Forum Replies Created
Hi Zed and others….. regarding why I sold when I did.
Well about 5 days ago Glencore Xstrata confirmed they will be putting the Wandoan project on ice for some time if not forever. Thats why I sold the property in Wandoan when I did. I noticed the price of the coal heading south and after some research realised the project would probably not be viable at current rates. Based on that there will be NO railway either and they were the two biggest projects. Yes the coal gas will continue and most likely the pipeline but once that is done in a few years that will be it. The reason for the property spike was the mine which was to have a 30 year plus timeframe which is no more.
I suspect that we could see quite a few property owners there head for the exits over the next 12 months once reality of this sets in. Bit similar to when the Labor party had the mining tax issue and a raft of properties went on the market. We stuck that out as it was obvious that it was a blimp on scale and would be in some way sorted over time.
This will not be the only resource project that ends up being suspended, dumped etc. QLD and WA will bear the brunt of this.
What I have learnt from buying and selling property over the last 20 years is to have a plan to buy, but also to have a plan to exit and to ensure your reasons for exiting are valid. Most people can buy, but most dont do research but they go with the crowd, but most dont know when to get out and most of them get burnt in the process.
GFC 2 is yet to happen, and Bernanke has just made sure of that yesterday and once this does happen, hold on to your hats everything will get hit pretty bad.
One of the reasons for investing in property or anything else is to make a profit and/or income. Most of us do this to fund our retirement, living expenses, end up with no debt etc. In our case we used it wisely and now own our home outright, and have no debt whatsoever. That was part of our plan, which has paid off.
Look I wish you guys well there, but I would be careful not to throw all your eggs in one basket, cause if one comes unstuck the whole pack of cards will come down. It may be prudent to take stock of your assets in these towns and pare back somewhat just in case. I have been down that track as well some years ago, and through some very prudent management avoided bankruptcy.
cheers
HarryPotter
PS re the subdivision of 2 Lawton, I looked into that and thoroughly checked the council LEP and phoned them. It doesnt fit the Western Downs regional planning guidlines. Another reason I sold, I doubt they have changed it. Its all about thorough research.
Hi Derek,
Thanks for the accolade.
The thought to keep it did cross my mind at one stage, and yes you are right about the site of one of the biggest coal mines this side of world, but we had a plan and decided to stick with it.
Yes it was very positive geared and rented at about $1,000 pw and since the landcourt decision of late March 2012 the final green light has been given, which I figured would happen and most likely, give a boost to property prices which it will.The secret for me before purchasing was actually jumping on a plane and then hiring a car and driving 100's of km checking out towns like Moura (which has active mines there already) and others like Wandoan, Miles, Chinchilla etc to actually get a feel for whats happening out there. Its not a matter of just doing research on a computer screen. This is just proves the point about not just what you pay but the thoroughness of your research and dont believe anyone, not even the friendly REA.
If we had "extracted the equity", then I would have most likely gone into another mining area and did not and do not want all my eggs in one basket (like the guy that bought my place who has 4 properties in mining towns….. that very high risk IMO) also the banks were/are only valuing properties up there around $50K less than contract prices, and that will continue in the foreseeable future as they are concerned about their general exposure to property prices nowadays.
IMHO I believe too many people have believed that property only goes up, unfortunately it doesnt (90/91 for example). Then they see places like Moranbah for example which unfortunately is a bubble waiting to pop and want to jump on board before the train leaves the station. Well same is happening to Wandoan so time to move on and take the profit.
It will not take much to stop most mining companies down tools if China catches even a slight cold, thats the main reason for selling.I would prefer to move my money through a number of places, buying, then adding value then selling for a profit, I will leave the risk of buy and holding (or folding) to someone else, who usually doesnt have a plan to exit. If this means that leaving a small amount of money in it for the next person, thats great as long I am making a profit along the way.
sorry about ramble mate.
Peter
Hi all
definitely agree with scedds post re wandoan realty. Ray Mortimer is the guy there and he and his wife run the business together, very easygoing and he does handle everything thats required, and he is very knowledgable about the area. He also has contacts in Brisbane in the thick of things and he knows whats happening.
One needs to be renting property there to the corporates from what Ray has told me, as he rents furnished places out at $150 per room per week,,,, so a 4 bedder will rent out at $600 pw now but that will probably rise with the influx of workers there over the next few months, thus it would be best to go for 6 mth leases to start as most companies will not give up their place because once they do they will find it hard to get back in.
I must stress, if you are seriously thinking of buying in the area do your due diligence properly and visit the area. You wont be sorry. Get all the facts and make an offer. There are not many around at the moment and now the train line construction has got the approval to commence prices will most likely only go up from now on.
In Moura I dealt with Christine at Moura RE she seemed very helpful. I am now pondering wether to buy land and build, total cost about $340K with an estimated sell price current market around $450K so there should be around $90 – $100K in the back end, no tax for me as the entity has some losses to eat up. My other option is to buy a house out there for around $260K rented at $495 pw on an 80% lvr so plenty of positive cashflow there, as with the Wandoan property I am buying.
cheers
harry
Hi all,
well after reading your posts I started doing a truckload of research on both Wandoan and Moura. Last week I took the plunge thanks to cheap fares on QF ($146 one way to Rocky) and drove out to Moura and Wandaon. [ note for those of you thinking of doing this you cant get accommodation in either town, they are booked solid 12 months out……so I stayed in Rocky]
well worth it let me tell you. at the moment Moura is in a hiatus (please forgive spelling if incorrect) but it was confirmed after not only talking with the agent but with some locals that work for Anglo, that they are indeed bringing on 50 contractors but more are to come. There are a lot properties out there but it would appear not a lot of action at the moment, no doubt some investors are having trouble getting finance I would think.
Wandoan, well there is only 2 agents in town and the guy I spoke to only had a few properties available. The rents are all over the place but some Xstrata execs are due in town around March with some major announcement due from them about April/May.
This place is simmering and will go off once the rail line is officially announced as a go ahead. Was due before Xmas but still waiting. The rail line is a joint venture between Xstrata and a number of other firms who are paying for it to be built. Once it starts the other stuff can start as well. As usual nothing is guaranteed, but the rents at the moment are being driven by the gas drilling companies and the mine construction has not even been started yet, when that starts rents will ramp up considerably.
In both towns the houses do vary greatly with most being on stumps, of a timber outside and masonite walls on the inside.
Dont expect luxury in these older places, remember its a mining town, not a resort. I can tell you the agents do get their cut with commissions though.
a guy from cockatoo constructions in moura tried to sell me building a house with them, and the cost to build a house was around $280,000 which really seems like a rip off to me, even out there where they are only 2 hrs from Rocky, its robbery. I am checking with some rocky builders to see what they might do, because if they can come in at around $220K (total turnkey)max plus $90K for the land then there could be around $100K at the back end when you sell. A corporate rental there would take a rental on a new property like that for around $450 – $500 per week minimum at this time, which would be enough for an investor to take on without any probs.
Well thats it from me
cheers
HPhi again guys and gals,
I find it hard to believe that there is no QLD or SE QLD RPdata group out there at all and who is willing to take on another member.
anyone with information, I would appreciate a reply.
rgds
HP
Hi steve
great post on Wandoan mate.
did you get my PM, if not would appreciate links as offered in your post.
rgds
HP
hi there YI
If the mine is definately happening contracts signed building commenced, then I would be buying, but if a hunch could prove to be a dud. I have noticed with a lot of mining places in WA and QLD there is a lot of fly in fly out or weekly commuting to nearby major cities eg to Rocky or Mackay for example, so I suspect not all mining people move their families out to the mine, but some do.
I think if you can rent direct to the corporate client (ie the mine) you will most likely get a better return whether it be units or houses than going through an agent.
you will never know whether its the top (or bottom for that matter) until well after the event, so you should already have your exit
strategy set before even purchasing, otherwise you are just hoping and waiting like the rest.cheers
HP
Hi Rav
sent you a message re last post and await your reply.
cheers
I believe the Perth property market in general is now like the Eastern capital cities were, over priced. Listen to the little people what they are saying, and what you feel (you did say I think you feel the market may have peaked) then you have probably answered your own question.
As Steve has said you cant go broke making a profit. Maybe it is time to sell?
cheers
[evo]HI Mr Charchie
I would appreciate a copy of your spreadsheet please to [email protected]
Thanking you in advance
regards
Harry
