mining towns

Agreed. Some mining towns are more stable than others – it depends on the ongoing life span of the mines near the town. Some still have 20 years of resources, others may die out in a couple.

Take a look at the mining companies involved, and how their investments are going around the world. Check for their stability and commitment to the area.

Also look at how close the town is to non-mining industries. If the mine does die, will people in the town be able to pick up other work nearby?

Risk is a matter of personal judgement. Some people would consider speculative investing for CG to be riskier, as it amounts to researched crystal ball gazing. You can never gaurentee that property prices will continue going up in an area, no matter what history has to say for itself.

Work out how many years it will take for the investment to pay for itself if there is minimal capital growth (look at the past 20 years growth). Then compare this to how long you expect the mining town to continue operating. If the mine is likely to remain healthy for this period of time, then it is probably worth investing in.

Hi Nspeed

Quantifing the reason you want to invest in these area may also help deside if its a good idea or not. I personally think they provide income opportunities for investors more so than capital gains as do own investments in some mining towns that return healthy yeilds. However, I do not expect significant capital gains even in the medium to long term. My intentions to add more value than what I spend and in doing so be able to sell on a lower yield but still attractive to the market. I find it useful to have an entry and exit strategy before considering buying.

It is in my opinion its fairly easy to find information about mining towns and mine life on the internet. If you can find out the mining company involved and access they web site and review regular updated on mines in the area of town you are considering investing in, it might provide you some information to quantify the risk.

There is definitely more risk in buying in these town as others have posted. Speaking to locals is also very useful. You will be surprised what people will tell you if you ask. I would however avoid taking as gospel what those say to you who would financially benefit from you buying in the town. They often paint a picture with rose coloured glasses were other locals are more frank and direct.

Hope this helps. This is my first reply BTW. Hopefully one of many as I create some more time to put back in what I have got out of the forum

Good Luck

Cheers
Simon

I own a house in a mining town. I would not buy another one there.

My house is structurally excellent and I have fantastic tenants giving me about 10.5% return.

BUT the property management is absolutely awful. I have to call every month to find out why the rent hasn’t been paid into my account, the PM told me that she has 15 minutes to do all her property inspections (which explains the one big tick across the inspection sheet!), repair work that I authorise does not get carried out until I call and bug the PM about it. My calls aren’t returned because the PM thinks I am being aggressive, but that’s the only way I can make sure I get paid every month.

There’s nothing I can really do because my options in this town are limited. I have found it far more hassle than it is worth, despite being an ‘on paper’ excellent investment.

This is one aspect that wasn’t covered in Steve’s books and a hard lesson we have learned. Be careful buying in an area where PM options are limited.

Hi nspeed,

I own an IP in Coober Pedy. It cost me $45 000 and it makes $100 pw giving me good returns.

It is near Roxby Downs which is a mining area. My tenents have lived there since June 1994.

So I have great tenants, great returns and a great PM. Their fees are a little high 11% but there’s not much you can do about that in a remote area.

Regards

easymoney

I wonder why people pay enough in rent for some properties to be positively geared.
Surely they would realize that they are better off financially being owners.
Can it possibly be ignorance?

Fascination by Jim Rohn
Fascination is one step beyond interest. Interested people want to know if it works. Fascinated people want to learn how it works.

Learn how to turn frustration into fascination. You will learn more being fascinated by life than you will by being frustrated by it.

I’m on my way to the airport to catch a plane that leaves in 45 minutes. The traffic is not moving one inch. I am now fascinated – not frustrated, but fascinated. But I must admit, it doesn’t work every time.

Develop a childlike fascination with life and people.

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Hi Demattio,

I have been looking at IP in minning towns. I was interested in your experiences with IP in broken hills.

can you please advise on the suburbs that you think are good for investing in BH?

It would be much appreciated.

Regards,

wjafri
email:[email protected]

Jafri

Broken Hill is barely a mining town these days but tourism is becoming more significant believe it or not. I agree with Dematiio re not buying there unless a PM is willing to manage what you buy. PM fees are high and PMs really do not want to have to work to get their money. It is not a place you would buy for capital gain. If you bought and sold at the right time during the (a) boom, maybe by accident. Many properties for sale are old and requiring ongoing maintenance. The ratio of owner occupied to rentals has also gone down so competition for available tenants will have gone up. Because of costs and risks I would expect much higher yields than elswhere in a place like this.

Anne.