Hi all,
I am interested in a property but it is in a mining town. I was wondering if anyone has invested in a mining town and whether they think it is too risky. This one is near Mackay, Qld. Any information would be appreciated and I am open to advice also.
Thanks
I live in Mackay and work in Moranbah ( I don't know if this is the one you refering to)the rentals in this particular town have been overinflated for years due to the boom, and are still over the top. But the one thing that could influence them is the impact of the new proposed mine ( name eludes me) which will require relocation of the airport etc as it that close to town, plus the fact that BMA has extended their subsidised housing scheme to the entire workforce which could give them some influence over the amount of rent that they are willing to pay. ( at the moment the most a worker has to pay is $60.00).
I've also lived in the Kimberely and NT and can honestly say that I would only invest in a mining town if I was comfortable financially and could handle the lose from an investment which could possibly turn to dust overnight.Hope this helps
rekooh01 wrote:I live in Mackay and work in Moranbah ( I don't know if this is the one you refering to)the rentals in this particular town have been overinflated for years due to the boom, and are still over the top. But the one thing that could influence them is the impact of the new proposed mine ( name eludes me) which will require relocation of the airport etc as it that close to town, plus the fact that BMA has extended their subsidised housing scheme to the entire workforce which could give them some influence over the amount of rent that they are willing to pay. ( at the moment the most a worker has to pay is $60.00).
I've also lived in the Kimberely and NT and can honestly say that I would only invest in a mining town if I was comfortable financially and could handle the lose from an investment which could possibly turn to dust overnight.Hope this helps
Thank you so much. I feel fortunate that you are a local and I appreciate your comments. The development I am talking about is in Middlemount. The developer is Shearer property. I just felt that this ticked all the boxes in that it is new, not very expensive, and suggests a good return. Having said this, I live in Sydney, know only what I have read about mining towns and although I have researched the area – I don't know Mackay at all. I have not committed to anything yet. I am a little confused about what you say "the most a worker has to pay is $60.00". Is this all that is paid or does the company they work for pay the rest? Pardon my ignorance but most of the properties I have seen have very good returns. Your honesty is truly appreciated and your comments definitely help.
Thanks again.
In my personal view a mining town remains important before it’s minerals are finished. Once the mining is finished the of property of the place start to decrees. So invest wisely.
Miccalady- $60 is all the individual pays and BMA pays the remainder- however this is currently being revised, I have heard the cap will be $800pw. I know they have a housing allocation scheme whereby operators etc are allowed a 3bedroom house and supervisors etc a 4 bedroom. I don’t work for BMA however and hear this info through colleagues (I work for another mining company in Moranbah area). There are other contractors and mining companies that do not have this policy however. Units can be attractive for companies to rent for couples as they are cheaper and there are lots of younger guys and girls in the industry. It is true that a mining town only holds its value so long as mining continues, however with all the new projects and billions of dollars being pumped into the area at the moment I think the outlook is healthy for the next 3-5years at Middlemount Mine Details
Tenements ML70379, MDL282, EPC1225
Location 6 kilometres south-west of the township of Middlemount in central Queensland
Coal types Low volatile PCI coal and semi-hard coking coal
Manager Middlemount Mine is being developed by Middlemount Coal Pty Ltd an incorporated Joint Venture between Macarthur Coal Ltd and Noble Group Ltd
Mining operations
Mining operations for production at 1.8Mtpa ROM will commence in the 2010 calendar year.
Mining operations are carried out by Leighton Contractors Pty Ltd.
A coal handling and preparation plant will be constructed by Sedgman Ltd.
Mining and coal preparation activities will be carried out 24 hours a day, seven days per week by contractors.
History
Macarthur Coal completed the purchase of the Middlemount project on 15 January 2008
Bulk sample pit overburden removal commenced in December 2007 with first coal uncovered in May 2008
Coal mining commenced in the bulk sample pit in October 2008.
The Mining Lease was granted in September 2009.I am looking at buying in Middlemount- 4bedroom brand new house $459 000. Will rent for $900 per week. They have a display home that opened last weekend. I went and was impressed loads of people at the estate looking- only a three hour drive from Rockhampton. They have mine research on there website, rental letters and floor plans. milieu-at-middlemount.com.au
I have brought and sold an investment in Moranbah previously.
Mining towns can be risky but you need to watch the cycle and talk to people on the ground.
I live in Mackay and have previously lived and worked in Moranbah. As far as investing in mining towns goes the cash flow is fantastic as you would have figured out by now having done the figures. A problem I read about in the Australian Property Investor magazine was that an investor had purchased a property in a mining town and yes the cashflow was great, however when he went to leverage against that property for his next purchase the banks would only go to 60% of the value due to the inflation caused by the mining boom.
Just something to consider and maybe ask a lender whether or not this is still the case.
Just on a personal note, compare the property you are considering in Blackwater to some in Moranbah, the concentration of mines surrounding Moranbah is greater than that of Blackwater (from what I recall). Might be something to sway your thinking depending on how long you were planning to stay invested in the town.
Shane
Miccalady,
investing in a mining town can be very lucrative, if you get the timing absolutely right. One of our customers bought in Roxby Downs a few years ago when property prices and rental yields were going through the roof. The rent went up another 25% over the next two years (in between tenants), her property went up by about 30% and it looked like a great investment. Then the expansion of Olympic Dam got delayed, then there was an accident, and the mine's production dropped by 75%. All of a sudden, casual workers were laid off, and demand for rental properties plummeted. She said rents dropped by about 30% within a few months (lucky if you had a long lease in place).
So, whilst for a while (or maybe a very long time if things go well), a mining town property can be a great investment, it can also very quickly go bad. High return, high risk..I have bought many regional towns.
One must do due dilligence to see hat there is enough infrastructure around incase the mines close.
Good to see bunnings, maccas, kfc etc in town.
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