Forums / Property Investing / Help Needed! / Mildura – thoughts on a new villa opportunity?

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  • Profile photo of aschafsaschafs
    Participant
    @aschafs
    Join Date: 2009
    Post Count: 2

    Hi,

    We're currently looking around for our first IP.  A friend is currently buying a new villa in Mildura and is suggesting we buy in the same development.  Though I'm only starting my research, I've got my reservations on the numbers already.  The property is $240K for a newly built 3-bd villa – expected rental return is $250pw, so only ~5.5% yield.  I would have thought around 8% would be better for a regional area.

    From my research into Mildura iteself, I've come up with the following info:
    -the town is growing at a reasonable rate, with around 50000 people in the greater Mildura area
    -there's some good infrastructure projects, particulaly the marina and solar station going on
    -industry is largely agricultural (and supporting industries) and could be tied to the drought and health of the Murray-Darling basin (the govt buying back water rights now may reduce agriculture a bit as could the drought if it continues). 
    -there is a number of other industries including mineral sands mining, transport/logistics and tourism which diversify this risk a little
    -i'm told the vacancy rate is very low by a few agents though there do seem to be a no of outstanding rental and sales around.  i notice this lot of ~10 villas has opened for sale a couple of months ago and still has a no of unsold units.

    Overall it seems like a reasonable area to invest in, albeit maybe not a "hot spot"

    I'd like to hear any other people's thoughts on the investment and Mildura – this is all still very new to us, so any or all comments would be much appreciated.

    Thanks!

    Profile photo of Michael 888Michael 888
    Participant
    @michael-888
    Join Date: 2005
    Post Count: 260

    Your thinking is sound.

    Whilst depreciation of a brand new dwelling will help gross up that yield, that should be seen as the cream.

    I'd be wanting minimum 7 % there. Whilst I do not know anything about the Mildura market, as a regional city something over seven with depreciation as the jam may start looking OK.

    Benefit of a brand new box is that it should appeal to a larger rental audience than an older unit. There is however no further value add for you to achieve that higher yield that an older property may allow.

    Keep thinking like you are and do not rush your decision.

    Welcome to the forum

    Profile photo of aschafsaschafs
    Participant
    @aschafs
    Join Date: 2009
    Post Count: 2

    Thanks, Michael – I appreciate your  feedback…

    As you say, I'm keeping an open mind and looking around a lot still. 

    Thanks,
    Andrew

    Profile photo of JD86JD86
    Member
    @jd86
    Join Date: 2009
    Post Count: 52

    hi, dont know much about mildura, been there for a couple of site visits as we are doing work at sacred heart primary school

    i do know, that there are developers who are keen to put a big backpackers hostel there, somewhere in the order of 100 beds

    we are doing a concept design for it now

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618

    look at the future of the wine industry

    http://www.smh.com.au/business/de-bortolis-new-red-leaves-a-sour-taste-20091123-iyey.html

    The health/water in the Murray will be the issue. 

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