Dear Investors,
This is my first post of what I hope will be many in the futute on this forum.
I have done extensive research in property investing since arriving and have read Steve’s books as well as those of Dolf de Roos (NZ Investor). I believe the market is bottoming out, and am searching for a positive cashflow property in Australia to add to my portfolio. I currenlty have a -ve geared property overseas, and as I am still young am thinking of buying 2 +ve properties followed by one negative to build my equity.
As we all know it is becoming increasingly diffucult to source a cashflow +ve property, althugh I have seen some prospective high yielding investments in Mount Isa Qld, in the suburbs of Healy etc. I recently read in the API mag that Margarat Lomas states that Mount Isa and Mooronbah are still quite attractive for yields, however after downloading a suburb report on Mount Isa post code, I am a little concerned that there may be a slowing growth rate in the area. A positive is that Xstrata has their mine in the area, and as I follow the stock market, it seems that this company is there for the long run.Anyone got any information on these mining towns, I would love to hear your views.
Regards,
JonI used to live in Mt Isa and my brother sold up a few years ago.
The thing that scares me about “the Isa” is that you are relying on the price of copper on the world market (which is high today but could be low in 2-5 years time). I would rather be in control of my destiny rather than at the whim of the mining industry.
You should be looking at places that will boom in the future rather than a town that is riding high at the moment but subject to wild fluctuations. That’s my 2 cents worth anyway.
“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Thanks for your quick reply. Is the area very volatile?
Hi Jon,
We have just come back from Mount Isa on the weekend to view our latest purchase of 3 houses on one title which we are in the process of splitting. While up there we bought another house which will rent for $300 per week and will be building a duplex at the rear of property hopefully next year. My wife and I spent the day with our property manager touring around, after seeing it first hand, Mount Isa is a great place, has everything you need, most big businesses are their eg Subway, Macdonalds, Bunnings, Coles Woolworths and the list goes on. Business don’t open up in towns unless they think its profitable for the long haul. We went to the local club Buffs and it was the Octoberfest night, standing room only as the night wore on, went to a 6 year old subdivision ( can’t think of the name of suburb ) with lovely near new homes. Xstrata I believe will be doing open cut in the near future, which I was told the minerals go for 19klm, they also have a acid plant with 30 years of life making fertiliser, also Summit Minerals is sitting on the 3rd largest deposit of Urainium 20 odd klm outside Mount Isa, I have been watching the last 6 months in Mount Isa and I think rents are going up more,after seeing the town first hand, I can say nothing bad.Hope this puts your mind at rest.
Don
djr
Dear Don,
Thanks for the insightful response regarding Mount Isa, your insights will prove valuable when purchasing in the area. A couple of questions:
1. What are the top suburbs/areas to invest in?
2. What are the property managment fees? Are you happy with your manager?
3. Do you forsee any capital growth in Mount Isa in the forthcoming years?
4. Is the general demand for 4 bed 1 bath houses?Look forward to your response Don, I think I will be going down next week end to have a look.
Kind regards,
JonHi Jon,
I live in Brisbane and both properties I have purchased, one is just outside town on acreage with 3 houses which will be rezoned next month by the council from rural to rural/res. The other is a 3 bed house walking distance to town with units in the street zoned for multi dwelling. I personally don’t know the top suburbs, but I am happy with our purchases. The council next month is rezoning the whole town and it could be worth your while checking which suburbs may benefit, I have found the council very helpful when phoning. I have spent months searching for pos geared properties which we can create capital gain with income and can’t go past Mount Isa. Our property manager charges 8% which is lower than most, I can PM her details if you like, we are happy with the service she provides. I think there is some upside still in Mount Isa, but I am trying to make sure when I buy I can create it as well. 3 bed home in excellent condition close to town is now renting for $300.00 a week, not sure what a 4 bed would bring, one house we have brings in $375.00 a week as it has 6 bedrooms, 3 bathrooms and 2 kitchens, avarage 3 bed should get $280.00 now. Should give you an idea of returns.Regards
Dondjr
Thanks again Don,
If you could please send me the PM details it would be greatly appreciated. What LVR are you getting on your loans I have sourced a broker who can secure 95% if you are interested. Do you think a price range of $200,000 – $220,000 is a good starting point. In addition can you recommend any real estate agents which have been of help to you.
Kind regards,
JonHi Jon,
I have sent you a PM, check your inbox.
Dondjr
I’ve spent many years in Kalgoorlie. Personally, i wouldn’t invest in a mining town. Too cyclical, and a very transient population.
Cabo Wabo
Thanks Cabo. Anyone else have any news on Mount Isa? Would like to hear a few more opinions!
Regards,
JonI’ve got no problems with PI in Mount Isa and I think the returns are good. Although they’re not as good as they could have been this time last year at least they’re on the market long enough to go and have a look at them! The vacancy rates are really low, and with the new mine opening/opened I think they’ll be low for a while.
I just bought a 2x2br there. It wasn’t on the market but the agent chased it up as a posibility for me since I was up there for the weekend. Also have a private sale opportunity in Healy that I will be taking advantage of when all the figures are in.
My opinions on Jon’s questions.
1. (top suburbs) Healy … Townview, Soldier’s Hill, Sunset are OK … stay away from Pioneer. There are more suburbs but I’ve forgotten. I found it better to go and have a look and get a feel for the place.
2. (PM) 7.5%+gst because I bought through them. Not sure yet how good they are. They lost the keys for inspection and had to get the tenants in so they could cut others – not a good start!
3. (cap growth) Not in the short term possible 8-10 yrs before any meaningful increase – but that’s not why I bought there.
4. (4br) I wouldn’t buy one unless it was a really good price in a really good area, as I think that a 3br will get as good a return with more rental appeal.
Like I said …. my opinion [trigger]Mckero,
A great and insightful response. I’m thinking of going down next week to look at the suburbs mentioned.
For searching, did you use:
1. http://www.domain.com.au
2. http://www.realestate.com.auWhich estate agents do you recommend based on your experience. Ray white seems to be on the ball, but the agent Signatures seems to be a bit over aggresive on their views on the potential rental returns, I may be wrong.
Would really like to hear your views.
Regards,
JonJon,
My business partner and I currently have an IP in Moranbah. I have been there several times and the town is supported by various mines. What exactly would you like to know?Hi Jon,
Have emailed you direct.
Thanks for all the info investors, anyone have any views on the current real estate market in Mount Isa in terms of growth, supply vs. demand etc.
Regards,
JonResidex has predicted (aprox 2 years ago) that Mt Isa will grow by 10-12% per year for the next 5-6 years at least. I find them to be consertave.
I purchased aprox 18 mths ago and have enjoyed steady rent rises and capital gain also.One example.
3 bed in Sunset
purchase price $137k
Owners rented back for $240/wkCurrent rent value $285/wk
Current bank value $185k
Purchases and managed by Jayes RE. and have had no problems.
I think that it has some room to grow still as you can not rent a house there, and Xtrata has big plans for the mine.Hope this helps
CATA
Asset Protection Specialist
[email protected]I have just sold my PI in Mt Isa and wouldn’t buy there again.
I bought there just over 1 year ago at a 10% return and have just sold it at about an 8.2% return (so a nice healthy gain of about 25% in the last year).
Problem is, it has come despite several sleepless nights over the terribly slack job done by the PM there. I have had to chase up rents, work I have authorised but has not been arranged, etc. Because there are so few PMs there, they are all a bit slack and there is not much you can do.
Also, rents seem a bit overpriced at the moment because there is such a shortage of properties right now. That will settle down and I was concerned that we would not be able to maintain our rent, thereby lowering the value of our property.
So I hightailed out of there as quickly as I could.
If you still want to buy there though use a local REA. They have a realistic view of the market (they really say that the market has levelled out there) while the ones from Brisbane will tell you that the market is booming. The local agents say that you can get an 8 – 9% return while the others will try to sell you a 6% return property.
Good luck though.
K
Dear Investors?
My shortlist for mining towns is:
1. Kalgoorie
2. Mount Isa
3. RockhamptonWould like to hear your views!
Regards,
JonI cut and pasted the following from another post ( in case it does not make sense)
Gee I hate to butt in as I know nothing about NZ, but how does 7.5% equate to a good return.??
I mean, what are the interest rates currently ??For what its worth, I am still buying in Oz where I can get a rental yield of 12% on residential, with an investor achieving around 8.5% yield on their investment.
On top of this it is possible to get an instant cap gain of $70k to $100k per property.
Of course this takes a bit of creating and thinking outside the square, but its nothing special.
We are building houses on vacant land and packaging them up for investors to do the same, or to buy the finished product.I can’t understand the attraction of going over the NZ or the US to chase pos cashflow property, when you can do the same in your own backyard.
Yes, I have visited the US, yes its a nice place to visit,no I would not want to live there, and no I wouldn’t want to buy over there..I don’t see the point.kp
So basically, obviously this is a mining town, the market of which I have been observing and investing in, for the last 4.5 yrs.
Prognosis is that there is another 5 yrs of growth based on curent demand ( I am out in 12 to 18 months anyway)So Jon,its a bit out of the way, but I would include Karratha and Port Hedland on your list.
kp
Hehehe, yes, the two pearls of the North West!
If you time it right, you can have your CF+ AND CG all in one.
We’ve just used our CG of $70K to finish of our reno and refinance to make our life easier. It is such a relief not to have to add balance to “Store Cards” or “Personal Loans”! Love it when the liabilities side of the equation only has one or two items in it!Back to Mining Towns – I have only researched Hedland so There are a number of options I would choose, the biggest thing to look out for, though, is major re-work or mine opening or closing! You get in on the right side of those and tour coking with gas.
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas Edison
You must be logged in to reply to this topic. If you don't have an account, you can register here.
