QLD mining regions (Bowen & Surat Basins & Gladstone): Willing to help anyone with questions

Hi JD,

Can I ask what drew you to look at these three areas initially? This might help with identifying which area has the strongest characteristics that suit your needs. I am not 100% over the NRAS properties so maybe someone else can give there opinion here also. From my understanding, you are bound to let them out below market value in order to recieve a lump sum payment from the government. To me, this sounds to restrictive, especially if its your first property. Am I correct in saying that if you want to sell, then the scheme applies to the new purchaser? If this is the case, I could see issues with finding a buyer in an efficient manner should you have to implement your exit strategy for whatever reason. I could be wrong in my understanding of it so do correct me if I am wrong. If I am correct, this is just my personal feelings on it, I am not saying it is not a good thing, It just wouldn’t be for me anyway. Without knowing your circumstances Its hard to know if it would be right for you or not.

In regards to the areas, I would favour Gladstone and Mackay over Bundaberg purely for the amount of growth drivers they have. However, property prices in Bundaberg however, are less than Mackay or Gladstone. Of these two, I believe Mackay will be the long term steady performer over the often turbulent Gladstone. In saying this, Gladstone is in for some great growth over the coming years, however as a newbie, i would not go this option alone. Also to take advantage of the LNG industries, new properties are going to be better for rentals, obviously an indirect impact will occur on the older stock too. Mackay rents are around the 5.5-6% where furnished in Gladstone is achieving well above the 8%. Two completely different markets even though they are relatively close to each other.

Do you have tax to minimise? or are you looking for cash flow positive before any depreciation?

I am bullish on Emerald, have a look into that if you want to explore elsewhere. once again a steady, secure performer with good returns and great capital growth. Either way I believe you have done a good thing by exploring regional QLD, it is where a lot of the growth will be over the next few years especially.

Assess your goals, financial position, comfort levels, how much you want to be involved with something (how much time you have) and keep looking at all of your options.

I hope this helps, JD

Cheers,

Hi Katmat,

Thanks for your interest! If you’re a savvy investor who is willing to watch and try and time markets than Gladstone can be a great option for you. Unfortunately the land developers in Gladstone know they are in the box seat and are demanding high prices for reasonable blocks of land. I have looked at a few cheaper blocks for private sale around the low $200’s, however they are generally very steep blocks which will require retaining etc. Once this is done they are the same price as normal developers stock. We are working in some stages of some estates which will be released by the end of the year we are told. Depending on the size of the house you build, you will be able to secure a house and land package in the very low $500’s. This is of course depending on the blocks that you choose as well as house size. As we are a boutique sized firm, we are lucky to be able to deal with some of the better developers who wont let builders secure 20-30 blocks at a time. This protects our clients investment from having tiny “shoe boxes” which all look the same, being built all around them and also increasing the owner occupier rates for the neighbourhood.

In regards to rental returns, the managing agents in Gladstone are expecting 20% increases by the end of the year alone. Bechtel, who are the company awarded with the contracts to build the LNG plants) have shown interest to secure rents for 10 years with CPI increases annually. This isn’t the most effective way however it does provide security for some landlords. All the advice given by the local agents is to sign a 6 month lease at a time. You don’t have to rent out furnished, however it is well worth the investment!

Does this answer your question for you?

Hi JD,

Heres a link to whats in council planning at the moment, http://www.gladstone.qld.gov.au/web/guest/planning-applications .

when i made the post about being more this was over a month ago, and they only need to be advertised for a month generally so they seel to have been gone (i should have done a print screen!).

I am confident that there will not be an oversupply of accommodation, it will be the opposite in fact. However, in regards to capital growth, it is the land that is the real strength so if you can get as much land aspect in your budget then the better off you will be in the long run. The larger developments that will come online will take quite a while to get built.

Its unfortunate that the council look unfavourably on dual occs. Developers need to include duplex blocks in there master plan for them to be approved so far out of the CBD. Its not ane asy process to get a duplex done in Gladstone unlike other areas of Australia can be.

Anywhere on the western side is where the newer developments are however many established properties are around the $500-$600k mark. Even townhouses are selling off the plan in this part of town for $500k!

The north/west side is the better option i believe as it is the furtherest away (whilst within close proximity) to a lot of the industries. Inner city area might let you find something within your budget of $400k which you could potentially value add, however these are hard to find as every man and his dog has tried this too!

I’ll have a look out for something that might suit you

what happens once everything is built?

thats my only concern