hi all,
I am interested in mining towns for +ve cash flow.
However, I am concerned that rentals can fluctuate quite dramatically as well as property prices. So potentially I could buy something with great gross rental yields which in a year could be cheaper with considerably lower rents. Is this a fair concern? Should I only invest in such towns once I have a range of properties in other areas?
Thanks in advance for you help!
anchHi Anch
I currently have 2 ip’s in QLD and am about to place an offer on a property in north WA – it has 4.5 years to go on a guaranteed rental so I think it should be ok – The rental can’t go below what they are signed up for but it can rise – with the future development in the town I think it would be a good investment.
gross rental yields are fabulous, however, when the guaranteed period runs out I can still rent it to anyone for approx $150 less per week and still enjoy a good income…
Good luck
]The best investment I ever bought was in a minning town.
towlie, care to elaborate more? how long have you had the property for, what are the figures?
robertv, do you plan to hold onto the properties for a long time?
What hapens if the mine closes down? YOu could end up with a town with a large drop in numbers and no one to rent and your property will go down a lot in value.
Am I just being too meladromatic and pessimistic?Hi Anch – I wouldn’t have all my properties in a mining town, though the yields can make having some properties there attractive.
I would choose a large regional mining centre with a variety of companies, rather than a smaller one-company town. Also if there are other industries in the area (tourism, pastoralism) then that would be a bonus.
To further mitigate risk, I’d choose a place that even if vacancies rise will be the first to be re-let. I’m thinking of a fairly modern, brick low-maintenance unit or duplex that’s within staggering distance of town & pubs.
You can get capital gain in a mining town, but it might be only over 1-2 years. Then you might get 10 or more years of static values and rents, so you’re dead lucky if you get any CG.
Peter
Eighteen months or so ago, places like Singleton, Muswellbrook, Branxton areas were good buying. Maitland as well as it is within commuting distance. Prices have skyrocketed, but there is still the odd good buy.
Anna
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