Mining Town Woes

Hi there – sorry to hear that (investing in a mining town that is).

What is the current market value v purchase price? being tenanted is great! however, do you have a borrowing attached?

Depending on the state, the town will driven by certain companies in the area, review the financials/ prospects and determine what the future holds? most likely will not be positive but lets hope its positive for you.

Cheers, Ivan

Jason Staggers wrote:

Would you buy that property today at it’s current price? If the answer is no, then why would you continue holding it, other than the emotional pain of admitting failure? Psychologically, you’ll make a better decision if you can consider the loss in value as money that is gone forever. Otherwise, you’ll be tempted to hold onto it in hopes of a recovery, which would amount to little more than speculation.

This is a great way of looking at all investments – if you wouldn’t buy them now, why continue to hold them?

If you have the ability to service the debt have you considered picking up a few bargains in the same town eg to use the same PM in order to average down your costs?

NAB lowering their LVR requirements for mining town purchases could be seen as a bearish sign. I’d say downside risk remains. But for anyone who disagreed, they may answer “yes” to “Would you buy that property today at it’s current price?” in which case holding would fit their opinion on the market. My point is hold because you have a strong reason for a bullish outlook, not because your ego can’t handle admitting failure. My experience mentoring mining town investors has taught me that most continue to hold for the latter reason.

• This reply was modified 9 years, 1 month ago by  Jason Staggers.

Yson wrote:

well, i bought into mining town in QLD in May 2015, wait 2 mths to rent out after slashing the rental.

If rents are still sliding, that means values are still falling. Thanks for adding to the conversation Yson.

I bought in a mining town, my first IP in Aus. What a mistake that was! I have however learned from that mistake, ate some humble pie and moved on. I still own it because even if I offered it for 50% less then what I bought it for there would be no buyers. I’m sure there are more then a few people on this forum who are in my shoes but unfortunately unless your IP is tenanted and returning 10% then it’s unlikely you’ll get any buyers. My guess is that there is about 5 more years of pain before some light at the end of the tunnel. I could of course be wrong, wouldn’t be the first time!