Broken Hill - has it got any life left

Hi all,

I have found a property in South Broken Hill that is under offer but has not yet exchanged and the vendor is still willing to talk to me about it.
I won't be able to look at it so it will be sight unseen.
The owners would like to rent it back for a while which means I wouldn't need to worry about tenants for about 6 months.
I have done a search through the forum re Broken Hill and people seem to think its dying down. I have looked at rental vacancy, jobs in the area and Perilya (mining company) website and it doesn't seem too bleak.
However the house I am looking at has boarded up windows (what the???) so my thinks it might be a dodgy area.
Has nayone got ny experience in South Borken Hill?

Cheers,
Emma

My understanding was that it was starting to pick up. My family originated there with my grandfarther working the mines from 15 to 70 years old. When he died a few years ago they couldnt sell the house. They just walked away. At the time the FHOG would cover the full purchase price of a house. But with increased mining i was under the impression  that things were picking up. Infact the company i work for has just signed a contract to supply aircraft for medical support out of several mining locations for up to ten years. Broken hill is one location.The other locations ill keep to my self as they will be good locations in the near future for investing.

Hi Emma

If the vendors are living in the house, which I presume they are as they want to rent it back, then I would be very concerned about boarded up windows.

To me, it shows a lack of attention to maintenance, which may be evident throughout the rest of the house.

From looking at many properties over the years, the reason for a personal inspection is not to check out what you know, but to find out what is NOT shown in photos or pictures.  Just a fortnight ago we drove past a house advertised on RE.com.au which looked great - it was a lowset and had obviously been photographed from a low angle because what was NOT shown in any of the many pictures was the huge McMansion behind, about 2 metres from the fence, which totally overlooked the backyard.  As it was on the northern side, it would have completely blocked any sun in winter.  We didn't bother to go inside.  Other properties that have been very appealing from pictures have been metres from huge overhead power pylons, backing onto busy roads, opposite factories etc, all of which are not shown in any of the carefully angled pictures.

If you must buy sight unseen, then at least have an independent person inspect the property on your behalf, even if you have to pay.

Good luck!
Marg

Thanks for your reply Marg,

Who would you recommend I have look at the property?
The owner boards up the windows when he goes interstate which is frequently (apparently)!!
Also I am thinking of calling some property managers in the area to see what they think of the area as after the vendors rent-back time is up I will need new tenants!

Cheers,
Emma

Hi Emma,

I've had property in Broken Hill now for almost 4 years.  With any market you have to separate fact from opinion.  I bought a property there originally as a tactic to offset a negatively geared Sydney unit.  My research showed values had moved up slightly, yields were well over 10% (at one stage I was actually on a 48% yield), Centro was redeveloping the shopping centre etc. and the town had not in fact died at all.  I researched and formed relationships with people in the town whom I needed as my team on the ground. I went up there for a week and had a great time, it is actually a unique place.

Last year quite a few pieces of market data were made public. A community forum was held in which 3 mining companies outlined the fact that they were employing at least 1500 new workers over the ensuing 18 months (this was last Oct-Nov). A stock exchange announcement was made by Perilya.  They were opening 2 new seams from the existing known reserves because they are now economically viable with the price of commodities being so good.  They did not want to do fly-in/fly-out.  Think about it.   The housing stock in Broken Hill is 10,000 dwellings.  Alot of which are so delapidated you could not put a dog in them.   1500 new workers means something like 3000+ people coming into a town of 22,000 people (let's say half of the new workers are married and no children) who will need housing. 

I bought another house straight away. If I had more time to devote to that market I would have bought 10.  Since then, the new workers have steadily been coming in, and in actual fact alot of them bought homes to live in rather than rent (confidence in their long term future?).  This was great for 3 reasons, (a) values went up sharply and (b) rents went up sharply as expected but also (c) the quantity of good quality rental stock is reducing.

My properties doubled-tripled, and I am just having them revalued again as the rents and values have both gone up since the last revals. 

Now, South Broken Hill used to be a pretty undesirable place.  In reality there are some quite nice homes there, the Flying Doctor, airport and golf course, but a few lousy ones that brought the place down.  There has been a noticable shift of less desirable tenants out of the south,  but you would still need to be careful in checking out the street etc. before buying.

Email me if you want a recommendation of the agent to speak with about the rent potential, street, etc.

Cheers
skippygirl

wow thanks for your in-depth response skippy girl.
Unfortunately I can't get LMI approval for Broken Hill so I can't proceed.
I wish I could go and have a look at the property this weekend but I have a flight booked to NZ to look at some houses there and by next week it will be too late, the property will be gone!
If only I could be a full time investor!!!

I was going to contract on a property in US that had nice "curb appeal" and looked good on the listing on the web but when I got it checked out it actually didn't have any back to it no joke.

Hey Emmajane.

I've seen boarded up house window pics in Broken Hill too. - that's enough said in my opinion...... However as you have a trip to 'UNZUD" booked, make the most of the opportunity there to look around at get the feel of the place. Even if there is nothing there that tickles your fancy, at least try and establish a couple of relationships with Real estate agents, and a good accountant face to face if you can. No stamp duty in NZ will make your money go so much further for a start - and will make an ' average property' profitable so much sooner. All the best. PS; SOuth Island I presume?  I get the odd email form these guys https://www.qv.co.nz/ that make me wish I had bought property over there instead od here, or that I could do what you are about to do. You go!!!

Hey thanks V8Ghia,

I'm actually from Chch, been living in Sydney 4 years now.
I currently have a JV IP (a flat in Chch) with the family but want one of my own.
We bought that in April last year for 180k and its renting for $230 p/wk privately to a freind of the family who will stay forever.
We recently had it valued in April 0 and it was valued at 210 - not bad 16% in a year.
Yes South Island as I know the market and it is a town I spent a lot of time in as a child/teen.
I have a great agent who emails me no less than an 8 line paragraph for each property she is selling, she's fab!
The only bugger is that I can't borrow more than 90%LVR but I guess that keeps it realistic.
I am going to focus on one at a time so Broken Hill is out the window.
I'll let you know how I go with the trip. If nothing else at least I get to see the folks!

P.S What is stopping you from buying there?

Hi guys,
yes definately dont buy if you havent seen a house for sure!!
In regards to Broken Hill ,Skippygirl is correct .It is pumping! My properties have all either double and tripled in the last 3 years.I am confident it should at least double again in the next few plus years too as there still is very cheap properties available.
*(just be careful with the 300K+ props are they are still slow moving ,sale wise.)
South BH is getting better for sure and mostly had a bad name from the aboriginal communes in there.They have since sold those off and disbursed the ternants to all different areas of broken hill .The South is actually a quieter area than the north these days .
 The mines are exploding also and the town has proved that even if the mines close it can stay afloat as since a few years back the mines only employ 500 workers.
There is talk of BHP doing some deals just outside the Hill again too.Imagine that hey ,the huge superpower company coming back to where they were born!
At the end of the day just do yr research and be careful as resource booms do come to an end eventually ,so have an exit strategy and a plan once yve made yr profit.

In regards to the LMortgage insurance go to a good broker and they will get you a loan easily. ANZ ,adelaide bank,commonwealth etc etc will do a 80% lo/no doc loan for you at 80%LVR.

kind regards

"Don't let yr character be impacted by yr surroundings, instead make yr character impact yr surroundings"
- Rachel Scott(17 yr old killed in columbine shooting 1999)http://rachelschallenge.com/