Hi
just wondering what you all think of in investing in property in a mining town-do you think its a big risk??
tata,
Depends on how big the town is and how far away from a major town. If it is a long way, you could end up with a headache organising traddies, getting word out to find a tenant, or having an agent look after it for inspections and maintenance. They usually produce high returns, but consider the down side and if the place was vacant for some time. Is the industry definately staying on for the long term? Having said all this – we have one and it is doing well (touch wood).
JLI know people who've done very well out of mining towns, and if I could go back in time and get in at 2002 prices, I'd be buying as many as I could. But my concern is that the world commodities market created a very particular set of circumstances that led to a huge boom in housing prices in those towns, and I would have thought that that has happened now, and is unlikely to be repeated. Unless you're talking about a town that hasn't had its boom yet, and has a new mine opening or something. Even in that case, I'd want to be very confident about the mine's prospects for the longer term.
So for me, my feeling is that we missed it, and prospects going forward are much more limited.
thank you allJL wrote:ta,
Depends on how big the town is and how far away from a major town. If it is a long way, you could end up with a headache organising traddies, getting word out to find a tenant, or having an agent look after it for inspections and maintenance. They usually produce high returns, but consider the down side and if the place was vacant for some time. Is the industry definately staying on for the long term? Having said all this – we have one and it is doing well (touch wood).
JLAny suggestions on how to find out for sure whats happening in a mining town and how long it will be going for-council?? or who would i approach??
taTalk to Council, check out the websites of the main mining companies, ring the mining companies and ask about their plans, ring the local Visitors bureau (surprisingly helpful sometimes), etc.
YReggie29Jetski,
I concur with all that Trakka said. Be warey that the house is worth it. We just had 2 A/C's put in ours. It is 1 hour from a major centre. It cost $4000 because traddies won't quote. The tenant is installing the new curtains for us, because I can't find a handyman that will do it. We have an agent looking after it, but they are an hour away – we are 2000km's away, so we are lucky we have a good tenant.What town you looking at?
JL
Maybe do your research on any new mines opening in the near future (within 5 years) and then look at the towns close by that will accomodate the mine workers.
If you find there are no mines around the town already real estate prices shouldn't have gone too mad yet.
This is probably the riskiest way to make a dollar out of mining town real estate booms but can also be the key to gaining maximum capital gain in the shortest period of time.
I know several people that have done this and are now laughing all the way to the bank.
However ALL of these people put a considerable amount of homework into the mines that were opening in the future.Cheers
AdamHI
A lot of research needed and also you need to work out are you in the mining town short term or long term.
We have done a fair bit in Biloela, Gladstone, Rockhampton, Chinchilla, and now focusing on Bowen basin areas.
We buy land, subdivide, build houses, and rent some, sell some.
Also buy just individual homes, good location, opportunity to makeover and sell or we furnish and rent out.
I don't go to really small areas, I make sure there is a regional central town, all facilities, strong rent or resale demand, and that there is industry there only than just mining. The areas above we have done really well out of, but now our main focus in
Bowen and Townsville and a little in Chinchilla.Bye
Hi Reggie Jetski,
I was fortunate to jump on a property in South Hedland (Iron Ore town) which settled in NOV 04. It was purchased sight unseen purely because the numbers stacked up. Through my finance brokers network I was again fortunate enough to have a client of his who lives up there to check it out for me.
I only paid $325K + costs for the of block of 4 X 1brm units. The rents have doubled and mine are actually let below market rent. A unit exactly the same (Ex BHP built units) in the same area has just sold for $315K. This has allowed me to leverage into other properties and projects.
The resource boom is being driven by China and India's demand for all things removed from the ground. Ore, gas and coal which Australia has in abundance. Analysist are saying even with the impact from US Sub Prime meltdown it will continue for many years yet. Hedland has a shortage of 6000 beds for its population. Council is relaeasing a subdivision of 1000 blocks and this will not even dent the demand.
Yes it can be a painfull experience dealing with tradesmen. The managing agent has stated that they will just "fix it" if its under $400 then bill you and any thing over will be quoted. Getting finance to purchse used to be hard with some lenders only going to 60%LVR but thats not the case anymore. I think it is prudent that when you have had a good deal og growth from them, get a val done, and use the equity to leverage into "good blu chip keepers by the sea"
As long as your due dilegeance done so you can make an informed decision you should be fine. I hope this has helped
thank you all
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