Hi all,
We are deciding to purchase a PI (approx $400,000) in Emerald (Central Queensland Mining / Agriculture town) with having it positive geared at a cost to us of $45,000 (5% deposit plus Mortgage Ins, Stamp Duty etc) , OR
Since we plan to relocate to Adelaide in Sept 09, keep the money we have set aside and buy a do up property in Adelaide (Approx $250,000 – $300,000) renovate and live there putting down 15-20% deposit (to lower M/I and Stamp Duty) and use the increase in equity and savings to purchase Emerald PI at a later date??????????????????Need help
Look forward to some other thoughts to our crossroads
phlang
Hi all,
We are deciding to purchase an Investment Property (approx $400,000) in Emerald (Central Queensland Mining / Agriculture town) with having it positive geared at a cost to us of $45,000 (5% deposit plus Mortgage Ins, Stamp Duty etc) , OR
Since we plan to relocate to Adelaide in Sept 09, keep the money we have set aside and buy a do up property in Adelaide (Approx $250,000 – $300,000) renovate and live there putting down 15-20% deposit (to lower M/I and Stamp Duty) and use the increase in equity and savings to purchase Emerald PI at a later date??????????????????Need help
Look forward to some other thoughts to our crossroads
phlang
Normally I don't investing in mining towns as the prices and rental demand can change so quickly. However not all mining towns are the same so could you give us some information on what factors are likely to underpin Emerald's future. Why are are so interested in Emerald?
My preference would be to invest in Adelaide as prices are likely to be more stable than Emerald. As a Queenslander, I'd much prefer SE Qld especially Brisbane. Outside of Qld I'd invest in Sydney or Melbourne before Adelaide but if you want something to live in of course buy in Adelaide.
I just feel Emerald has a lot of growth potential due to increase in mining development ( new mines opening up & others increasing there output for 2010).Business in Emerald seem to be trading pretty good . Plus Emerald has a solid Agriculture resouce history, so it is not solely dependant on the mining industry (unlike Dysart & Moranbah).
Incomes are good and employment is stable, yields are around 7%. $425,000 with a rent of $550.00 – $600.00 if you look around. Which seems good to me (the novice that I am).
There is a proposed Bunnings going in (weather that is a good thing or not????)
10 yr growth is 15.9% (which I know is not a indicator for the future, but still is good past performance)
Large growth of residential estates on the south of the town, and house construction is constant with rental demand still seems strong.
But I am leaning towards Adelaide because of the saving of stamp duty and a greater deposit (which would be a saving of paying Mortgage Ins).
I keep you posted
Thanks for your comments
phlangPhlang,
I moved from Emerald about 6 months ago due to mining cutbacks. I believe there were up 600 people that lost their Jobs from Emerald around that time (all mining). It may have picked up again and as you say it is quite a diverse town.
They have been talking about bunnings for quite some time now – I'm not sure when exactly it will go ahead or how this will effect growth.
Just from living in the area and as far as risk factor goes I'd lean toward Adelaide. Please don't my opinion sway your decision, just thought i'd give you some feedback.
Hi Phlang,
previous growth that is so high may be an indicator that growth may stagnate or go backwards, especially with the economic slowdown reducing the demand for resources, therefore mining cutbacks. Also if there is a lot of land being released this generelly means that existing house prices go down, or again, stagnate. When there is a shortage of land property prices increase because the land is what is appreciates in value not the building.
if you are looking to spend $400k on investment property you may be better off buying two or three cheaper properties as you then spread the risk across more properties. if you only ahve one property and it is vacant for four or six weeks then you receive no income over this time, whereas if you have two or three properties and one is vacant at least the other property/ies will still be bringing in some income. Alos properties at the cheaper end of the rental market are easier to rent than higher priced properties. This does not mean you cannot get quality tenants either. You can still get very good tenants at this lower end of the market.
hope this helps, again it is only my opinion, but this is the info that seems to come through from all the real estate books that i have read as well as my own personal experience of owning five investment properties.
cheers
sonya
Thank you Tommygun & Sonya
Your comments are much appreciated and it's good to hear from people with experience.
Regards
Phlang
Hi Phlang,
I would be wary of investing in any area which is predominantly a mono-economic region e.g. mining
I believe you always need to consider a good exit strategy before entering into investment property and you limit your options in such an area.
Tommygun has lived there so I'd respect his opinion.
Much better to invest where there is a vast diversity of employment etc. We always invest close to schools, transport, shops, employment and infrastructure.
My wife and I have been investing for some time now and this basic "rule" has worked a treat for us.
Invest with your head not your heart – save that for deciding where YOU want to live.
all the best.
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