It appears that the property could return 12%
I'm guessing it does not have a tenant?
What town/city are you considering as there is lots of BS by agents floating about?Hi BuilderBob,
It is around the Longreach area. There is no tenants in the property at the moment, but my understanding is that rentals in the area are on the short side.
Tania
This site really is a plethora of information, with guys like you so very generous and willing to share this information.
As a newbie to investing, I attending the wonderful weekend that was the three day seminar held in Melbourne last Friday Saturday and Sunday.I note with interest the dedication that you have shown in travelling to these towns to complete your due diligence.
My question is: could you please expand on the criteria you use to evaluate these towns/ any other properties you buy. This was the one area that I wish I had of got more out of from the weekend. I am fully aware of the need to be a local area expert, however do you have checklists / websites / evaluations / spreadsheets / tables / questions etc. that you use and may be willing to offer some advice on?
My understanding at this early stage is that the best way to do this is to get out there and speak to agents and try and get a grip on the market. If you could somehow de-mystify this process it would be greatly appreciated.
Dysart is listed in this months API in their top 100 growth suburbs and APM is predicting spectacular growth of 46.5% growth over the next 12 months providing the resource sector keeps powering ahead.
Re: risks in mining towns.
We've got property in Dysart, which is performing well. (Cash flow positive on loan of 105% of purchase price.)
I mitigate risk by only buying in mining towns with more than several different mines in the area. Then every 3-6 months, I check the ASX website and look for info regarding the expected life span of those mines. I also have a great agent in the area who posts up- to- date newsletters every few months, on how things are going.If you keep up to date with the area, you can lessen your risk. Steve is looking for a higher profit if he looked at property in mining areas, because of the inherent risk ie. if mines shut down, industrial accident, etc. These towns wouldn't survive without the mining industry.
Hi guin_ness,
I was at the weekend too – wasn't it great? (I was the guy with his arm in a sling – it was a great conversation starter so we might have chatted
)I'd identified these towns about a week before API published on them, so by the time I acted my first 4 choices were under contract. That said, my thinking was along these lines:
1. I tried to think of resource-based activities that should be reasonably reliable for the next 50 years or so (I'm being hopeful
)
2. I figured that with some minerals it might be harder to pick a winner over that timeframe. Eg metals get used for various things, and may come in and out of favour. Iron ore for example used in steel would be a good bet. But others I know less about and are more specialised eg tantalum???
3. Then I thought about coal, and the fact that even though it's got some green energy challenges, there are 2 things I'm confident about: Humans will continue to increase their energy consumption and it's unlikely that they'll come up with a more economical alternative in that timeframe.
4. So I looked at the major coal areas around the country. Those in NSW and VIC had pretty ordinary yields, but the Bowen Basin was still pretty good. Emerald had seen a bit of a boom, and I thought might flow out to nearby areas. The Surat basin south of Emerald had average yields, so I looked north.
5. Further research revealed that a lot of the coal taken from the Bowen is coking coal, which is used to make steel from iron, so that matched up nicely with my earlier conclusion about steel. Also made me feel a bit better about the green thing. The bowen basin is pretty much all coal, and it's a huge basin. I don't think they'll run out in my lifetime.
6. Then I analysed all the mines, and looked for towns with more than one mine, and more than one mine operator in the area. Then looked at the age of the mines and any activity associated with opening new mines. I gravitated towards the larger towns.After that it was all about offers and building inspections etc. I didn't travel to see the places until after I'd bought them, so all my due diligence was remote. The good thing about these towns is that there are only about 4-6 types of house in each town, because the mining companies built them (presumably with 4-6 builders!). So I really only needed an assessment of the condition of the house to decide.
All research was on Internet, and a few phone calls to agents and councils.
I hope that helps your investment journey,
Daedalus.
Daedalus. have you considered Proserpine?
The word has it that the Shale oil is a done deal and is going to generate huge demand in the area.
I cannot go into detail but extra land has just been purchased for the venture and quotes have been called and not just to refresh the mining lease.
EPA are still collecting data.
Apart from that much of the Airlie/Cannonvale community are looking towards Proserpine due to the high asking prices in the area.
Actually the entire area is booming but the market it far to high.
Check out this link for more details of projects in the area: Whitsunday investment feed back.Does anyone know about Moranbah in terms of projected capital growth and mining activities around that area?
I'm considering to buy property in Moranbah with positive cashflow. any tips in terms of what to look out for?
How accurate are the projections from Property Investor magazines?
Thanks,
HarryHarry what has you considering Moranbah?
We just completed a few contracts for Qbuild there and did find accomodation very hard to obtain but we only wanted a few nights.well, I'm very close to sign contract to purchase 3 bedroom house with big block. My concern is whether this boom is just for couple of years or people are going to be in the town for next decade? Are there enough projects in or around to keep Moranbah occupied?
Thanks,
Harry I have a friend who could help you out with some updated info of the area sales if needed?
I'd send you a pm but I cannot see any option on site to do so, visit the link site below and drop me a PM , same user name.
ashara wrote:Does anyone know about Moranbah in terms of projected capital growth and mining activities around that area?
I'm considering to buy property in Moranbah with positive cashflow. any tips in terms of what to look out for?
How accurate are the projections from Property Investor magazines?
Thanks,
HarryHi Harry,
Remember that they are only projections.You need to understand what assumptions they are based on.
I have a property in Moranbah, and I'm aware that there are almost ZERO rental properties available to lease at the moment. So now is a good time to get in if it suits you, because you will lock in a tenant on a long lease at positive return (presumably).From my perspective, I'm not investing on the assumption of a significant capital growth. Sure, it might happen in the short term, and that would give a margin of safety, but significant capital growth in the long term is unlikely. However, so long as the rental yield remains high for some time (which I think is very likely), I'm happy for the property to be a cash cow.
Moranbah has the largest open cut mine in the southern hemisphere, and at least 2 other significant pits nearby. The explosives plant looks like its back on the agenda as well. All other accomodation is significantly further away from the mines than Moranbah is, and Moranbah is the biggest town in the area, with excellent services etc.
So those are some of my reasons for moranbah, but you'll need to make sure your happy with your reasoning.
All the best,
Daedalus.
PS I have developed some pretty specific opinions about ONE of the property managers in Moranbah. If you want to PM me, I'll share them with you.
Hi BuilderBob,
I have not researched Proserpine, but I'll look into it. Thanks for the tip mate.
Daedalus.
" explosives plant looks like its back on the agenda " I was told it's a no go and never get off the ground, but with the joining of shires maybe some thing has changed?
I just noticed this bit of info posted Bowen Basin – New and Potential Developments
Scroll down to a user called RussBuilderBob wrote:" explosives plant looks like its back on the agenda " I was told it's a no go and never get off the ground, but with the joining of shires maybe some thing has changed?
Dyno shut the project down, but I'm told site activity never stopped. A few weeks ago I read in the press that the project was being reviewed again…. but that was a few weeks ago. There is a lot of contract pressure on Dyno to find a way to get the plant operational.
Daedalus
Hi,
Im looking around for my next move and your post caught my interest.
If theres a shortage do you think its possibe/proffitable to build a house in one of these towns and sell for a good profit.Are there any problems like a shortage of builders of zoned blocks of land ?
Thanks,
Mark.
Hi Mark,
I think building would be more expensive than you might expect. Local builders would be expensive (based on some quotes for maintenance work that I've had), and as you've read above, accomodation is tough for visiting trades.
Having said that, the established houses are pretty simple i.e. not an expensive looking design.
There are a few new houses in these towns, so somebody must be building…
Daedalus
Hi Mark , as stated by Daedalus local builders are expensive and so are just some of the basic materials.
We just finished in Dysart and for example we carted/trucked our concrete mix / pre mix over 3hrs away and it worked out cheaper then buying concrete from the local batch plant.
The biggest problem in such areas is the accomodation and as stated we had to return endless times for short periods paying over $180 per man each night.
And that was eating at the Mac camp, ( cheap) .
You add this on top of day labour of approx $350+ per man it's costing you a good $600 +per day each man.My suggestion is to find some quality prefab homes and truck them out, but even then you still need all trades and for the limited work required they most likely would not be interested in the work.
Also, the local council is pretty fussy about the type of accomodation going in. They are particularly against single person accomodation (dongas). You would find the going easier with family homes.
Daedalus
Hey BuilderBob, pity I didn't know you were in Dysart sooner, I'm going there this weekend to do some maintenance on my property there. Even with airfares and accomodation, it will STILL cost me about a quarter of the local guy's quote. We could have come to an arrangement
Daedalus we spent an extra week in Dysart doing just that for other contractors as they heard we were in the area, my men were starting think we would never get out ..lol
You might get accomodation at the motel on Thursdays and Fridays , the Jolly collier was booked out and camp fully booked way after xmas even with the extra 200 rooms.
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