Does anyone have any advice/opinions of investing in mining towns? Particularly in Mount Isa and Coober Pedy. I am currently negotiating a deal in the Isa.
Also, what are your opinions on buying a mobile home situated in a caravan park.
Thanks…Hi veronica
for info on buying in caravan pks go to pge 7 of help needed I posted my experience concerning purchasing in one there hope this helps.
mandy[rolleyesanim]Hi Veronica,
Can be tricky. It boils down to research and due diligence again which may need to be more extensive than for other areas. It will also depend on what you want to achieve, with how much risk, how much “worry”.
Are Coober Pedy and Mt Isa living, thriving communities for example or depressed, declining ones? In my experience Coober Pedy has a major image problem. (How many bodies are really at the bottom of some of those holes?).
I personally expect a significantly higher return in those sorts of towns because I perceive the risk as higher.
Cheers,
Anne.
Hi Veronica,
I was looking at buying two mobile homes in Roxby Downs, near Coober Pedy but I had a change of heart after some due diligence i undertook.
The property would make a before tax profit of $60 per week but when it’s untenanted the site fees for the park alone are $100-110 per week.Also you can’t get a home loan for a mobile which means you need equity in your home which could be used as deposits on a few propertis or have a lot of cash saved up
On top of that the park owner can hike up the fees or ask you to move the mobile home off his land.
This happened to my parents who owned a caravan and annex on the NSW coast. There were about 40 people in one area who were all given notice that their caravans had to be moved off the premises.
So there is a higher gain to be made, but like Anne said the risk is much higher as well in these single industry towns.
easymoney
I have been looking for quite a while at the Isa also. Many people think that it is not a great idea (but if we listened to everyone’s opinions we’d probably not get anywhere!) I am looking at a block of flats personally.
Have you come across any problems with your negotiations?
Mobile home…don’t know.
Coober Pedy…love to own an underground home and go night golfing…. as far as investment…don’t know.
Mt Isa, I have two block of flats there and they are a cash cow for me. Capital gain 40% in one year, put the rent up from 120 to 155 with no problems on all flats and there is hardly anything left to rent around.
Houses are doing better than flats. It is hard to find good quality houses and they have good returns.
There are several very bad areas to be avoided like the pest, and some borderline areas that will become bad very soon to be avoided like the pest.
Do not buy sight unseen, do not buy from real estate agents from out of town, go and spend a day or two with Lorraine from Jays Real Estate, she will tell you what is good and what is bad.
Tell her Marc from Sydney sent you, she will treat you even better. Ask her to tell you which solicitor I used, and DO NOT use that one, use the other one._________________________________________
“What you want in your life occasionally shows up…
what you must have… always does.”
……….– Doug FirebaughMay God Prosper you.[biggrin]
Marc…http://www.chosen4u.com/?acecheers to all who have replied so far, really good info ta Have replied to you all individually.[biggrin]
Hi Veronica,
I can’t comment on mobile homes, but can offer a few thoughts from my experience of attempting to buy/buying sets of units in two mining towns.
The first set was in a tiny mining town in Central Qld (population 3500). Fantastic cashflow and new mines popping up everywhere. Everything was looking great, finance approved subject to valuation. Then the valuation came in more than 20% under the sale price, with the added information that several years ago the property was purchased by the current owner for $60,000 in a bankruptcy sale (we were to pay $420,000 and still considered it a very good deal). Consequently the bank pulled out as it considered it far too risky to lend any money on that particular property.
We then moved on and purchased a set of 4 units in Mt Isa in September 2004. They are doing well, there has been no problem with getting or keeping tenants and some rents have risen. I suspect I paid a bit too much for them as it was a hot market but values have continued to rise and we know that we would get more than what we paid now. We are about to have them revalued for finance purposes.
The lessons I’ve learned – 1. Don’t buy in a small mining town (my view is less than 15,000 people). 2. Market fluctuations are likely to be much greater. 3. Make sure there are other industries/ employers than just the mines. 4. Do your due diligence as you would with any other purchase. 4. Often banks ask for much more equity because the town is regional & mining – we had to put 35% down, which is a real pain when it comes to trying to move onto other purchases.
Hope that’s helpful,
Cheers,
JKMThi veronica,
i own a property in queenstown, tasmania (another mining town). while the returns are ok, you will find that cg will be static or at best very low given the huge reliance on the one industry. sometimes the only employer in the town. when the resouces boom of current starts to go off the boil you will start to see vacancy rates start to increase as residents of these places lose their jobs. do your research carefully i say.
Hi Veronica,
I have 3 properties in a small sapphire mining town which I gather may be similar to Coober Pedy. Very little capital outlay ( less than 75000) and recieve 200 pw rent) I also have 5 rental properties in a central qld coal mining town. With yeild of 20%. WLith the coal mining town I went there and spent time choosing the houses I bought and a lived 4 hours drive away and needed to rely on the local realestate agent and a small band of tradesmen to do any repairs which needed to be done. We ensured that all properties had.1. Good kitchens, 2. Fences, 3. Sheds and 4. were clean and neat and in good repair. We also impressed on the agent we needed regular inspections and reports. We made the last 5 purchases about 2 years ago and are very happy with them we are considering buying more homes in the same town. Investments in these areas can be very rewarding but you must do your homework and continue to be informed of what goes on with your investments. We have agents who we trust and this also makes it easier. PS do not hesitate to change agents if you are not satisfied, remember they work for you.
Best of luck
theresa[biggrin]Hi there
My parents live in one of those mining towns and have properties in the town their in, plus the town next door. Both of these properties have increased way beyond their expectations in price, subsequently so has the rent. Admittedly they got in before these two towns really started booming. I don’t remember them saying that they had to place any extra for deposits and so on though.
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