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Daedalus
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November 2, 2008 - 11:30 pm
or at least a wealthy bloke
Daedalus.
Daedalus
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November 2, 2008 - 7:51 pm
Esam,
refer: http://www.dailymercury.com.au/storydisplay.cfm?storyid=3786539
Discussions with my managing agent indicates that there is still demand for good properties in Dysart. If Marian haulage lost the contract unexpectedly at renewal time, then it seems to make some sense that someone else won it, or is about to.
Marian would have been in the ideal position to see if work was tapering off – and they didn't seem to see the contract loss coming. So I'm guessing the haulage work is still there, but someone else is doing it. And they will need to live somewhere too.
So my thinking is that if you get your place fixed up then someone will move in.
There is a maintenance guy in Dysart called Darren Hita 0438 008 782. He is the guy that a few of the managing agents use, I think because he's the only maintenance guy in town. In my experience he's really expensive, but there are no alternatives unless you go up and do it yourself. You might find someone from Mackay, but that will be expensive too because they'll have to travel 200km.
BTW if your PM is slack, sack them and get another. There are a couple of good operators in the area, and for the money they are taking, they should be earning it.
Daedalus
Daedalus
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October 29, 2008 - 8:35 pm
HopefulInvestor,
I agree with you that investors in this area need to understand the risks, and I don't mean to paint a 'blue sky' picture by any means. Investors in this area at this point can probably expect some short term gain, but will have a thinner margin of safety to protect them when these towns return to a more normal, operational mode.
Also, I'm not in the industry, so I will always defer to those closer to the game.
My long term view comes out my own analysis and my consideration of fundamental economic drivers. Coal prices returning to historic levels is part of that. In fact, coal prices themselves didn't feature heavily my thinking when I was originally investing in this area. The recent spike and associated activity is a bonus as far as I'm concerned – I got in before all that.
Good to discuss with you,
Daedalus
Daedalus
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October 26, 2008 - 8:36 pm
Hopefulinvestor,
Do you think you might be looking at the waves on the ocean, and not the direction of the tide? The link that you provide http://www.globalcoal.com/news/coalnews.cfm does indeed indicate a drop in particularly thermal coal prices on one article, but several others on the same page talk up the fundamentals of coal – particularly metallurgical. Also:
"The analyst mentions further factors to consider when watching spot coal indices, not least the habit of participants leaving spot markets ahead of contract negotiation season." (http://www.mineweb.com/mineweb/view/mineweb/en/page38?oid=63627&sn=Detail)
My view is long term, and I see a drop in the spot price as a wave on the surface. I think the tide is coming in for coal (metallurgical in particular) on a longer time horizon, based on this reasoning:
1) Developing countries need steel (ergo coking coal) for infrastructure. India and China are both developing in this sense. WIth over a billion people each and increasingly dominant economies. Try stopping them!
2) There is limited supply of coking coal. Sure China mines a lot of its own, but it also imports. Vietnam is about to stop exporting coking coal to China, because it needs it itself since it too is building a lot of infrastructure. That supply will need to be replaced – about 20Mt, which is 2-3 large Aussie mines' worth.
3) The limitations on supply out of QLD (ironically) are infrastructure related. We can't get it out of the ports as fast as customers need it, or even as fast as we can get it out of the ground. This boosts the coking coal price (somewhat artifically), but won't be addressed for at least a couple of years yet – probably more.
4) Even if we weren't infrastructure constrained, the demand is still greater than our mining output i.e. we would then be production-constrained. As long as the constraints are at our end, (the supply end) the price will be held high. This is of course the risk of opening too many mines – we will ultimately become customer-constrained – too much supply. That would be bad, and is possibly what leads to the 'cycle'.
5) The Bowen Basin is largely coking coal, so the arguments and impediments to thermal coal e.g. CO2 etc don't impact as much, if at all. Having said that, even with the emergence of Coal Seam Gas and Natural Gas, I think thermal coal still has life yet. It takes a looong time to come up with an alternative and replace infrastructure that has been established for so long.
I think we at the top of a wave, and I'm not buying any more properties in the Bowen Basin right now, but I don't think that a drop in spot prices indicates that the tide is going out. Unless someone comes up with an alternative to steel, India and China will continue to consume coking coal. Directly or indirectly, this is good for the Bowen Basin.
Just my 2 cents worth.
Daedalus.
Daedalus
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September 22, 2008 - 9:11 pm
Hi BenEdan,
Yes I believe that is correct. Moranbah seems to have broken through the threshold that makes new development viable. At one end of the town there are a lot of homes built within the last few years, and these are the most likely to be pulling the $$$ mentioned in that article. You can still get highsets and lowsets cheaper than that.
On the subject of Moranbah, this is interesting…
Housing explosion for Moranbah ammonia plant employees
I wonder if this is a sign of a shift back to employer-provided housing in the area. Remember that this is how Mornabah began.
It makes from a development point of view, since they have construction teams in the area already, and removes some of the accomodation uncertainty for potential employees of the plant.
It is interesting because although it means that these employees won't directly impact the demand for housing in Mornanbah, they will impact the need for services – which is good for the growth of the town. 58 homes indicates 58 families, which would increase the town population by a couple of percent.
It also means that even though these new houses are being built, they probably won't impact the free property market because they are all reserved for staff.
If history repeats, they may be sold off to employees for significantly discounted prices in a future down cycle….
Daedalus.
Daedalus
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September 18, 2008 - 8:47 pm
Hi WealthyJvd,
Sounds like you've got your head screwed on right, congratulations.
In my experience, the houses that I've bought as IP's are NEVER places that I'd live in myself. The qualities that make a good investment don't usually overlap with the qualities that make a nice place to live – especially if your investments are CF+. And if they are of course, you could use the excess funds to help pay off your PPOR.
Your situation reminds me a little of when I was studying. I would usually start to question why I was at uni about this time of year (as the end of year exams approached – I was generally under-prepared ). It also reminds me of the amount of time I spent theorising about what might happen years down the track. My degree is in Mathematics, so there was no shortage of financial models and projections…
Anyway, the thing I've learnt since is the only thing that really counts is that you make a definite first step. Invest in something. Your plan will certainly change soon after you begin, so don't stress about two or three steps down the track.
Just decide what your first step will be, make it happen, and get back to your studies
Daedalus
Daedalus
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September 16, 2008 - 8:35 pm
Good information, thanks Terry.
Daedalus.
Daedalus
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September 11, 2008 - 8:09 pm
Hi Aram,
Have a look back through this thread and you'll find a few references to Blackwater, like this one https://www.propertyinvesting.com/forums/property-investing/help-needed/4323195?highlight=blackwater&page=5#comment-177578.
The quickest way is to use the search feature at the top of the web page.
WRT building and pest, I don't know of anyone in Blackwater, however the yellow pages or asking the real estate agent are good places to start. Each report will probably cost you about 400 bucks.
Daedalus.
Daedalus
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September 11, 2008 - 9:58 am
Hi Mick,
Well done on your property, is it in Dysart? If so, you might be interested in this:
http://www.yourprojectnews.com/news_item.php?newsID=10084
I think that might put more pressure on Dysart the rental market in the medium term…
With regard to Clermont, I haven't really been watching it. I was aware of the Waratah announcement a few months ago, but I don't scan for news on Clermont, so have probably missed any significant news about it.
For what it's worth, I'd be surprised if Clermont rentals ever approached those of the more remote towns like Dysart. Clermont is on the highway, and is also a significant rural centre. Mining is just part of it's economy. However, not necessarily a big part.
When I visitied there I got chatting to a publican (as you do). He told me that many of the workers on the Blair Athol mine were fly-in-fly-out via Emerald. Also, since the accomodation was on-site, and they were regularly breathalised, there was not a lot of flow-on economic benefit to the town. This corresponded to my observation of the town (which felt more country town than mining town), and made sense of the lower than expected yields.
Hope this helps,
Daedalus.
Daedalus
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September 8, 2008 - 9:31 am
Hi Swany,
The CoCR looks a bit low to me, making some broad assumptions about operating costs like insurance, maintenance etc. I'd be looking at ways that I could increase the value of the property to gain equity, and increase rents to improve CoCR…
I expect that a commercial loan would be required, rather than a normal residential loan. This may increase the interest rate a tad.
All the best,
Daedalus.
Daedalus
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September 4, 2008 - 9:08 am
Hi BenEdan,
It's never too late, there is always opportunity. Analyse carefully, strike swiftly.
I've had a question posted on my blog about building in the Bowen Basin, that sounds like something that BuilderBob might know about. Bob?
The other question I had on my blog was about Capella.
When I visited Capella at the beginning of the year, there was a bit of development going on (i.e. about half a dozen houses), which is more than I saw in the more isolated towns. So I guess its proximity to Emerald helps from a building perspective.
From a mining perspective, there is a mine on the road out from Capella towards Tieri, but from memory there aren't that many.
Capella did come up early in my research because it had pretty good advertised yield at the time, but I think it was more a factor of it being a remot-ish rural town with a mine in the area, meaning depressed house prices at the time, rather than a booming mining town that was short of accomodation. There didn't seem to be much there that would put upward pressure on property prices. Nice town though.
Daedalus.
Daedalus
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September 2, 2008 - 9:16 pm
Hi guys,
There's already an airport at Moranbah isn't there? An airstrip at least. It couldn't take a jet, but it takes the regional turbo props.
Deadalus
Daedalus
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August 29, 2008 - 10:19 pm
Hi,
It sure seems like there's a lot of activity in the area at the moment. As I've mentioned in previous posts, I use Google news feeds to send me anything that hits the news about Moranbah, and I've been getting several alerts every week for months now. Lot's of new mine activity, and lots of articles about how the town is growing to support the demand.
There is definately a supply shortage at the moment, but that's also because the cost of trades is very high as well. So renovations etc become more expensive too.
Daedalus.
Daedalus
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August 27, 2008 - 5:16 am
Hi Pecko,
I saw your post in the other thread, and my thoughts were that I don't think it matters which one you go for – it's more important that you just do something. So from that angle perhaps it's good to start with the one that works out cheaper for you.
I'm sure you will find that either of them will be worth more to you than the ticket price, provided you take the information on board and make use of the things you learn.
Learning from other people's experience is a good investment.
Go for it!
Daedalus
Daedalus
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August 26, 2008 - 11:37 am
If the money is owed to the child then it is a liability, which is an accounts payable.
Let's say it's your trust, and you are the beneficiary….
A beneficiary loan under accounts receivable would be funds that the trust has 'lent' to you, but expects to get back (receivable). If the trust had a lot of cash, and you needed some, then the trust could lend you money, but it must be a written agreement at commercial interest rates as I understand it to keep the ATO happy. Still, you are better paying interest to yourself than to a bank, right?
A beneficiary loan under liabilities is money that the trust owes YOU. E.g. the trust finances a property using bank funds – but needs the 30% deposit. You provide funds from personal savings/home equity etc to lend the 30% deposit to the trust. The trust owes the 30% to you and the 70% to the bank. Both are liabilities. You don't have to charge the trust interest in this situation, but obviously you don't pay tax on that 30% when you get it back either.
It is an unsecured loan because the trust has offered no security (mortgage/title) to you over the loan.
So it's an asset (accounts receivable) or a liability depending on who owes who the money.
Daedalus
Daedalus
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August 22, 2008 - 9:46 am
Hi AimHigher,
Hmmm, dear old dingo…
When I went through Dingo at the beginning of the year, I tried to work out what makes Dingo 'tick'. I do this to see if I can identify the opportunity.

The conclusion that I came to was that Dingo exists because it is a very old town on the highway, and way back might have been about the distance you could make in a day from Rockhampton, so you would stop there before continuing on to Blackwater. I doubt this is really the case, as it's only about 120km from Rocky, which is probably a day's travel if your horse has a bad leg…
The other thing of course is that it's on the junction of the Middlemount/Mackay road.
Anyway, I concluded that it's close enough to Blackwater that Blackwater would fill first, followed by Bluff, then Dingo. Since there's not a lot happening in Backwater property-wise, I tend to think that Dingo is a ways off booming. BUT, I read no news feeds regarding Dingo, so there may be some big news that I'm not aware of.
There is a caravan park there, which is interesting, and somewhere that I don't think I'd like to stay.
I hope I haven't offended anyone from Dingo…
Daedalus.
Daedalus
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August 20, 2008 - 10:44 am
Hi Tina,
I don't do reno's but I sympathise with the problem of trying to find a deal that works. I had the same problem when I first started looking for CF+ properties. It took about 6 months of searching and researching until I started to find locations and properties where the numbers stacked up. Even then they weren't that great by some measures.
I'm now going through the same process to find small development sites. I'm resigned to the fact that it will take a bit of time and I just have to stick at it. Don't lose heart, just keep looking. All the while you'll be honing your skills and getting better at it.
To borrow a topical theme…. an olympic gold medal is not achieved on the day of the event – it's achieved in the years of preparation that lead up to the event.
Hang in there.
Daedalus.
Daedalus
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August 19, 2008 - 10:34 am
CGT is based on your marginal tax rate. So just work out what marginal tax rate you're on and multiply it by the capital gain.
E.g.. 30% marginal tax rate (income between $30K-$75K) = 30% X $50k = $15,000 tax.
If you hold for more than 12 months, halve it.
(I'm assuming when you say 'make $50K' you mean net profit)
Daedalus.
Daedalus
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August 19, 2008 - 10:07 am
Hi Tina,
I'm personally not so warm on Blackwater. There seems to be a lot of mining activity there, but I haven't seen much increase in prices over the last year or so. Perhaps all the mines are in a mature stage of development.
It's hard to see a compelling reason for prices to increase in Blackwater, but I must confess I'm not looking that hard I don't get any newsfeeds on Blackwater, so I'm not up to date with what's happening there.
Are you aware of anything new happening there? I use google alerts to send me anything that appears on the web regarding the locations that I have IP's in. It's a great way to keep your finger on the pulse.
If your property is paying its way (mostly) then that's a plus. There always seems to be a lot of properties for sale in Blackwater though, so if you're thinking of selling it might take a while to get top dollar…
Daedalus
Daedalus
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August 16, 2008 - 7:02 am
Hey Bob,
My PM called the other day about the upcoming Dysart lease renewal. She suggested somewhere between 850-1000pw is viable. Currently sitting at 600pw, so I'm looking forward to finding out where it settles.
Also, Moranbah is looking hot again with the Nitro plant moving forward and talk about the Pilbara-Bowen rail line having a coal loader at Moranbah. Have you heard much about that?
Daedalus.