Hi,
Just wondering anyone have any comment on investing in Mining town area especially Moranbah, these properties all seem to have good cashflow return, however I am not sure about capital growth. Any one have thoughts on that, thanks.
Mining towns can be pretty risky in terms of future growth. Having worked and lived through a couple of booms and busts in the mining industry in WA and watched places like Kalgoolie/Kambalda/Norseman etc go up in price then tumble down faster when commodities prices have dropped. You really have to get in early and try and bail out before the commoditity prices drop. Tricky. Thats why I prefer to look at areas with more than one industry.
World.
Hi maddy1769
We have 2 IPs in Moranbah, both bought mid 2004. We are in the process of selling one now – contract not yet unconditional. We made 62% CG in 18 mnths. Not bad for a property that was bought primarily for cashflow. Of course if we’d bought even earlier we would have made a lot more.
It is a riskier investment, and depends on your comfort level. We were happy to have them as part of a larger portfolio, and have never intended to hold them long term. We try to keep up with what’s happening in the area so we can make a more informed decision as to when to sell. By the way, we aren’t selling one now because we think its time to bail, but to provide the means for another opportunity.
We are hopeful of further reasonable growth, perhaps not as much as already achieved. The town has plans for expansion, which is necessary to cope with the industry boom, and even though new housing is being built, it still won’t fill the demand.
We are constantly amazed at the rents. When we bought $320 was the norm. Now its $550!
Do your due diligence and see how comfortable you feel. Be mindful that there are some downsides, such as the cost of having work done, assuming you can even get a contractor.
Good luck.
Wake
Also be aware that many banks require a 50% cash deposit for mining town properties – you might get good cashflow from them, but you have to give up a decent chunk of your own cash first!
That could be the case with smaller lenders. I know the big 4 have no restrictions on LVR there.
Wake
I see we are talking about a “MIning Bloom”
Is that anthing like Flower Power?[biggrin]Michael Yardney
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