- Property Investor 1 wrote:I’m personally continuing to invest in Dysart as it has all the drivers to make for a great property investment for the following reasons:
1. Demand significantly outstrips supply (the perfect equation).
2. Vacancy rate is 0.2% (proof of the above statement).
3. Yields are currently 14% (normal for Dysart is 9-10%) – and capital gain always follows yields, so prices will rapidly rise (and they are!).
4. New mining investment in area (over $60 billion) that will last over 20 years. This means more workers, and continued demand.
5. Dysart is a service centre, so is not reliant on only one mine (it has mines to the north, south and west), which means it is not as prone failure due to a mining disaster (but it is prone to a failure of the mining sector).
6. Its highly cash flow positive. A property can be now be bought for $500k (last year for $400k), and rent for $1200-1400/wk (last year $600-900/wk), meaning you are cashflow positive up to $600/wk. This assists you to reinvest and grow your portfolio quickly. Buy four houses, and you have a passive income of $2400/wk (that has to be good investing…).
I consider Dysart to be the best investment in Australia right now, but it wont be in 12-18 months time, as the prices will have caught up, and yields will be back to 9-10%, and capital gains will start to diminish. Then it will be time to find the next big thing.
Use mining towns as a means by which to turbo charge your portfolio. Then branch out into other areas, and property types. Just remember, dont put all your eggs in the one basket…Just put them into the Dysart basket right now.
http://www.news.com.au/money/property/mining-boom-pushes-average-rent-for-central-queensland-house-up-nine-times-more-than-brisbane/story-e6frfmd0-1226040921422This gets my vote for post of the year. Very astute, thanks for the contribution
M Y wrote:Hi everyone,
I’m heading up to Blackwater in a couple of weeks time to have a look around and maybe an investment property.Does any one have any tips of where to buy or where not to buy? Anything I need to watch out for while I’m there?
Thank you
MY
Hi MY,
To start with you have chosen the right area to invest in. I have 10 properties in the Bowen basin alone. I have lived there also and was a real estate agent in Emerald for a number of years. if i can give any piece of advise it would be to consider areas within the Bowen basin that attract more than just miners. There are key areas throughout Central Queensland that will experience unprecedented amounts of growth due to the capital expenditure of the minerals and resources sector.
Emerald is a town that has a significant amount of diversification and is quite often overlooked due to slightly lower rental yields, however a significantly higher level of security. If you buy the right property in Emerald you should have it neutrally or positively geared easily enough. Out of all the towns in the Bowen Basin, Emerald suffered the least amount of damage during the GFC. There were no problems with renting properties out as long as you were realistic. It is currently experiencing a massive amount of growth in the town.
Woolworths are spending $120m on a new shopping centre, Harvey Norman has confirmed a site, Bunnings is shopping around etc. They will be upgrading the airport runway soon to fit Boeing 747’s. Emerald is quickly becoming a regional powerhouse in what it offers the 66,000 population currently living in the Central Highlands Regional Council.
For me, Blackwater is not diverse enough. What if something happens and you need to sell quickly when things may go quite for small periods of time. It depends on what exit strategy you have in place for your portfolio but i would consider somewhere more diverse whilst still capitalising on the minerals and resources boom. towns like Blackwater have a MASSIVE investor owner ratio, this means you are relying on investors to always be active to buy your property if you sell. Focus on an area with majority owner occupier ratios could make a more risk adverse investment for the long term and short term.
Hope this helps,
Josh
Dear all,
I have just purcahsed a property in Moranbah and currently looking for PMs in the area. Instead of making a new post, I will keep all the CQ stuffs in this post
I have the follow questions:
1. Since the rental return has increased rapidly (and it is still increasing), is it common to have a 6 monthly market rental reivew as a condition in rental contract? I believe this will reduce the time lag of being rented out at a huge discount in a fast growing market.
2. I notice that RayWhite is quite new compare to other agents in the area. Could you please give some feedbacks if your IP in moranbah is with them?
3. If my property has a big lawn, would it be hard to maintain? As in, is it possible to make sure the tenants will mow the lawn? And incur penality in the future if they don't maintain it, such as deducting money from the bond to replace the lawn?
Please PM me or post it here if you have any PM recommandations.
Thank you in advance for your infos.
Cheers
Talismanswith the returns your getting in moranbah it would be a good idea to spend 40 bucks 2-3 weeks and get somene to mow it for you, its tax deductible anyway and keeps your place clean and tidy
I've recently moved to Moranbah. You'd be very hard pressed to find someone that will cut your lawn for approx $40, try doubling that price and you'll be getting closer!
better off buying the tenant a lawn mower!
Talismans wrote:3. If my property has a big lawn, would it be hard to maintain? As in, is it possible to make sure the tenants will mow the lawn? And incur penality in the future if they don't maintain it, such as deducting money from the bond to replace the lawn?This is always the tenant’s responsibility and the PM should ensure it is done. I have never worried about this, and never had a problem with it – except between tenants when the PM had to get someone else to do it.
Daedalus.
the point is if your getting 1400pw in rent surely you cant be too pandatic about the bloody lawn, just buy the tenant a mower and get them to cut; no need to be completely greedy
coalstar wrote:the point is if your getting 1400pw in rent surely you cant be too pandatic about the bloody lawn, just buy the tenant a mower and get them to cut; no need to be completely greedyAgree
Thanks guys!Do you guys notice there's been an increase of rents in dysart and moranbah as well?
A 3×1 has recently jumped from $800-$900 pw to $1000-$1300 pw and a 4×2 from $1000-$1200 pw to $1600-$1800 pw.
I reckon another boom isn't far behind (in the next couple of years, given the strong rental return is sustainable). When most of these houses are renewed with new rental contracts, the house prices will also rise, until they reach about 10 times of the yearly rental return.
Any thoughts?
This happened 3 years ago, here's one sold in Jul 2008 rented for $560pw
http://www.realestate.com.au/property-house-qld-moranbah-104767405
Demand is still very strong all throughout the Bowen basin with new mines and the missing link progressing. So I would think that there will continue to be growth in rental yields and property prices. Keep doing your research on all the FIFO propaganda, there is a lot of local opposition in the mining towns themselves but as far as I know it is still awaiting a court decision.
In my opinion, and has others have also said, investing in mining towns has a high risk/high reward, just make sure you know when to call it a day. One day (in 10years perhaps) there are going to be a lot of property owners who have payed in excess of $400k for a property they can’t give away, one can only hope the banks are lenient lol. As with any strategy, diversify and spread your risk.
Could be wise to start up a lawn mowing bussiness in Moranbah
Talismans wrote:coalstar wrote:the point is if your getting 1400pw in rent surely you cant be too pandatic about the bloody lawn, just buy the tenant a mower and get them to cut; no need to be completely greedyAgree
Thanks guys!Do you guys notice there's been an increase of rents in dysart and moranbah as well?
A 3×1 has recently jumped from $800-$900 pw to $1000-$1300 pw and a 4×2 from $1000-$1200 pw to $1600-$1800 pw.
I reckon another boom isn't far behind (in the next couple of years, given the strong rental return is sustainable). When most of these houses are renewed with new rental contracts, the house prices will also rise, until they reach about 10 times of the yearly rental return.
Any thoughts?
This happened 3 years ago, here's one sold in Jul 2008 rented for $560pw
http://www.realestate.com.au/property-house-qld-moranbah-104767405
seems cheap now, blackwater might be next, poss. followed by moura and wandoan
Yeah this is very smiliar to south hedland (WA) before the boom in 2009
I have a few friends who live in the above towns and others which have invested. They are happy with their purchases
Hi everyone on this thread. I've been researching my next property investment, and have found this particular thread interesting, so I'll add my question to it. Does Blaclwater flood?? Coalstar, if you're out there, I have noted your interest and apparent knowledge on the subject, so perhaps you can reply? I work in a coal mine myself, in the Hunter Valley Nsw, have a couple of IPS there, and another in Gladstone. I note that propeties for sale in Moranbah and Dysart are very scarace, pricey. but achieving fantastic yields. As Coalstar has suggested in the past, I think Blackwater may play catchup to some extent, but in any case, properties there are currently returning very attractive yields. There are also more properties available, and at lower ask prices than it's northerly neighbors. I realise that there are more mines on the doorsteps of Dysart, and particularly Moranbah to push their prices up, but there is still a lot of activity around Blackwater, and so I have set my sights there. I personally feel fairly confident about the continuation of the current mining boom, and the Surat and Bowen Basins are also in line to benefit from significant international interest in LNG, so I see potential for capital gains and a continuation of high yields. I have talked to some agents and developers on the phone who assure me that Blackwater does not flood, but i would appreciate confirmation of this advice from anyone who can varify.
We have had a property in Moranbah since 2004. We have a larger portfolio so were comfortable with the level of risk. Our first lease was $320pw for 2 years which we thought was great. However during that time rents increased to $450pw. 12 months ago when our last lease expired there was quite a lot of places for rent and we had to take a rent reduction, from $750 to $725 to get a tenant. At that time BMA would only sign two year leases without a rent review midway, so we accepted that because after all, its still fantastic rent!! However now, here we are midway through the 2 year lease and today we could be getting $1100pw!!! Someone asked earlier about 6 month leases. Ideally that would be fantastic in mining towns. In reality it's almost unheard of. The companies who lease the majority of the houses know the drill and want to minimise their rental increases.
The rents and demand do fluctuate, although obviously the trend overall is up, up, up.
Purchase prices are very much linked to yield, hence the crazy capital growth. If our place was vacant today or had a current market lease, we could sell for $530k easily. (we bought for $165k)
The downsides – getting any type of maintenance done takes forever and is very expensive. But perhaps the biggest downside is the quality of PM. We have a lot of different PMs across 2 states and I have rarely changed managers, however we have tried 5 for Moranbah and all promised the world, but their delivery was underwhelming. In the end we decided to self manage. Rent is paid on the first day of the month, and they are 2 months in credit. BMA emails me if there is an issue and we arrange a contractor. Having made several trips there over the years to carry out maintenance (sometimes cheaper that way) we have been able to source some contractors, and as long as we keep on their back after sending work orders the work gets done – eventually. But that's Moranbah.
Two things that make me smile when I think about Moranbah:
1. Quite a few years ago I was there for a working bee, and we were having dinner at the pub with perhaps 20 or so other patrons in the room. There were 3 ladies wearing the same top. At the time there was a Rockmans there (and little else for ladies) and clearly that's where they had all been.
2. There is (or was last time I visited) the most AMAZING shoe shop I have ever seen (boalywood.com.au) They had every type of shoe you could imagine, in every colour, along with accessories etc. In a town where flouro vests and work boots are the norm, this is so out of place, and very unexpected.Wake wrote:There is (or was last time I visited) the most AMAZING shoe shop I have ever seen (boalywood.com.au) They had every type of shoe you could imagine, in every colour, along with accessories etc. In a town where flouro vests and work boots are the norm, this is so out of place, and very unexpected.Must be for all the high earning mining wives that have nothing else to do with their days and go shoe shopping regularly.
moxi10 wrote:Hi everyone on this thread. I've been researching my next property investment, and have found this particular thread interesting, so I'll add my question to it. Does Blaclwater flood?? Coalstar, if you're out there, I have noted your interest and apparent knowledge on the subject, so perhaps you can reply? I work in a coal mine myself, in the Hunter Valley Nsw, have a couple of IPS there, and another in Gladstone. I note that propeties for sale in Moranbah and Dysart are very scarace, pricey. but achieving fantastic yields. As Coalstar has suggested in the past, I think Blackwater may play catchup to some extent, but in any case, properties there are currently returning very attractive yields. There are also more properties available, and at lower ask prices than it's northerly neighbors. I realise that there are more mines on the doorsteps of Dysart, and particularly Moranbah to push their prices up, but there is still a lot of activity around Blackwater, and so I have set my sights there. I personally feel fairly confident about the continuation of the current mining boom, and the Surat and Bowen Basins are also in line to benefit from significant international interest in LNG, so I see potential for capital gains and a continuation of high yields. I have talked to some agents and developers on the phone who assure me that Blackwater does not flood, but i would appreciate confirmation of this advice from anyone who can varify.Hi Moxi,
Blackwater does not flood. Rents in Blackwater are quite high already, you will see demand increase in Emerald more so as three of the largest coal mines in emerald plan to get into gear just 150km west of Emerald. I am an ex local to the area, am in the area every two weeks for my clients and have 15 IP’s in central Qld.
If you need any more info feel free to PM me.
Josh
Hi Gents,
I’m new to this forum but like to know about future of coal mining activity. Recently if you notice, there is a concern from coal mining companies regarding MRRT and carbon tax (refer to Financial Review today). It seems unfair for coal industry they got taxed 3 times as hard. Do you think it will drawback people to invest in Dysart or Moranbah? Also we might got beaten by Indonesia in terms of coal pricing and export since they are geographically closer to China and India plus they also have a cheap labor cost.
Please have a look at this link below and let me know what you gents think. You need to subscribe to AFR first though.
http://afr.com/p/national/coal_industry_fears_lost_jobs_jMmTNTPcXzZm9ExBJNZ7JJ
Also what is the lifespan of this coal mine? I estimated that it would be around 40-60 years
I’m interested with the yield return but I feel a lot safer invest in Iron ore town compare to coal since iron ore deposit can last 200+ years plus they only got taxed from MRRT (Coal will be taxed twice with MRRT + Carbon Tax). By the way I have property in Newman and interested to diversify a bit now.
Your gents opinion is much appreciated.
Many thanks,
BillPortfolio PI wrote:moxi10 wrote:Rents in Blackwater are quite high already, you will see demand increase in Emerald more so as three of the largest coal mines in emerald plan to get into gear just 150km west of Emerald. I am an ex local to the area, am in the area every two weeks for my clients and have 15 IP’s in central Qld.If you need any more info feel free to PM me.
Josh
Future development in the Galilee Basin could potentially result in some big upside to not only the whole region but Emerald in particular. It’s going to be an interesting ride I’m sure. In relation to rental yields, Emerald is some ways behind Blackwater and certainly those towns further north such as Dysart and Moranbah. Any thoughts from the forum on just how rents could go in Emerald given the huge investment to the west?
Jack
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