Hi all,
I am currently looking to get into the investment property market. By the middle of this year (maybe earlier) I should have $20,000 deposit and currently earn $48,000pa (rising to $65,000pa) next year. I do not have any liabilities (car insurance and rego only) or debts and pay next to nothing on utilities, food or housing (collectively $250 max a fortnight).I have done a large amount of research, probably still not enough. But, I would really like to invest and believe that a mining town like Wandoan, Moura or Dysart. These may be good places to start due the boom that is starting and/or is about to start. The new rail, pipe, infastructure and mines in these towns make it very tempting.
As I am an inexperienced first timer to investment properties is this wise to start in these areas?
Am I to late to take advantage of the looming boom?ANY advice on where to get going, from brokers or RE's to your experiences would be great!!
cheers,
Tom
Hi Tom
I remember when Dysart was under $100k for a house and during the last boom before the GFC these houses tripled in price. The main thing with these areas is to get somewhere where new mines etc are happening. The qld gov has a web page that covers all these areas telling you existing and new mines etc, sorry can"t find the link, start with Bowen Basin/ qld gov type search. Dysart and surrounds have come back a bit in the gfc, with prices, rental returns and employment, if you look any existing properties with a lease they still hold a good return, any looking for a new lease are now not as good a return.
Because these towns rely on 1 thing to survive you need to understand coal and the future of coal and base your decision on that.
As far as your deposit for a ip you will need 20% + costs, so for a 400k purchase you will need 50k approx, even at 80% lend I would believe some borrowers would want lmiHave fun
Barry
Tom just to correct Barry post regarding maximum lvr and deposit required.
As discussed by email you can still get 85-90% in areas like Dysart with LMI but at 80% you will be fine.
Some non bank lenders may still mortgage insure the loan even though you wouldnt pay the premium however you avoid them for a deal like this.Richard Taylor | Australia's leading private lender
Be careful as mining towns as they can have this following cycle occur
- Houses are cheap
- New mineral deposit found
- Mining company decides to build a mine
- Heaps of workers come into the town to build the mine
- House prices rapidly climb
- Houses are hard to come by
- Rents go through the roof
- Mine gets built
- Most mine builder workers leave town except for the actual mine workers.
- House prices fall
- Rents Fall
So timing and due diligence becomes very important if you get it wrong you could make a costly mistake.
grew up in amining town always have booms and busts look at emerald which is now a city and has more then just mines also rocky is another interesting area if you want to speculate keep an eye on alpha,aldershot toogoom howard etc.
i agree to duckster's comment. timing and due diligence is the key
Thanks heaps for the advice. Ill be sure to take it on board.
Do you think that taking such a risk as a completely inexperience investor is stupid? because I probably could get the deposit money together.
Cheers
Tom
you can reduce the risk in mining towns if you buy a property with a long term company lease 2yrs etc.
Tom,
Latest update (27th March 2010) for Moura is Belvedere has completed their prefeasibility. Looks like $700 million or so to be allocated for above ground infrastructure (roads, offices, loaders etc). Lots of workers required for that. It is unknown at the moment if they will have a "camp" or use local accomodation, although I understand both locals and council are fighting for "no camp".
All the very best. And yes, mining towns will have there ups and downs. Try for a mine in its early days rather than one that is halfway through its expected life span. Hence why I chose Moura. True, Dawson North did close down (bloody economic collapse) but announcements have been made that it will reopen again this year so all bodes well. Like with anything, just do your homework.
Cheers
Mick
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