Forum Replies Created
Well Guys and Girls
Mine is a bit boring just a Commodore 2009 bought new due to the Govt incentives at the time. And on which I have clocked up 90,000 Kms in just under 3 years. My 2nd car is a Proton which I won in a competition I didn't known I entered when I put down a deposit on my last Building Project – A big thank you to the Builder for that.Hi CMS and eveyone
Looks like there may be light at the end of the tunnel I just received an email for one of the agents in Moranbah which said in part "Our Rentals Department has just started negotiations with some of the larger mining companies over the past few days regarding new leases that they will be taking on." Hopefully this is the start of this getting back on track up there.
Cheers
Hi FTI,
Have to agree with Stacey Surveying – need more Info – there are a few options that you might consider depending on what you can put on the site. Perhaps doing a 2 staged development and A Joint Venture with another Investor are a couple of ideas that spring to mind. You could also look at building 3 – selling one and keeping 2 if you can't manage the loan.
As for building costs I work on $1100 per sq metre to start plus development costs. So a 200 square mtr unit would be $220k to build as an initial guide.
Hi Moxi10 (Tony),
I think you made a good call to hold back and I agree with your comment that "Although demand for accomadation should pick up again soon, the recent inflated rental rates may not be attainable again. ". There was a window of opportunity that I think has closed for the moment. The Supply Issue is an interesting one – I believe that there are around 1000 new dwellings coming through and will be available in the next 6 to 18 months. That comprises Units, Houses in backyards, knockdown rebuilds and the new land release. This will probably fix the issue short term (in my opinion) – the question is will the town be expanded after that and will the new rumoured 3000 man camp be built. All interesting issues that are worth watching.
Cheers
Hi Kate
My suggestion is call your Building Inspector and discuss with them, Also give Council a call and speak to the Health and Building Department and run it past your Solicitor also.Cheers
luke86 wrote:Thanks for your feedback. What I was curious about is how you get the cash out of the deal if you are building and holding.One option is to use a trust- where you lend money to the trust and then repay the loan using a LOC secured against the completed development.
I just am not sure if there is a way of doing it if you buy in your personal name, because if you set up a LOC and then draw it down to put the money as cash into a savings account, the interest will not be tax deductible.
I use trusts because I think they are more flexible and you can 'get money out of the deal' (as the term seems to be) but it would be good if there was a way to do this if you buy in your personal name.
Cheers, Luke
Luke,
I also use Companies and Trusts in doing my projects -they are effective for both minimising tax and asset protection. So why do it in your personal name ? Still I don't see the difference in using the cash funds to develop and then refinancing on completion to repay Cash funds invested. As far as interest is concerned it should be deductible either in a trust or personally – But attempting to justify charging Interest to yourself might be tricky (If that's what you are inferring) Either way you should check with your Accountant before proceeding down either path. Which ever path you take – I believe you keep it simple and always have a paper trial.
Cheers
luke86 wrote:Hi Ballerina- just curious as to how you got your investment out- did you purchase the property in a trust, loan the money to the trust and then take out an LOC in the trusts name to repay the loan toi yourself? Or did you purchase in your own name and find a way around refinancing?
I am working though ways to do this and it is good to see what other people are doing, after all that is what forums are for!!
Luke,
There are a couple of ways you can get your money out of a deal – it comes back to your strategy and the deal.
Option 1The first is to buy build and sell all of the project.
Option 2 is Sell part of the project to recover capital, keep profit in the deal and refinance.
Option3 is refinance the whole deal on completion.Which option is best will depend on equity and income created, why you did the deal to sell or keep and your personal situation.
Hi Ballerina
I did a road trip last year went from Toowomba thru Dalby, Chinchilla, Miles, Wondoan, Blackwater, Emerald, Dysart, Moranbah and out to Mackay.What I recall about Dalby came from a local builder who indicated that there was a lot of stock sitting vacant at the time. So I would do some homework on supply and vacancy in town.
Cheers
Cintaku
I am wondering why you want to reinvent the wheel? Ceiling heights are standard at 2.4 metres so 2.7 is higher but 3 metres – WHY? Also my experience is that a good size bedroom is considered ,3 by 3 metres – Some project homes rooms are even smaller – my opinion is the master bedroom needs to be a bit bigger by the other rooms are fine even 3.3 x 3.3 is considered large. And would you get your money back You need to build to the area thats been my experience – not too small or too large do your homework. Many people make money from the knockdown/rebuild strategy
Cheers and all the best
Hi everyone,
Just came across a couple of articles that I wanted to sharehttp://www.hotspotting.com.au/article/2304-high-growth-high-returns-and-high-risk
http://www.brokernews.com.au/mpa/article/how-to-invest-in-mining-towns-126231.aspx
http://www.apimagazine.com.au/blog/2012/04/is-the-magic-of-moranbah-over-2/
There are a many more on my facebook page
Cheers
Hi Lukey
Is the land registered? Perhaps you could buy some time if its unregistered or perhaps you could look at a delayed settlement. I have had delayed settlements up to 12 mths after exchange.
Warren Buffett once said: “Be fearful when others are greedy, and greedy when others are fearful”. Reading through various posts, articles, blogs and publications has been an interesting exercise this morning. What do you think of this article ?
http://www.apimagazine.com.au/blog/2012/04/is-the-magic-of-moranbah-over-2/
Warren Buffett once said: “Be fearful when others are greedy, and greedy when others are fearful”. What do you think is this an over reaction by the media?
http://www.apimagazine.com.au/blog/2012/04/is-the-magic-of-moranbah-over-2/Hi Again Everyone,
Rereading through the posts in this thread has made me think – The short answer to the question is there are mining towns that are too hot at present – Dysart peaked last year and dropped, Moranbah is going thru some issues now – I commented on this back in Sept 2011 on my facebook page "mining towns have volatile markets and are highly vulnerable to the cycles of the resources sector". My opinion is that this is the top of the market at present and caution should be exercised – I have a property with a rental yield of 25% on cost but expect it could fall as low as 10 to 12% in the future – If you buy now on a yield of 16% now you could expect that to fall to around 6 or 7% on cost when supply increases or demand decreases in the future."
Having said that I believe that there is still good long term potential in the area and that this is a short term hiccup that will pass and will sort itself out. The dramatic headlines of Prices drop by $100K and rents drop by $800 per week are somewhat misleading as there are based on asking prices not on actual market prices achieved. You can ask whatever but the market price is what someone will actually pay.
I still believe there are opportunities else where and you just have to look around. Finding another Moranbah will not be easy as it is pretty unique as far as yields are concerned but then I don't think one has to. And for those who chase big returns there is a lesson here in risk management.
I am adopting a wait and see attitude on Central Queensland and am investing back in the Hunter Valley for now. The returns are not as high but the market is stable and demand is constant as the saying goes "little fish are sweet".
Cheers and happy investing
moxi10 wrote:Hi Mrs P ……………
I personally would expect the rental demand to return to it's recent high levels in the near future, as there is no short term solution to the lack of supply in Moranbah, and I suspect that the combined efforts of the mines to hold back demand will have a limited impact in the near term.
However, it is obvious that investors who have recently purchased at elevated price levels, expecting high yields to cover their loan repayments, will be experienceing stress currently as they wait for demand to resume. There are some obvious lessons for all of us here.Hi Mrs P ,Moxi10 and everyone,
It is a question of supply and demand – It appears that Demand is currently being withheld by more than one of the major players in town and there is the Increased levels of supply coming in the pipeline. The other question is how sustainable are these rents long term? With new projects coming up and workers needing to be housed is this just a short term blip on the radar that you will have to ride thru? It will bw interesting to see where the market is in 3 to 6 months.
Hi Everyone,
Its been interesting catching up on all the posts since the new year started. What a difference a few months can make and it just demonstrates the volatile nature of investing in some mining towns. I have been following whats has been happening in Moranbah and the surrounding areas with interest for some months now in various forums – My views are as follows :-"Rents have climbed but my view is that the rents have peaked at present and have the potential to fall – its simple economics , supply and demand, there are a lot more properties available for rent now ( about 100) than there were pre-christmas (around 10). Plus there are around 300 units under construction and around 200 new dwellings in the pipeline with land releases coming. It's a case of lets see what happens during March and April." That was my posted comment on Terry Ryders (Hotspotting) facebook page back on 12th March.
And on My Facebook Page back on the 29th September 2011 – "Read this article it has some good info including that mining towns have volatile markets and are highly vulnerable to the cycles of the resources sector". My opinion is that this is the top of the market at present and caution should be exercised – I have a property with a rental yield of 25% on cost but expect it could fall as low as 10 to 12% in the future – If you buy now on a yield of 16% now you could expect that to fall to around 6 or 7% on cost when supply increases or demand decreases in the future."
So I tend to agree with GloveboxInvestor – That i am also bearish on certain mining towns at present and am adopting a wait and see attitude.
One of the big factors in Moranbah and Dysart is the number of investors that bought into the market last year, that were taken up by Investment groups and Seminar Spruikers who have no regard for what is actually happening in the area – they just jumped on the bandwagon. And those people will now pay the price of getting caught up in all the Hype.
Josh, I disagree that towns with populations of less than 30,000 are that small – I have been investing in the Hunter Valley mining town with a population of 20,000 for almost a decade and it is quite self sustaining and stable. The thing is unlike QLD mining towns it has other industries around also. But I totally agree with you on your supply and demand comment.
CMS – you and many others will need to bite the bullet and make a decision, but now the the wet season is over and once the strikes are resolved things will pick up again. Everyone just needs to be aware that there are around 1000 new dwellings (according to my calculations) coming onto the market in Moranbah over the next 6 to 18 mths, made up of New 3 story Unit complexes, Backyard developments, Knockdown rebuilds and new land releases and this will impact the rental market. All the info is out there you just need to do your homework.
I trust that this has been both informative and helpful.
Cheers
Derek wrote:HI Sean,Coincidentally this just arrived in my inbox from Terry Ryder.
"What's a "boom town"? Here are four definitions…
- A town of 1,100 where $3 billion will be spent Hedland – check
- A town of 11,000 where $9 billion will be spent on its port Hedland – check
- A regional centre with a key mining province on one side and a port undergoing a $10 Billion expansion on the other Hedland – check
- A regional city where the port, the airport, the train service and the road system are all undergoing major expansion
These are the towns and regional cities where the real action in the Australian economy is happening."
MY INSERTIONS IN RED
Hi Derek , Sean and everyone – I am joining this conversation a bit late but have just been working thru Terry's 4 Boom Towns
Initially I thought as follows
1) Roxby Downs due to Olympic Dam mine expansion but that's only $1.2 Billion initially which increases to over $8 Billion
2) Is Bowen due to the Abbot Point Port expansion http://http://www.dailymercury.com.au/story/2011/12/01/demand-drives-9b-expansion-of-abbot-point/ and it was just announced that this decision has been delayed from 30 March to December 2012.
3) Thinking Mackay or Emerald but will research Port Hedland
4) Has to be Newcastle as it ticks all the boxesOne way to end the speculation is to buy Terry's report I guess
As for Moranbah vs Hedland – I can't say anything about Hedland as I haven't researched it but I have invested in Moranbah – great spot but as Terry Ryder points out the best time to buy was 18 months ago. Currently too hot a market for me prices have jumped substantially over the past 6-9 months from $400k to $750K for an old house and close to the $1 mill mark for new homes plus supply is an issue with lots of new stock coming onto the market – I am aware of 4 projects that will provide around 400 units, plus there are aroud 200 to 300 new dwellings either being built or to be built and another 300 plus lot subdivison that will provide around 400 dwellings in the pipeline – Increased supply will impact the current high rents that skyrocketed due to demand. So either way do your homework mining towns are volatile.
ledgend80 wrote:Was just reading the local mackay paper and they were reporting that rents have doubled in moranbah in the last 12 months, where people were paying 750 a week are now having to pay 1500 plus a week looks good for the investor out thereLegend , Rents have skyrocketed in the last 12 mths – Rents are now over $2000 per week and property prices have gone up also. So if you owned a property up there its great if you are looking to buy – not so good at the moment.
Rickg wrote:Did someone say the Hunter Valley!Plenty of Mining, Great Wine, the most populated regional area of NSW & voted the 7th hottest city in the world for tourists!
a very diverse major mining town.
Yes – All of the above but the returns are nowhere near what you can get in Qld and WA – I have been doing projects up in the Hunter since 2003 and doing OK BUT my project in Central Qld earlier this year was so much more profitable.
cheers
Hi everyone
The media has finally caught up with the new of the mining town boom check out the link to read the news
Cheers
- A town of 1,100 where $3 billion will be spent Hedland – check
