I would like to buy my first invest property 3 bed.r and 1 bath.r unit 100sqm in complex of 20 land size 204 sqm in Kalgoorie WA 6430 where is principaly gold mine towns.132K for 260$ a week rent.
I like to know if this area will attract some capital growth in the future.
Thank you for your advise.
FrancoisYou will probably keep up with inflation, but thats about it i reckon. Unless they find diamonds there. How much gold reserves are left. Is Sons of Gwalia there? Did they not just go under because they underestimated their gold reseves.
I doubt there would be much land content in a unit in kalgoorlie.
What will your investment be worth in 5 yrs time. Will you have generated enough cash over that time to be happy with your investment. Will you have nay major or minor repairs in 5 yrs that will eat your cash flow. If your happy with the above, then proceed.
Good morning all,
Firstly to Yack:
Is Sons of Gwalia there? Did they not just go under because they underestimated their gold reseves.Sons of Gwalia have their main operations in Wodgina, way up north. That is not to say that they aren’t in Kal., though.
Secondly to Francois:I like to know if this area will attract some capital growth in the future.I currently work with two guys that come from Kal. and they have indicated that over the past 4 or so years, they have had NO capital growth, nor have their rents increased. Both bought houses to live in while working out there. Since meeting up here, we’ve got a small investment group-thing happening here, where we explore different investments (mainly in our area). Perhaps it will grow stronger, who knows.
So, you need to check out the local shire to see if any new developments are due to come or take a chance that CG will come within an acceptable time frame for you before you invest in Kal.. Look at the East Coast, their prices went thru the roof, sooner or later WA has got to catch up!
Do the research and let us know. Sorry for the not-so-good-news.[blush2]Cheers
C@34
Francois,
Here’s some decent info on Kalgoorlie from somersoft. Actually, if you look up Kalgoorlie on somersoft.com.au, you will find a lot of discussion on the place. There’s not much about it if you do a search on this Forum.
http://www.somersoft.com/forums/showthread.php?t=10001&highlight=kalgoorlie
$260 is a great yield on a 132k property. But yield means nothing if you have no tenant. Check out how long the lease is for. If I were you, I’d be wanting to make sure I had at least a 1-year lease. What’s the tenancy base there? Is the unit attractive enough to be competitive to the rental market?
If the Unit is post-1985, you will benefit from having significant depreciation. You might be able to write off the whole price of the unit over it’s lifetime.
As for CG… well, noone seems to think so.. hehe. But it does have good cashflow. I reckon $260 a week is a lot more than a lot of people would be getting in suburban areas of greater population.. but therein lies the risk… you get higher rents and take on other risks- smaller population = less tenant base to rely on… town is reliant on mining (a risky industry).. howver, there is around 30,000 people in the towns of Kalgoorlies/Boulder, so it’s not tiny. (some populaiton decline has been recorded, but you get that with mining towns).
If you can keep stable tenants (no guarantee there) and the unit is of decent quality, it may not be such a bad buy.
Another point on the size of the unit… 100sq metres is not so huge for a 3-bedder. Also, check body corporate fees. For rural/regional, I wouldn’t pay more than $1000-$1200 (although if the complex has a pool etc, they may be higher. Again, re BC fees, check there is no planned special levy coming up- these can be found by checking all past BC papers.
CG- probably not… CF? Seems alright :o)
kay henry
[bonjour]First thank you all for these infos.It’s been my first post and I’m been not sure if somebody will answer me.
I’m agree with what you are all saying.
I will give you little bit more details as I called the RE yesterday.
The unit is on Great Eastern Highway the land is 204sqm look like an house there are 20 like this one.The unit is built in 1995 one owner/occ.
single lock up garage&single carport
BC:1200$ Const Type:Brick&Iron Area Pop:30,000 Lending Cat:3
she said,with mine there is all time up and down,
she well not have any problem to find a tenant as the vacancy is only 2%.I’m agree sooner or later WA has got to catch up!
It look like the property will be a good CF if rented 50 weeks a year, the building is nearly new BUT CG who’s knows.(sorry for my writting)
I will let you know.
FrancoisHi Francois,
As Kalgoorlie is a miningtown it has it’s own cycle which is largely related to the level of activity in the mineral of concern at the time.
In the last 6 years or so gold prices and other incentives to explore new territories were on the wrong side of zero hence the ‘flat spot’ of recent years. In more recent times Nickel is having its dy in the sun and gold seems to be on the improve and hence the Kalgoorlie economy has at least stabilised.
Having said all of that – the issues I have raised are typical of most (all?) single industry towns – they will have largely have their own cycles.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi All,
Update – Tonight’s local regional news reported regional WA as still experiencing good growth and that Kalgoorlie’s name was mentioned first when the regional high achievers were discussed. No stats given but……….remember it is a regional mining city and will largely have its own cycle.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Francois
I have IPs in Kalgoorlie and offer the following:
$260pw rent would probably be for a fully furnished place. Sure you’d get depreciation benefits, but there’s the risk of shorter term tenants, more wear and tear AND much higher management costs.
I think I know the area and it’s not easy walking distance (maybe 30 min) to much at all.
I have gone for somewhat older (but still post 1987) 3br places that were not furnished. Either in very small complexes or in none at all.
One is in a small group of 4 approx 5-10 min walk from the CBD while the other is further out, but a duplex half (no body corp fees). One gives 10.2% gross yield, and the other gives approx 9% (I think the rent on this is a little low, but Kalgoorlie seemed to go through a vacant patch around May-June).
$132k is not unreasonable, but if it was unfurnished, you’d only get $180-200pw, which is quite a poor yield. Maybe see if you can get something nearer to $110-120k?
Also I have a bias against buying places in large complexes (like this one) as at any one time one unit will be for sale or for lease.
Also beware of 1br f/f places that some agents try to sell for as much as 3br u/f places!!!
Regards, Peter
To answer your question on cap growth:
No one can predict whether values will grow or not. But there has been growth in the last 18 mths or so.
I bought my first in March 03. The yield was 9% but I knew the rent was a little below market value (its now returning 10.2%). An identical property next door sold for 13% more than I paid for mine in Oct 03. I returned in March-Apr 04 and prices appeared to have risen further. However since then they appear to have flattened or maybe retreated a little.
Kalgoorlie is attractive for the cashflow investor as it combines high gross yields with a large number of post-85 properties (so you can claim depreciation). Most other country towns don’t have so much newer property.
But beware of 1br f/f places in large complexes that are advertised for about the same as a 3br u/f place in a smaller complex. The rents may be about the same, but to my way of thinking the u/f place is much better value, and if you really want to you can always furnish it later on if required (though most f/f places are 1 or 2 br – there seem few 3br f/f).
rgds, Peter
OK lets turn this wheel a little bit. Tassie main cities of Launceston Hobart Devonport and Burnie are all going ahead quite nicely. I have a “stir the pot” option for you, forget there and look tassie.
Just a thought on why go there with no cap gains for 4 years (another poster said this) where the Australian ‘south island’ hehe is still a happy land for the right deals.
Look outside the Kalgoolie you think you know and look qld and tassie for other options before committing.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
I have a “stir the pot” option for you, forget there and look tassie.
I would be wondering why?
Are you going for growth or yield?
Hobart prices are no lower than Perth’s. Yields in Hobart might be slightly higher, but Perth has far better growth prospects.
As for Launceston and other country parts of Tassie, these have experienced enormous booms driven by interstate investors. Yields are low and I can’t see much room for growth given there’s been so much of it recently.
I’d think that those regional cities in WA and Qld with growing populations would still be better value, though to get more than 8% gross yield would be quite hard.
Regards, Peter
Bon Jour Francois,
Here are few links sent to me by a friend who was recently looking into Kalgoolie:
http://www.gedc.wa.gov.au/populat.html
http://www.abs.gov.au/Ausstats/[email protected]/0/f245e8d67d84ced7ca256db80077bee2?OpenDocument
http://www.egmdgp.com.au/Information/local_information.htm
http://www.abc.net.au/goldfields/features/transit.htm
This last one is particularly interesting not so much in relation to just Kalgoolie’s population movements, but the whole of WA.
Please note: Statistics provided are at least 2 years old.
Cheers,
Jo
Calvin..
I think Yack is alluding to the fact that Sons of Gwalia are in ‘voluntary Administration’ ( as of last monday)
PeterP..
How’s it going, long time no see[thumbsup2] Francois, peter ‘does’ know about Kal and the area for investing purposes.
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorHi Yack & Redwing,
SOGS have (or should that be had?) gold mines in Southern Cross (~230km W) Laverton (~300km N) and South Leonora (~200km N). They also have/had Tanatalum mines in Greenbushes and Wodgina (many kms from Kal) and as such their presence in Kalgoorlie could only be described as minimal – at best.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
So all these 12%+ yields that I could have got in Leonora (which I skipped past because I thought it was too high risk) will now have shot up to maybe 15-20% or down to 0% depending on if you have a tenant???
For this reason, I drew the line at Kalgoorlie, and this for only part of my porfolio. I’d be wary about Kambalda, even though it offers higher yields and appears to be doing well at the moment.
Peter
G’day all,
i live in kalgoorlie and have since dec99.
i bought a 152K house jan02 and is worth around 185k or so now.
knowing the area, unless its a 1 bed outside loo you wont get anything worthwile under 140k or so.
i bought at a perfect time as people i know leaving when i bought were losing around 40K on a 250k house so the market is pretty ‘up and down’.
sogs were never in kal as such so they wont bother us leaving at all, nickel is huge at the moment and mines are popping up (or down!!) all over the place. i plan on being here untill ive got enough passive income to retire, well b4 i’m 40 anyway.
feel free to contact me if you want any assistance in the area. as i read steve’s book the other day, which led me onto margarets lot i will need some assistance b4 my first positive investment.cheers.
warren.
Francois,
If you go to http://www.residex.com.au/index.php you can type your property addresses into a free “prediction” / property performance tester thing. It might be useless or might not be. It will tell you what Residex thinks the property will be worth in 5 years time. You can go to their FAQ’s to see how they get their predictions on CG. They also have pricey prediction reports that you can pay for, but this little predictor is interesting anyway. You type in details and it sends you an email immediately with the results.
kay henry
Hi every one,
Thank you for all your answers and sorry to responded so late.Ok,between my reserched the house have been already sold,some people know already this area and have also the money ready.I bought an apartment in Bris area after that.
I’m on this forum nearly every day but my writting is not so good and take a long time to answer some of these questions,but practice will make me perfect.
I’m very enjoy this forum and find it very instructif some of you guys are definitly “Gurus”.
To see the place you want to buy you can also link to
http://www.whereis.com.au very good tool.
All the best
Francois
You must be logged in to reply to this topic. If you don't have an account, you can register here.
