dies quite quickly once it is over. One such example is a town where you cannot get accomodation at present because of a extension but will die down quickly as soon as the work is completed. Be sure to look into it further.
Cheers
Conrad
Seems decent. See if there is any leasing arrangement with the local mining company.
Hear Hear Wilko91!!
From the experience of living in a mining town of 4000, in the 5 years that I was there I saw the prices go from ave $100K to ave $350 then back to $130 when I left. In the 3 years since I’ve been gone, it has once again gone through this exact cycle.
I would advise you to research the company and ask how many years the life of the mine has left in it. In the above case, it was 200 years!
Cheers,
Shell.I think the question is whether or not there is someone who can manage the place for you? The numbers might stack up but if no one is close enough to manage the property then you could be in trouble.
Capital Gains or No capital gains is up to you. Positive Cashflow is not to be sneezed at because it helps service the loans for negative geared properties for the future.[
]You will always miss 100% of the shots you don’t take!
Well, I rang up about the property and here’s the info I got:
3br fibro, carport, A/C, lounge, kitchen etc.
Cost: 20k
Rent: 75pw
Mgt fee @ 9%: 6.75pw
Rates/water: 13.50pw
Insurance: 4pw
Morgage P&I @ 5.97%: 32.10= +18.65pw.
However, on talking to the agent he said that the current tenant is looking to break the lease and that the vendor had agreed. So looks like no tenant. The agent also said vacany was a problem but that it was on the ‘good’ side of town – who knows how true that is… lol.
Cash on cash returns though look pretty good however as I can access 20k already (LOC) – whether I’d want to buy without tenant is another question.
Ah well, I’d say maybe it’s not a good buy afterall… [
]Is this in Tassie? Situation looks similar to other properties I’ve seen. If it is, I can let you know what RE agents have told me.
Cheers,
Jon.
Is this in Tassie? Situation looks similar to other properties I’ve seen. If it is, I can let you know what RE agents have told me.No, not in Tassie. I’ve been checking Tasmania but been finding it hard to find +ve properities… [
]M&K,
I like your thinking, I’ll have to keep that in mind for the future
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Jam for the Great I Am!M&K – I’d include a phone, just make sure that it’s a mobile number. If you have a prepaid sim & secondhand phone, you can use it for just receiving calls and it should cost no more than about $20 for 6 months.
That way you’ll get people calling & they will have no idea where you are. Besides, you can use the excuse that the place is rented and you’ll get back to them should another place become available.
By keeping their number, you can always phone them back should you decide to buy in their town *without* having to forgo a “weeks rent” penalty having a managed agent find the same tenant you spoke to earlier.
Edit: And if you go phone only, you don’t need to hire a PO Box either (possibly saving you a hundred bucks or so).
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