Mining town in QLD or WA

Wendy

I've been looking a lot at mining towns myself but being a cautious person by nature i'm a little hesitant.

You'll find mining towns will give very good rental returns usually providing positive cash flow on minimal outlay.

I've lived in country WA for last 5 years and can offer you my experiences and thoughts

1. You really need to know the life of the local mines and if any new mines are on the horizon- Places like Kalgoorlie, Port Hedland are well established and will be around for many a year to come, even if one mine closes down it wont effect the market much.
2. Even with the above i'd still do research into the area and mines to make sure your confident it's not going to fall over- Have a look at Ravensthorpe, people lost a lot from that and was considered fail safe
3. The cost of repairs. I live in a remote place now and if you need a tradesman the callout fee is usually starting at $1500. Even when I lived in Kalgoorlie tradesman where twice as much as what I was paying in Perth… I feel this is one of the really big issue's and as you said without looking at the place who knows how good the property is. Even in small mining towns whose going to do the building report? Maybe the sellers best mate Johnno next door. Can you trust them and if you need an independent report from someone out of town how much will that cost? Last thing you want is those profits being eroded by tradesman.

I'm really interested in buying into a Mining town as I have many friends making a fortune in Karratha and know how good it can be. The above three things are what I'm mainly taking into account and I'm sure there will be other things people can add.

Just on WA i'd say your main problem would be cyclones in the northern mining towns but you'll find most houses seem to be built to handle them. The kimberly floods fairly often and although this year is one of the worst on record it doesn't effect any of the area's you have probably looked at. Personally when looking in WA natural disasters are a minor concern.

Good luck,

Matt

Hi Matt,

Yes the amount of money being spent here I dont think it is at risk of closing shop anytime soon.
As for the 3 things you mentioned above:

1. The Mine here is massive both above and underground (It is Australia's deepest mine) and seems to have great future potential – Google 'enterprise mine'

2. Like you said there are alot of big franchises here and alot of upgrades happening so it does seem quite stable however nothing is certain obviously.

3. There are a lot of local contractors and businesses in town so there is plenty of competition with pricing. I dont see the cost of repairs out here to be too bad but I am probably not the best person to ask… As before moving out here I was living at home with my parents so I wouldn't know otherwise.

The biggest expense with an IP out here would probably be the management fees. I currently pay 10% plus GST so ends up as 11% which is quite high but I am happy with them and can't get it much cheaper out here.

The main suburb in Mt Isa to avoid would be Pioneer. It is mostly housing commision houses and is a pretty rough area. Nicer suburbs are Soldiers Hill and Healy. The majority of houses in Mt Isa are quite old and alot have seem to be done up as quick reno's. Healy heights is a new suburb that has all executive style houses but you pay a premium for them as well.

As for my properties we bought our PPOR in April last year for $324 000. It is an average 3 bedroom fibro house (very common out here). We then bought our IP October last year which is a 2 bedroom unit in a block of 3 for $200 000 and it is currently rented out for 350/week. The first lease on it ended in Feburary and it was free for one day only because I told them I wanted to go through it and have a look myself before anyone else moved in.

Hope this is of some help.

Nathan

No worries.

Let me know how you go and if you you want me to do a drive by or anything I would be happy to help,

Cheers,

Nathan 

Hi wendy, In 2006 we bought a place sight unseen in Moura, Qld. At the time we bought and for the first 2 years we were getting enough rent to cover the mortgage and tenants were aplenty. We hit a rough patch in 2008 and had no tenant for quite some time. We've actually been up there a few times now, painting and tiding the place up as it costs a lot for anyone to do any work on a house in a mining town. We bought the nicest house we could afford and have found ours rents before other more basic homes so that has been an advantage. There are several big projects in the pipeline out there, if you haev a look at the Queensland government infrastructure website. http://www.dlgp.qld.gov.au/component/option,com_mtree/task,search/Itemid,105/searchword,moura/
The other good thing is that the town is sited quite high and did not flood at all during the floods, in fact alot of Theodore resisents got evacuated to there. We are happy with our place and are now just sitting on it for a few years waiting for prices to increase again.  Its a nice little town and houses are not overpriced yet. We live in North Qld and know a lot of people working in Mines up that way and it will only increase in the future. Good luck. Do your research before doing anything.
Kelley

TLC Investments,

I just typed 'Mt Isa' in realestate.com.au and it came up with 379 results. Alternatively you could search the post code '4825'.
Not sure where you were looking?

Cheers,

Nathan

Hi Wendy,

In regards to high-set and low-set houses I am happy to be corrected but I would say the main difference would be your target market. People in there older years would probably steer clear of houses where they have to constantly walk up and down stairs.

As for the 10% management fee that is definitely not the case everywhere in Queensland and I think the average would be about 7-8% here as well. It is only because it is a Mining town the that Mt Isa has a 10% fee as most people here are on great money and getting a good yield.

Nathan