Dysart QLD

Hi Alister,

I'm always wary of just looking at the cash flow a property generates. 

I much prefer to invest in areas that have a wider macro-economic appeal e.g Capital cities/major regional centres, rather than an area that is predominantly supported by one or two industries.  If the industry slows down or shuts down what value then for your property and what about the rent?

I also believe that you need to have an exit strategy that is stacked in your favour if you have to sell i.e. easy to dispose of without too much anguish.  I believe that mining areas don't provide this.  

Be careful of becoming emotional because of the cash flow – it's capital growth you need to focus on to help increase wealth for the long term and that's why I believe major centres provide more security.

You rarely go wrong when you invest close to schools, shopping centres, employment, transport and infrastructure.

Good luck with whatever you decide.

Hi Sonti,

I am just starting out & I also looking at dysart as rental yield 9.4%.  I would be interested in the areas of positive cash flow in qld. I am on the sunny coast.

Kazimack

Hi Alaster
Any of the mining towns are going to be OK.
Check what 9% rental return will do to your taxable income before you go running off and buying this type of product.
I sell negative geared cash positive property in the Bowen and Surat basins, and I can tell you that sometimes the return on the investment can hurt rather than help.
If the yield is high make sure the product has a lot of tax deductions. These generally only come from new property.
Lets use a property that you purchased for $510,000 and assume that you are a single investor earning $75,000 per year.
Taxable income – $75,000
Rental income – $52, 624 or 9.04% yield
New total income – $127,624
Rental deductions – $51,246
New taxable income – $76,378
Present tax – $17,625
New tax – $18,059

You can see from this that you have actually increased the amount of tax you have to pay even though there is tax deductions in the home.
You also stand to gain very little in capital growth.

Better areas of growth in the mining sector would be Chinchilla (billions of dollars of new industry) and Bowen, close to the water and billions of dollars of new industry.
Regards
Kevin

Hi Alaister

I have owned a house in Dysart for 5 years and it has been cashflow positive since day one.  My partner bought a house in Dysart 18 months ago and it has been cashflow positive ever since  too.  I was in Dysart last weekend and talked to a number of people to get a feel for the viability of the town.  There was a rail extension, road widening works and the town has had considerable investment since when I was last out there 2 years ago.  I am now selling my house as it has substantial capital growth and we would like to take it out and put it into our non-tax deductible home mortgage.  We are keeping my partners house though as there is still much more to be earned.

my advice would be is to try and secure a corporate tenant on a minimum 2 year lease.