Forum Replies Created
Hi Yazdan, I’ll start by giving you a little background: I have been a Property Investor for several years now and had a (less magnified) similar situation off the back of advice from a highly recommended Financial Advisory group in Perth which took me 7 years to get back to square 1 (without going bankrupt). The difference being that I could afford to hang on – I was using family money to do so but was able to keep the banks at bay while I did this. I then got more serious about investing and got involved with Steve McKnight and his team + mentees to learn how to mitigate risk to significantly reduce the risk of loss.
I am now a resident of Moranbah and have been for over 3 years now. I have been in mining all around the country for over 15 years. I have several friends who invest, some even vastly more experienced than me, who are caught in the Moranbah downturn in similar (and some worse) positions. I will mention here that I have never invested in a mining town as after I had my first lesson (and that loss was investing in the Perth area so i thought it was safe !) I could never accept the risk of towns which had few or only 1 industry to fall back on.
After reading through the replies here – most are really good advice in the options they are considering. I especially like mckero’s response as it gives you solid options of what you can do right now. I had to do similar, and because I was taking positive action had a little luck on my side and sold some existing well performing IPs at a good price. It still got swallowed up by the massive debt I had, but as mentioned I was able to sort of ‘limp’ through until values nearly came back some 7 years later…
The better news is that I don’t expect Moranbah to take that long (7 years) to pick up, excepting that in my opinion housing will never see the prices at the ridiculous highs it was a couple of years ago. If the bank lent you 80% meaning you purchased at around $750 K + costs, I think it will be difficult to achieve, but you will of course need to find out in your action taking what kind of sales figure you need to get back to square 1 – at least then you will have a figure to work on with the rest of your portfolio.
What I really think is important here is the assumption which has been made about not being able to rent the place. I have advised many people who have exactly the same situation as you to pull out all the stops in order to keep income coming in for your ip. I know of 2 of these within the last 2 months who have successfully rented their properties on long (12 month) term leases on reasonable money (of course not the rents of a couple of years ago but somewhere around the $300 – $500 mark). I always encourage those who contact me to try a couple of things. 1) (Probably the easiest): Contact the local agents (I am assuming you have someone managing the property already). Depending on who you’re with, Moranbah Real Estate (http://www.moranbahrealestate.com/) seems to have the best results and I know Vicki in that office comes highly recommended as a PM. Bella who is the principal of the Agency has been in Moranbah forever and would be worth talking through all your options – don’t leave anything on the table, discuss selling, online auctioning, renting, rent to buy, anything you think of or you learn from this website. Don’t forget, even if they only become a facilitator of any transaction – bear them in mind for some commission to make sure you can access their local knowledge and database (such as if you were to sell on Vendor Finance contract or similar). Discuss the merits of setting your house up for ‘FIFO’ or ‘DIDO’ workers – which as you may already know is those who work in town but don’t reside there permanently. This is the way of the future for the big mining companies to take absorption of massive rents out of their costs equation, hence the push for compulsory FIFO and the fact that there are now over 6000 camp accommodation rooms in Moranbah. What i mean here is setting up your IP effectively as a big hotel room where no work has to be done by the tenant i.e providing a washing machine and dryer, approach the local camp providers and see if it is possible to set up an account or swipe card with them for your tenants to be able to get their meals in the food halls they have (this is very convenient and provides all meals for travelling workers), see Civeo (http://civeo.com/#) the main provider of camp accommodation in the area. Also little things like having the gardens done by a local lawn contractor, providing some furnishings (even the basics of beds, tables and chairs, lounge and TV) – anything as most workers leave at 5 in the morning and don’t get home until 7 at night so have very little time to do anything else. I would also look at local facebook groups to advertise – though I don’t see much success with these, some specifically targeted property will get interest, things like fully furnished or property with specific features (https://www.facebook.com/groups/206032136158670/) and even the community noticeboard which won’t give you much useful information at all to do with renting, but gives you town news and an overall feel of how things are travelling (https://www.facebook.com/groups/Moranbahcommunitynoticeboard/). Also bear in mind if you are going to purchase furnishings or similar for your property, being a mining town,much of this stuff gets sold locally at very cheap prices from those on the move (https://www.facebook.com/groups/moranbahbuysellswap/). Secondly I would Call every business you can find a number for in the area and ask them about rental stock and if they may be interested. I know someone who recently rented to BMA (the largest supplier in the area) even though they are in the process of removing all external rentals from their lists. There are still many local business doing external rentals, Kalari, Dyno Nobel, Anglo, even McDonald’s was looking for housing at one stage !! Discuss this all with a local agent as I recommended and let them know how badly you want to make this work to keep at the top of the pile of investors in the same position. If they don’t show you the love your after, don’t be afraid to contact companies directly and deal with them as I know many others do – and companies will effectively have their own Property Manager overseeing employee accommodation.
You have a lot of work to do but I would say all is not lost. The investors 80km down the road in Dysart do not even have any of these options as there simply is no mining in the area to support it – I was offering $25K (yes $25 grand) per house for a group of 13 that went to auction late last year !!! At least you picked the busiest hub in the Bowen, some ‘one stop shop’ investment property ‘experts’ are now advertising Moranbah as the place to buy at it’s low. Get a feel for it and do some ground work to give your investment every chance you can.
All the best.
ayjae
Email MeHi Sunny,
I first looked at this post as I live in Moranbah and keep a close eye on surrounding areas etc. I agree with Moxi10's comments completely about investing in the greater area.
However, after reading further I would really recommend (shadowing the comments of JacM and some others) getting educated first – and many of the resources are right here at this website. Check out the links at the bottom of the page. The creator of PropertyInvesting .com (Steve McKnight) has been someone I have talked to and learnt from for many years now. He has used (and has a knowledge of) many different methods of making money (ie. investing) – which is why this website was created in the first place. You may already know, but in my experience there are a few basics which I have learnt over the years which are absolutely critical in being a successful investor such as knowing the why – what exactly do you want out of it ? Once you have a plan in place, many of the ' money making ' questions will fall into place (and when you're doing it right, they will come to you !)
All the best.
AJ.
ayjae
Email MeHi all,
see more info about this area at:
https://www.propertyinvesting.com/forums/property-investing/general-property/4344732I currently reside in Dysart and there is money to be made. Will try to keep it short as there is so much info. @ my post. Dysart is surrounded by some other mines though predominantly accomodates BHP employees (not contractors). There is also a smaller mining camp which services Thiess Lake Vermont mine.
Dysart has become the new accomodation centre for workers at BMAs Peak Downs mine, normally accomdated at Moranbah. The travel is about the same and with the temporary hold on Norwich Park, this is the only area which has some accomdation available.
But a word of caution..
BHP is building a bucket load of their own housing including 2 bed units, 3 and 4 bed houses of a very high quality (estimate is 50). They have put a stop in their new agreement to leasing any external rentals in Moranbah (so may follow suite in Dysart) and most of the current leases in Dysart are done on a periodic lease, so as soon as the house is complete the tennant moves out. The houses being constructed are built by a contractor and shipped up in 2 pieces and take as little as 4 weeks to make turn key ready. This stands to reason as it is a much cheaper alternative to being at the mercy of the rental market and gives the company an asset which it can pay off and own – where the value does not matter.
To add a little salt – Hutchinson group are also doing a private project of units I think about 14 (they demolished a small shopping square for this as the returns are far better) *note this is not shown in website link below, and Cullen Group are doing a reasonable size multi unit dwelling right in the centre of town. In addition the BHP camp is building a whole new section for contractors with at least 100 rooms (encroaching on the golf course !!) and I have watched the MAC camp import so many new rooms that at one stage they could only store them offsite on the verge of the main road to the mine.
http://www.hutchinsonbuilders.com.au/project-categories/modular/
http://www.cullengroup.net.au/gallery/79
http://www.themac.com.au/our-businesses/the-mac-accomodation/mac-villages/dysart
ABS stats put the population of this town at best at 4000, I would say that it easily eclipses 5000. However there would be close to 3000 camp rooms available at any one time. The fly-in-fly-out arguement keeps brewing, but in my view the bottom line is that if the companies don't have to accomdate employees, it saves a significant amount of money. And business is about making money.
Always do your due diligence and have your worst case scenario considered !
AJ.
ayjae
Email MeBy the way, the mining jobs website was:
http://jobsearch.gov.au/resourcesectorjobs/default.aspx
ayjae
Email MeHi all,
Thanks for your comments.Biggest news today is the approval of the Grosvernor mine located very close to Moranbah – another 1500 jobs about to be posted. In addition is a new dedicated website from the government target the resource sector, note though it's only compulsory for companies with migration agreements (ie Gina Reinhart) as they must prove that they have given aussies a chance at employment first. Something else interesting quoted in the same article:
The National Resource Sector Employment Taskforce expects that current activity will create about 62,000 new mining jobs by 2015.
I am not sure who the NRSET is, but it says it's figures are based on current lodgement of new mine applications. Working at Australia's largest Coal Mine – I would agree. It is busy and mining companies can't get the resource out of the ground fast enough.
Streamline: thanks for the comment. I agree with your scenario. My only comment is that having being around mining towns for a very over a decade now, to enter into mining property with a long term strategy would be a great risk. In my opinon it would be less risky (if there is such a thing) to look for a shorter term deal gaining high yields with a potential gain if you know the supply/demand ratio is going to change in your favour. Still real crystal ball stuff that I could not foreseeliving and breathing mining. Even those who make decisions on new mininig operations cannot foresee it's success. So agreed. It comes down to high risk, high return (and high losses. I am like you and am happy to accept a smaller % return for less risk.
Hi Michael: I did not get a chance to meet / see you, but was also at the MC. I was lucky enough to have had a couple 'after conference lemonades' with amongst some of the hard workers, Diana. Wow what a person. I am so grateful that I can use Earls' 50 years of thought, research and education and apply to my life in an instant. That goes for any of you reading here – go listen to The Strangest Secret ! I have read and listened to many pioneering authors, but this brought it all back to basics – just keep it simple.
As for the question of when the EA will go through (industrial action) – if I knew I would be charging as that sort of info. could attract a heafty fee ! Sorry, I can't help you. I thought it was looking favourable 6 months ago, but negotiations turned on their head pretty much overnight which triggered the last very unsuccessful ballot.
Hi again Bardon: Thanks for sharing so much wisdom. I am really impressed by your summary of what are we really chasing. If anyone younger than 20 asks me about investing these days (not that I am an advisor) I tell them to buy a house, then go buy an investment property, something good for long term growth, then find a job you really enjoy and live life. Just think if we all had our own home paid off with reasonable equity and another paid for by taxman and tennants which we held for 20-30 years, we would probably have a great house and $ 2M (or it's future equivalent) invested giving you $ 100K pa if you're only making 5% from it ! This is the only thing I wish I had been taught at school. So now we play catch up. I completely agree with your thinking on how much is enough.
Thanks again.
ayjae
Email MeHi Bardon,
Have not done much trawling on this topic, did catch a glimpse of thread about Alpha mining accommodation (trial mininig already started). What I can say is that this is BIG business. There are very few providers who do this well as far as I'm aware. Worth pursuing if you can arrange a substantial amount of capital as I believe it would be more likely viable only on a large scale. I have been lucky enough to be see the progress of a friend of mine who is looking at this on a large scale. Being such an attractive deal there wasn't even much outlay initially required.
Thanks for the info.
ayjae
Email MeHi Katie,
Have PMd you but had no response. Please let me know if you still have this available.Cheers,
Alan.
ayjae
Email Me
