I have received information about turn key house and land packages in Chinchilla area today. They seem attractive for a number of reasons.
For around about $340k (turn key build and land) i can build a new duplex that will rent from 500-650 pw (i am being conservative) being cashflow positive.
As to my understanding I would only have to pay stamp duty on the land (about $2000) making this much more worthwhile than buying an existing home.
There is talk of the company selling the packages securing our returns at 8% for 2 years on the product we purchase. If this trend continued I have an option of selling after 2 years and repeating if the situation was right.
Basically i would get a brand new dwelling worth $340k to build (may even be worth more after valuation) for a cheaper up front price than it would to buy an existing house worth $300k, id then have to renovate to get some sort of benefit from it.
I am based in muswellbrook so one trip to the area to look around and sign paperwork is the only trip i have to make, from then its in their capable hands. I had first thought of renovating but the logistics are concerning.
There are a very small amount of houses for rent in chinchilla, and it is still a well established suburb in the surat basin hub.
Work in the area is still increasing due to the pipeline.
It would only take 7 years to pay off with my savings used as an offset.
I believe this ticks all the boxes and is a smarter investment than brisbane which I first thought of, being that its the bottom of the market now.
Im not rushing into this however, i still need to exercise some more dilligence before i commit, the numbers and facets of the deal seem to stack up.
Also interested in best way to structure this eg) trust account, or under my own name.
I am open to any thoughts/opinions
Matt39… Your DD needs to include research from this forum https://www.propertyinvesting.com/forums/property-investing/help-needed/4337447 and looking into the workforce numbers…. If you take QGC as an example, they currently employ about 9000, with a large proportion involved in construction along with a lot of contractors. Whilst there's no doubt that extra jobs will have been created once construction has completed, the gas industry does not require the ongoing labour intensive workforce that coal mining requires. The sheer volume of housing that is being created can't keep up currently but do you believe that will still be the case once construction is completed within a couple of years? Please look at Emerald, (and Moranbah), as to how the market can change, once the jobs dry up and contractors leave town. There's no denying there's a lot of people still buying into Chinchilla but be careful about buying into a market at it's peak, unless you think it's sustainable. They are marketing these packages purely to make money whilst they can, but hopefully not at your expense.
Matt as Trickeymickey says do some more research. Don;t take the word of a developer or selling agent. One look at realestate.com.au and a word with the estate agents in the area will tell you what true rents are. They do vary a lot in Chinchilla depending on whether it is leased to a company or rented to families moving into the area. Also the time it comes onto the market comes into play, some will go before they are handed over others can sit for weeks.We have two 4 bedders there and are doing alright the first rents for $550 has been rented since July 10 started at $400 a week and only vacant a couple of weeks. The second rents for $650 started at $600 on handover Feb 11 and again vacant 1 week but with a new lease in place ready to start before first tenants moved out. As I say it varies a lot don't listen to the guys doing the selling, approach the agents send them the plans of what you are thinking of building and which builder there are good and bad in town. They are the people that know the area and what rents easy and what takes time. Chinchilla has more going for it then just mining and is a growing town, there have been many changes from when we first visited the town in 2009. Woolworths, a new motel and older ones done up. McDonalds and a new service station town centre end and another service station with a kentucky fries being built (maybe finished) at the end coming in from Dolby. We where there last Nov and more parcels of land where being opened up so it is very much a growing town that is not soley dependant on mining. What mining there is will be there for a long time, Chinchilla is not going to wind down anytime soon. Parts of Chinchilla do flood so again the realestate agents can inform you more about the risky area's they should be your first point of contact in deciding if its for you or not. A good property will rent without a guarantee secured to it.
Thanks for your opinions guys they are more than appreciated. JPS I think I summed this up in my comment on the other thread but I have decided to shelve the Chinchilla idea for reasons you guys have covered. This will be my first IP so something stead that is gaining equity and allowing me to move onto another project is what I need now, and something that I can afford to sell if things are working out or I need to free up borrowing power/cash etc.
Toowoomba is the area I am currently looking at. A diverse location with links to, but not solely dependent on mining, growing population and if prediction are accurate should begin to grow with the rest of brisbane etc.
Hi Matt39
I have been very interested reading your journey with investing and impressed you are starting so early. Wish I had started earlier. I have an IP in Brook St Muswellbrook and looking for some local opinon. The property is vacant and has been since Feb. It is a 3brm in the heart of town. What are your thoughts on the outlook for the coal jobs. I am still very confident the Hunter will come back into vogue so just looking for some reasurance from a local
taxdiva wrote:Hi Matt39I have been very interested reading your journey with investing and impressed you are starting so early. Wish I had started earlier. I have an IP in Brook St Muswellbrook and looking for some local opinon. The property is vacant and has been since Feb. It is a 3brm in the heart of town. What are your thoughts on the outlook for the coal jobs. I am still very confident the Hunter will come back into vogue so just looking for some reasurance from a local
Thanks taxdiva, I would have started earlier if I could have, but now I am trying to make hay while the sun shines. I will give you my personal opinion, this may not be testament but this is what I believe. Jobs down here have slowed up quite a lot in the past 6 – 12 months. I work at Ravensworth and for the past 18 months or so downer have been upgrading that facility which brought 100's of jobs to the area. Construction in the area has slowed up so the only jobs going are for maintenance. I have been very lucky where I work since I have been there a while but lots of people here looking for work are struggling. Also there is not much FIFO out of this area because the area is well populated enough for the workload. My mortgage broker had a house near Aldi and was renting it out fully furnished for $900 a week, this made me want to buy a block of land and build, but just before I decided to build i found out hers is now up for rent for $400 a week and she cant get anyone in. Rents have dropped and vacancy is high at the moment, there are many vacant houses.
I am now looking at Toowoomba and other areas in Brisbane, because I'm from Queensland, for something more solid. In my opinion the hunter may pick up, there is still lots of coal but with prices and taxes on coal its unlikely in the short term it will boom again like it has in recent years. Figure out what is best for you but it might be one of those ones where you cut your losses and move on to something out. Possibly ask some real estates down here for their opinions.
Hope it all works out for you
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