Looking for cashflow positive property?

Hi all

Normally I don't post speculative posts on this forum, nor do I give opinions about what might happen to the market.  My posts are usually restricted to offering advice or to asking for help with a particular issue. 

Today Inpex, a Japanese mining company, announced that it is going to build an $20Bil 800km pipeline and LNG plant in Darwin to ship LNG from the Kimberleys.  This has been one of the worst kept secrets in the mining industry over the last week or so.  Approx 4000 people will be employed in Darwin starting in 2010 to build the pipeline.  Darwin currently has a population of about 100,000, so this means a 4% increase to the population in the next year alone.  This is a MASSIVE population increase.

Darwin currently has a very low rental vacancy rate so this increase in the population will push up rental demand on what is already quite a healthy yield (up to 7% depending on where you look).  I am not authorised to make recommendations on property BUT I will say that I will not be selling any of my rentals in Darwin anytime soon (Woohoo!!)  IF I was to be buying in Darwin (and I won't be because I already have substantial exposure to that market) I would be looking at the cheaper end of the market, say 2br units close to the CBD (Stuart Park, Ludmilla) or the northern suburbs (Nightcliff, Coconut Grove, Rapid Creek etc).  Both these areas have lifestyle amenities that would suit youngish single people, those people who are likely to get a job working on the pipeline.  I think any units under about the $250,000 mark are reasonable buying now.  I say this because there are also some quite expensive units on the market ($500,000+) and the rental required on these units to make them positively geared will be too much for the average worker.

The massive influx will be likely to increase rental returns over the next few years, so while buying now will be unlikely to return a positive cashflow, these properties may well become positively geared over the next couple of years.

While I am certainly not the most experienced or most knowledgable investor on this forum, I have very successfully invested quite heavily in Darwin over the past 4 years and have done very well, so I most certainly am not a novice and I like to think that my thoughts are worth something …

Finally I will add another disclaimer – which is that I am not personally trying to sell anything in Darwin (well, that is not exactly true because I do have vacant land on the market but given that it is vacant and currently returning $0 per week, even a 1000% increase in price will still leave vacant land very negatively geared, so therefore inappropriate for anyone looking for positively geared property!).  I just think that based on fundamentals Darwin will be seeing some real growth, both capital and rental yield, over the next few years.

Cheers (literally as I pop a bubbly to celebrate my immediate equity growth following today's announcement)

K