Forum Replies Created
This article from SPI Online came across my desk today.
"Moranbah rents collapse as mining giants freeze leases
Tuesday, 3 April 2012
By: James Mitchell
Moranbah is in the grip of a rental standoff led by a number of mining companies unwilling to pay up to $3000 a week to accomodate workers, Smart Property Investment can today reveal.
The Moranbah property market is one of the favoured investment hotspots in the country with investors averaging yields of between 10 to 15 per cent.
But with mining companies refusing to rent any more properties in the area, according to some sources, investors could see a quick contraction of their yields and a sharp increase in vacancies………………………………………………(read on for more)
More big money being invested in the Pilbara and from many different sources and with rent returns 10%+.
By comparison Kalgoorlie is really only a gold town and its fortunes are dependent upon gold prices – it is a bit of a one trick pony in that regard.
Trouble is the Pilbara has higher entry level costs than Kalgoorlie.
The grant did make new properties more attractive – moreso than normal market conditions would have suggested. While the grant may have added a few extra 'new' properties to the market it did serve to detract from similarly price3d s/hand properties.
SamAus74 wrote:Inititally I thought and being naive that you just buy and hold waiting for CG and then buy again but I think Australia isnt like it used to be 5 – 7 years ago and hoping for CG is really just wishing at the moment.I dont want to be in a situtation that I buy my 2nd and 3rd then I cannot do anymore… because I didnt have the right strategy.. any advice from those more expereinced then I am who reached this cross point at sometime and how they decided the path best for them.
Hi Sam,
A couple of key comments here.
Some investors have built their portfolios on good fortune and circumstance rather than good investment decisions.
We have 'just' come out of a time when anyone could just about pick any property and it would have gone up in value. This coincided with a time money was very easy to get and the basic buy and hold was a strategy that worked at that point in time. Things are now very different and with banks tightening lending rules your chosen strategy will need to be able to address the two key issues lenders look at – serviceability (can you afford the loan) and security (how much spare equity do you have).
Given this your preferred strategy will need to deliver capital profits and/or growth along with higher than normal rent returns. It is often not possible to get both of these in the one property so you may need to consider a more balanced approach and look at your overall portfolio needs.
Put simply your formula may be two growth and one cashflow property – the order of purchase is also important. Obviously the right mixture for you will be dependent upon your long term plans, current situation, risk aversion levels, time resources and so on.
I would suggest you go to your broker and talk about financing aspects of your journey – this is more important than the property. Find out how you stack up from a finance point of view, equity levels, spare income etc and this may help you determine what type of property is right for you.
Seriously look at value adding type strategies; buying under value, renovations, small scale developments, re-zoning potential, and so on. Often these strategies also provide a higher rent return than typical for the area – which is also to your advantage.
What's that phrase about buying umbrellas in winter?
anandd wrote:see properties for rent in Point Cook – which was a hot area for investors several years agoBecause it was being heavily (& 'successfully') marketed by organisations to investors.
Sorry to hear about the fallover of this project in Tambrey.
Someone mentioned the phrase 'too hard' – this may well be on the money. Developing and building in the north west does require an extra level of expertise and due diligence by the developer and builder.
We have some development projects in Karratha using experienced NW builders. Before launching into more projects we are waiting for some resolution to the Shire of Roebourne's review of storm surge heights and the impact this may have on areas that can be developed. We are also waiting for clarification on some rezoning/zoning adjustments/reviews that are currently underway in the Shire of Roebourme.
Have also heard the planned big Mirvac project is also 'under review' – not sure of the reason.
RBA recently released a discussion paper on this topic. Try the RBA website for full speech/report.
Property Observer wrote a summary of the research available here
Old original post I know but I have been impressed by the professionalism of Andrew Allen's cooments on this board.
While I cannot comment on his work at the very least it would be worth picking up the phone and talking to Andrew.
Do a search on him.
Hi Ryan,
Maybe make enquiry of a friendly local agent. Explain the situation and they may be able to give you the answer.
Derek
Hi Andrew,
You're right – it is often the other side of the FIFO stuff that we don't always hear about. Mind you a couple of friends of mine who live in Hedland don't hold FIFO people in the highest of respect. By way of contrast my friends have made Hedland their home and joined in community organisations, give back, do the social stuff with long time family friends, look after the environment etc whereas their opinionis that many FIFOs take everything they can from the community without paying back.
As an aside Questus is building large numbers of NRAS properties in Karratha and Hedland. Initially I couldn't work out how this could be in a high income town and with NRAS income restrictions, but it would appear they are marketing many of the units to small business owners who have to pay a premium accommodation allowance on the wages so they can house their staff. I suspect the businesses are buying the NRAS properties in the company name and then on leasing the property to their employees in an effort to have a more stable workforce.
Inquiry being conducted by the Fed Govt into the effect FIFO work practices are having on 'society' in the local communities into which the FIFO's fly. The inquiry was in Pilbara last week and comments were made about the social effect of FIFOs, women feeling uncomfortable in these towns, break down of families, male domination of society, cost of housing and so on.
Nothing unexpected really. Be interesting to see what the final report looks like.
Interestingly of the 'top' 15 suburbs in Australia with arrears of more than 90 days 6 were located in Queensland with Gold Coast featuring twice (South and East) and Ipswich, Logan and West Moreton being the 'metro' areas. While confidence may jump up – I would think stats like this may cause the average punter to put the wallet away further.
Buyers market for some but …………………………………..
Aaron_C wrote:Speak to as many people as possible. You don't have to follow the advice of every single person but by talking to people you get a better idea of what you are comfortable with and how you should go about your own business.Good comment this one – some people are afraid to ask questions to different people for fear of being 'sold' something. Having conversations as per Aaron's comment does help the knowledge bank grow much faster and in a more rounded way. This, in turn, can help reveal inadequacies in a salespersons 'pitch'
Hi Andrew (again),
You may also want to identify which state you are happy to invest in – you may get some recommendations.
Andrew Stephens wrote:Hi Nigel, my idea is to buy cash-flow positive properties with improvement potential. That way I feel once I have have enough deposit and post renovation equity of the previous place, I could borrow again and again. Would an LVR of 80% always be needed? I would ideally be doing developments but I guess I need some Market experience and strong equity to get started.Hi Andrew,
Good to see you have a 'plan' and type of property in mind. This will improve the likelihood of you achieving success whichever way you end up going. Just a passing comment for you to consider – in your first post you indicate a shortage of available time for you to get your teeth into property selection and then in this post you indicate a desire to 'renovate'.
Is the renovation something you would consider doing yourself, getting a project manager, self-managing etc – All questions are relevant as 'time constraints' may impinge on your renovation plans in the future.
If you are looking at developments then you will certainly need plenty of equity – funding for developments is, as a rule of thumb, pretty hard to source for mum and dad type investors. Banks will probably require pre-sales, a strong track record, you having plenty of skin in the game and any other combination of 'hurdles' they see fit to put in your way. Obviously things do change and different lenders may have slightly different takes on some of the restrictions but ………………. food for thought for you.
You need not restrict yourself to 80% during the early stages of your investment journey – based on your rough outline in your first post I would look at 95% lend so you can get in the game a little earlier. Now I know this means paying LMI but this will mean you have to save a smaller deposit initially. Clearly there are plusses and minusses to this but a good broker can be of assistance while you investigate finance options.
Hope this helps.
Dreaming Big wrote:Jamie, we do plan on turning our PPOR into an IP eventually and we also plan to be very active in the propery investing areaIn this case there is no question – offset.account will serve you best in the long run.
hornbill wrote:… Selling is probably not a good idea now as market is pretty flat..Buying and selling in the same market is not such a bad thing.
Sure you'll probably end up selling for less than you wanted but if you do your research and due diligence the person selling the property you move into will probably be doing the same thing.
When the whole market moves in either direction your dollars will still buy you a similar property.
To give you an example of what I mean we paid $49K for a 3 bedroom house in the Perth suburb of Warwick (nothing special about the suburb – just your typical suburb) in 1986 and sold it for $143K in 1998. People have commented on tripling (approx) of profit we made – but if we turned around and used the money to buy another house without additional borrowings we would have ended up with a similar house.
Sure the situation can be accelerated through some form of renovation etc but without this you are buying and selling same same.
Is your intent to add additional borrowings to your existing loan to help the step up in property type, move slightly further out of Melbourne or ???????????????? – the answers to these questions will also determine what the right course of action for you is.
JT7 wrote:this assures the need for thermal coal to use as an alternative for energy production. Japan is also still our biggest customer in relation to hard coking coal.Japan is big buyer of LNG too.
