All Topics / Help Needed! / QLD mining regions (Bowen & Surat Basins & Gladstone): Willing to help anyone with questions

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  • Profile photo of bandwagonbandwagon
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    @bandwagon
    Join Date: 2012
    Post Count: 11

    Hi guys,

    First of all, thanks to everyone for sharing their great knowledge on this site – very informative & a lot of food for thought to say the least!

    We are finally ready (hubby & I based in Syd) to buy an IP in one of QLD’s mining regions but keep changing our minds on location every 5 mins it seems! We were keen on Bowen initially (due to all the good things happening at Abbot Pt – incl Graeme’s post above) but at the mo vacancy rates are pretty high – seems 100+ properties currently for rent (have spoken to couple of agents) so if we buy there now, there’s no way we’ll get great yields and I guess good CG for a while either. But…. it’s tempting as we could buy an older house on a large block (1000sqm+ with development potential) close to town for around $350K – which is our budget (although could prob squeeze to $400K max).

    Then we looked at Mackay – we can buy a 2bdr or 3bdr unit/townhouse there for $250-$300K+ with great rental yields straight away but not sure about CG on a smaller unit here compared to a house? Most houses seem out of our budget – except possibly for a few very old 2 or 3 bedders.

    Then, after reading a lot of Josh’s posts & blogs (fantastic reading & info BTW thanks Josh!), Emerald seems a very good option too with predicted good yields & CG – but is there anything we could buy within our budget & if so, concerned about buying in the “right” area & estate – after reading posts about dodgy builders & percentage of renters vs percentage of owner occupiers, we wouldn’t know where to start.

    So…. hoping to get some feedback from you guys on what you think about our dilemma – Bowen, Emerald or Mackay?! We’ve sort of ruled out Gladstone mainly due to risk factor (3 we’ve shortlisted don’t just rely on mining & also hardly much within our budget). Ideally we would like good rental yields straight away, at least neutral if not positive, with great CG to follow – like everyone else I guess!

    Anything you have to share would be much appreciated thank you!!

    Profile photo of camjanicecamjanice
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    Join Date: 2011
    Post Count: 51

    We invested 7 months ago in Gladstone and happy with our puchase of a townhouse.  Rang up an agent to see what it was worth and ask about the market.  It has gone up probably $50,000 in value so happy with that.   Seems townhouses are the way to go as most of the people moving there are single and not wanting the large garden.  New places are preferred.   Prices are very elevated so I don't feel confident to invest at current prices. 

    Also bought in Emerald in December and very happy with gross  yield on fully furnished 3 bedroom, 3 bathroom house of 11.4%.  Was told that in Emerald people are living in their cars and under bridges in Emerald due to the housing shortage.   Our place is rented out to managment, who are only there Mon – Fri and have meals provided so a good deal.  We also have a place in Mackay that is being built.  I feel that the emerald purchase was our best deal.  

    All three of our houses have been new, might be time to take on a development project next.  Others might be interested to know that we have found it surprisingly easy to buy 3 houses in 6 months.  The bank just seems to keep lending us money due to two of them being nicely cash flow positive and one neutral.  Shame we took 10 years of having equity in our home to do something about it but better late than never. 

    Profile photo of trickeymickeytrickeymickey
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    @trickeymickey
    Join Date: 2012
    Post Count: 19

    Gotta say thanks to Josh for this topic as it's been invaluable. I'm in the process of purchasing through Josh, a unit in Emerald that's due to start construction shortly. Can't wait for completion since I'm sure Emerald will keep booming this year. The hard thing will be to decide whether to get another CF+ property in Emerald or try elsewhere. Camjanice, that's great that you have bought 3 houses in 6 mnths…Now just to convince the wife that we should do it also.

    Profile photo of moxi10moxi10
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    @moxi10
    Join Date: 2010
    Post Count: 193

       I've just returned from a three day house-hunting trip to Mackay. Prior to going, I spent many hours surfing the web looking at all varities of residential properties for sale in the region, including Hay Point and surrounding suburbs. I had quality houses, units, houses with development potential on large blocks, houses with renovation prospects, median price houses etcetera all saved on R.E.com to check out. And of course, I've done my background research.
       Having never been to Mackay previously, one of the first important observations I noted was that the majority of the town is very low-lieing and prone to flood-water inundation. In my previous research, I had downloaded and studied council maps detailing flood prone areas, so although this observation came as no surprise, physically seeing the town impressed upon me the risk of purchaseing a property which might eventually suffer flood issues. Discussions with locals and agents revealed that the worst floods in recent memory occured in 2008 when 600mm of rain fell in three to six hours, depending on who I spoke to.
       Several of the properties I was interested in are in South and West Mackay, zoned high density residential. It's interesting in these areas that it's very common for rundown, poorly maintained old houses to be surrounded by or adjacent to well renovated older houses, new houses, and blocks of old and new units. The potential to upgrade or demolish and build for a healthy profit is obvious in almost every street i drove down in these suburbs. This phenomenon is not restricted to these suburbs, with many of the northern suburbs showing the same development trends, and in my opinion Mackay presents some of the best opportunities I've seen anywhere in the country for upgrading old houses to increase equity.
       Agents all told me that sales are increasing rapidly in Mackay, and several said that even just the last few weeks had shown a noticeable improvement. My own experiences there seemed to confirm this, with many of my selected properties having recently gone under contract, and two which I looked at on Saturday going under contract by Tuesday.
       Rental demand in Mackay is very high, with excellent and rising yields, comparable to those currently achievable in Gladstone.  Even the poorly maintained old houses rent quickly with prices in excess of $400 p/wk dependent on location.
       A trip to the Hay Point area confirmed that rental demand there is high as well. Although the expansion of Hay Point has not officially begun, engineers, designers, managers etcetera are reportedly already engaged there, and demand by the companies for rental properties in close proximity to the site is high. With the impending influx of workers, near-term high yields there are assured. The beach suburbs in the area are an interesting prospect, with a very limited number of properties in the region, although currently there is no shortage of houses for sale there. Again, however, a very high percentage of the properties are very low lieing, which is a scenario I prefer to avoid. Nonetheless, with an increasing number of cashed up miners in the region, and a limited supply of properties in theses areas, many complete with water views and well within the buying capacity of high income earners, I forsee high growth prospects for these properties in the near future.
       Back to Mackay. The topography of the town allows a continuous sprawl to occur to the south, which is occuring rapidly with large new developments underway there now. The airport is also to the south of the town. There is a Very Big and busy industrial area there also The expansion of the town to the north has occured in a more disjointed manner, with mangrove marsh and wet areas interrupting development. Some of the moderately higher ground in the town occurs around the suburb of Andergrove, an area which I investigated thoroughly and which offers a wide ranging selection of properties. To anyone who shares the same aversion I have to floods, this is an attractive area. However, I did find that during the "big one" in 2008, the drains in some of the streets were incapable of handling the high volume of water, and consequently even in relatively high areas, some houses suffered water damage. However, due to the sandly loam, the water apparently dispersed very rapidly.
        An aspect of construction in Mackay which greatly reduces the potential damage from water, is the usage of concrete blocks for the walls at ground level. This is a common construction method in the older properties, and I witnessed it being utilised in the construction of new houses in ongoing development areas. This material is not prone to the damage which timber and gyprock walls suffer when soaked. 
       There is a high hill, Mt Pleasant, on the north side of Mackay which stands out. Not a real big hill. Not enough room on it for a lot of houses. Premium space. On the eastern face and the crest of it, it is apparent that many of the more affulent citizens of the town have settled, with expansive houses taking advantage of the views.
       I concentrated my focus on the streets around this area, and have returned home with contract in hand for a very tidy 4bd 3 bath, fully airconditioned house (lower walls concrete block) situated about half way up the south west flank of Mt Pleasant. It has views out over the city and the Pioneer River. Purchase price appx $450,000. Current rent potential $600-$700p/wk. High and dry.
      It might also be of interest to other investors that I have found that well renovated properties, even though the work may be several years old, have the potential to achieve tax deprciation of around $10,000 p/a.
       Oh, and let's not forget airconditioners. It was hot in Mackay. And humid. I found walking indoors into an airconditioned room a welcome relief after spending a few minutes inspecting the yards of houses. Sleeping at night without air con would be unpleasant. Many of the older houses have inadequate airconditioning. If you consider buying a house with old airconditioners, or not enough, factor some new split system air cons into your calculations. You'll have a more easily rentable property, get a better yield, and you can depreciate the air cons.
     

    Profile photo of moxi10moxi10
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    Profile photo of camjanicecamjanice
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    @camjanice
    Join Date: 2011
    Post Count: 51

    Fantastic research moxi10.  Makes me feel confident in my investment in Mackay (in my case in Plantation Palms).  I never actually visited Mackay but you have done well to paint such a good picture.  Thanks for that and good luck with your purchase.

    Profile photo of trickeymickeytrickeymickey
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    @trickeymickey
    Join Date: 2012
    Post Count: 19

    I'm a corporate travel manager and we struggle to find motel accomodation during the week for our clients in Mackay, Emerald & Gladstone, (especially last minute where you call 25 places and still can't find anywhere). Moranbah is booked out for 4-6 months ahead and it's hard to get mid week accomodation in Dalby, Chinchilla & Miles. Some motels are smart and have a lease to a unit/apartment/house for overflow and even the contracting companies are now holding months of accomodation at a time in apartments/units in Rockhampton & Gladstone. Rocky is also starting to feel the flow on effects of Gladstone.

    I grew up in Mackay and whist I haven't lived there for a long time, (now live in Brisbane), my family are still there and I go back to visit regularly. Mum is at Slade Point/Lamberts Beach which is about 10-15 minutes from town, (just north of the harbour and close to Andergrove), and has never had flooding issues due to the sandy ground. It's probably not the ideal location but you'll need to do your homework on which areas are flood prone since in big flooding event of 2008, the river flooded a lot of areas and even places in town away from the river had touble due to drainage. Mackay is not as bad as Roma for example with flooding but there are a lot of low lying areas. It's great driving around and seeing all the renovations, extensions & decks as a result of the mining industry.

    Even though my unit in Emerald hasn't yet been constructed, I'm already ahead by 10K as the remaining units for sale have increased due to demand. I'm aleady going to be looking for somewhere else to get a CF+ property in QLD and can see the mining/energy sector in QLD is going to keep on growing.

    Profile photo of crazyacrazya
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    @crazya
    Join Date: 2010
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    Hi everyone,

    Thought to throw my 2 cents worth in on this topic.

    Was up in Rocky/Gladstone over xmas break and over the past year or so have been analysing and waying up options to invest there.  The gameplan has been to buy a block large enough for duplex/small lot houses/villas and sub-divide and build 4 bed/4 bath workers accommodation.

    The following information was provided by Gladstone Regional Council (GRC) planning section.  Heres the run down of requirements and fees:

    Requirements for lodgement of DA application are as follows

      Full Town Planning Report addressing GRC planning scheme;
      Full survey plans of site showing elevations, footprints, easements,
      water and sewerage connections, etc; and
      Dept of Local Govt and Planning forms with required supporting statements and documentation.

    Also duplex developments are impact assessable, this increases the fees to
    council.  We were originally working on approx $30K for council fees, however this was way under as the list below illustrates:

    Impact Assessable Application Fee – $3,900 + $2,000 (for advertising and public notificaitons)
    Small Lot Housing Fee – $2,497
    Reconfigure of Lot Fee – $$2,000 + $300/lot = $2,300 as one lot exists if duplexing.
    Infrastructure Charges – $28,000.

    If only doing duplex on one title only need to pay impact assessable fee.

    Within the boundaries of the former GCC, minimum block is 800m2, within the former Calliope SC minimum block is 900m2 for these types of developments.

    A breakdown of numbers so far is:

    $300K land
    $12K Stamp Duty
    $1500 per square metre build cost (turnkey price) = $250K per unit (assuming approx 170sqm each unit)
    $50K subdiv costs
    Project total = $862K
    To achieve a min 20% gross return on sale = each unit price approx $517.5K.

    Haven't kicked this off yet due to:
    1. New estates covenants do not allow subdiv/duplex on lots even though they are big enough, so it is proving difficult to find a developable block;
    2. LNG proponents have been handing back houses to the rental market as their workers camps are being built, therefore this should damper demand for buy and rentals (have a search for rentals in Gladstone and see how many available, especially in new houses), a case in point neighbour to rellie in G has had their fully furnished near new house advertised for rent at $1000/week for 4+ months;
    3. New estates and stages of existing ones are due to kick off in April/May, therefore hopefully land prices will drop later this year.

    Also here's a tip for those looking to invest in the mining towns, after speaking to a mortgage broker (Mortage Choice in G), unless you have 20% deposit, you won't be able to leverage into these places.  The LMI originators won't go near them and they do not take into consideration the high rent return.  Effectively its a risk profile attached to these places in the view of the banks/LMI companies.  (Any mortgage brokers/bankers on this forum that can confirm this advice?)

    If this is the case shame really, as there are some good positive cashflow deals in Blackwater from my reseach!!

    Profile photo of JT7JT7
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    @jt7
    Join Date: 2010
    Post Count: 286
    crazya wrote:
    Also here's a tip for those looking to invest in the mining towns, after speaking to a mortgage broker (Mortage Choice in G), unless you have 20% deposit, you won't be able to leverage into these places.  The LMI originators won't go near them and they do not take into consideration the high rent return.  Effectively its a risk profile attached to these places in the view of the banks/LMI companies.  (Any mortgage brokers/bankers on this forum that can confirm this advice?)

    If this is the case shame really, as there are some good positive cashflow deals in Blackwater from my reseach!!

    Don’t know about this one crazya I’ve been getting finance through MB on this forum at 90%LVR + in mining town.

    Might just be an issue with retail MB’s like Mortgage Choice. I think 90%LVR in towns like even Moranbah isn’t such an issue.

    Jack

    Profile photo of moxi10moxi10
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    @moxi10
    Join Date: 2010
    Post Count: 193
    JT7 wrote:
    crazya wrote:
    Also here's a tip for those looking to invest in the mining towns, after speaking to a mortgage broker (Mortage Choice in G), unless you have 20% deposit, you won't be able to leverage into these places.  The LMI originators won't go near them and they do not take into consideration the high rent return.  Effectively its a risk profile attached to these places in the view of the banks/LMI companies.  (Any mortgage brokers/bankers on this forum that can confirm this advice?)

    If this is the case shame really, as there are some good positive cashflow deals in Blackwater from my reseach!!

    Don't know about this one crazya I've been getting finance through MB on this forum at 90%LVR + in mining town. Might just be an issue with retail MB's like Mortgage Choice. I think 90%LVR in towns like even Moranbah isn't such an issue. Jack

    My experience seemed to confirm what crazya was told. In August 2011 I had a contract to purchase an off-the-plan unit in Middlemount. I tried for a 95% loan, but was offered a max of 85%, and was told that valuations were difficult there, largely because of few comparable sales. If the unit had been existing rather than off-the-plan, it may have been possible to obtain 95%, but I don't know for sure. The development had unexplained lengthy delays, and the vendor had serious communication issues, so I used the finance clause to terminate the contract.
        I later tried to purchase an existing house in Dysart, and in spite of the fact that my mortgage broker tried two banks with two different loan mortgage insurers, I was only offered 80% loans. My mortgage broker then "felt out" other lenders without making full applications, the feedback on the potential to obtain greater than 80% finance was negative.
     

      Jack, I would appreciate a private message with details about your mortgage broker, if you don't mind sharing that information.

    Profile photo of schmooschmoo
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    @schmoo
    Join Date: 2012
    Post Count: 11

    I see that the new ULDA housing project has been launched in Moranbah.
    http://www.dailymercury.com.au/story/2012/02/03/housing-project-launched-bushlark-grove/

    With a bunch of new houses coming on the market in 6 months, this will provide some relief for renters.
    I’m concerned, as an investor it will impact existing rent prices? Also, I’m sure a new house would be much more rentable and attractive than an old Queenslander on a bigger block?

    Also, in regards to the high demand for rentals in Moranbah, does anyone know if there is a waiting list for rental houses?
    What’s the average time on the market of these rentals as they do appear to hang around for a while on RealEstate.com.au

    Thanks.

    Profile photo of waydo77waydo77
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    @waydo77
    Join Date: 2011
    Post Count: 155

    awesome thread, does anyone know if council allow granny flats to be built at the rear of properties in emerald and mackay?

    Has anyone successfully done this? if so what was build cost and rent/yield afterwards?

    is this worthwhile for increasing the yield or are they not in demand? seems not many 1 bedders up for rent in these areas?

    thankz

    Profile photo of JT7JT7
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    moxi10 wrote:
      

      Jack, I would appreciate a private message with details about your mortgage broker, if you don't mind sharing that information.

    Done mate!

    Profile photo of moxi10moxi10
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    @moxi10
    Join Date: 2010
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     Thanks, Jack

     It may be useful for other investors to know  that I was  told by my mortgage broker that the valuers sent out by the banks have risk categories that they use to rate certain areas. The valuer used to rate a house in Dysart that I had under contract rated that town, as well as Moranbah and several others in the region, at a risk rating of 4 out of 5, five being extreme. He apparently also told my mortgage broker that he knew another valuer who had just raised his rating to a five for those towns. 
       It might be of interest as a reference point that Mackay is rated at one, and Sarina Beach, half an hour south of Mackay, is rated at three.

    mattnz
    Participant
    @mattnz
    Join Date: 2007
    Post Count: 574

    I just got a valuation back for Gladstone, rated as 2 risk rating.

    Profile photo of abcd1abcd1
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    @abcd1
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    moxi10 wrote:
    JT7 wrote:
    crazya wrote:
    Also here's a tip for those looking to invest in the mining towns, after speaking to a mortgage broker (Mortage Choice in G), unless you have 20% deposit, you won't be able to leverage into these places.  The LMI originators won't go near them and they do not take into consideration the high rent return.  Effectively its a risk profile attached to these places in the view of the banks/LMI companies.  (Any mortgage brokers/bankers on this forum that can confirm this advice?)

    If this is the case shame really, as there are some good positive cashflow deals in Blackwater from my reseach!!

    Don't know about this one crazya I've been getting finance through MB on this forum at 90%LVR + in mining town. Might just be an issue with retail MB's like Mortgage Choice. I think 90%LVR in towns like even Moranbah isn't such an issue. Jack

    My experience seemed to confirm what crazya was told. In August 2011 I had a contract to purchase an off-the-plan unit in Middlemount. I tried for a 95% loan, but was offered a max of 85%, and was told that valuations were difficult there, largely because of few comparable sales. If the unit had been existing rather than off-the-plan, it may have been possible to obtain 95%, but I don't know for sure. The development had unexplained lengthy delays, and the vendor had serious communication issues, so I used the finance clause to terminate the contract.
        I later tried to purchase an existing house in Dysart, and in spite of the fact that my mortgage broker tried two banks with two different loan mortgage insurers, I was only offered 80% loans. My mortgage broker then "felt out" other lenders without making full applications, the feedback on the potential to obtain greater than 80% finance was negative.
     

      Jack, I would appreciate a private message with details about your mortgage broker, if you don't mind sharing that information.

    Can I have the MB details to please I was approved for one in Moranbah and then they changed thier mind that home has now gone up around 80k since christmas LVR was 20%

    Profile photo of KevinRKevinR
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    @kevinr
    Join Date: 2012
    Post Count: 3

    Hi All,

    Long time reader first time poster –

    What are the thoughts on collinsville? I have done a lot of research and most signs suggest large capital gains and increased rents are just around the corner?

    If anyone can assist with thoughts or research they have done it would be appreciated! This is my first foray into the property market and I would like it to be a positive experience!

    Thanks

    Kevin

    Profile photo of coalstarcoalstar
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    @coalstar
    Join Date: 2007
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    KevinR wrote:
    Hi All, Long time reader first time poster – What are the thoughts on collinsville? I have done a lot of research and most signs suggest large capital gains and increased rents are just around the corner? If anyone can assist with thoughts or research they have done it would be appreciated! This is my first foray into the property market and I would like it to be a positive experience! Thanks Kevin

    what do you base your prediction on??  I know there are three planned mines which will emply around 850ppl; Drake, Jax and Sarum coal projects

    Profile photo of KevinRKevinR
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    @kevinr
    Join Date: 2012
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    The expansion of the current mine sites, relocation of camp staff from a nearby mine site and the general lack of accom in the town are the main reasons, nearby power station and other govt/private projects underway are also factors

    I am interested to see what conclusions people have drawn on Collinsville, have others invested there etc

    Thanks

    Kev

    Profile photo of Von KrummVon Krumm
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    Join Date: 2011
    Post Count: 23

    IMO you can't go wrong with the bowen basin and surrounding areas. All this doom and gloom of property bubble bust cannot apply to these mining areas, can it?. Some guy said it before… "lots of people with massive salarys trying to rent/buy properties that don't even exist yet".

    Dispite key demand/supply data that is available now, you still have to look at the macro-economic outlook for the long term. I know this is speculation and I am indeed no guru on this topic but I will try to explain what I heard on the radio the otherday.

    Basically it's a question of comodity price + demand. China has had a minor reduction in *growth* which has caused a massive overload of "the sky is falling" chatter. But the key word here is growth, i.e. it still has it.

    From recolection it has been 10% p.a. for the last 3 years and now back down to 7%, which is still huge.
    As growth slows, demand slows and as China is one of our biggest customers it will have an impact.

    But when will we start to see a slow down in the energy/mining sector? Basically not any time soon.

    If you have a look at the dollars spent investing it's rediculous. Something like energy up 40% from last year, mining up 20%.
    Really if the big guys like BHP and rio + the AUS government were worried, it aint showing yet.

    Check out mining atlas Australia and you'll see the main area for development is the bowen basin.
    This also tells you where planned and potential sites are.
    Then all you have to do is pin point where all this money is going…

    Most of the towns suggested have seen growth in the last ten years at some point in time.
    If you can afford the risk I would look at Chinchilla/Emerald/Bowen over Mackay/Gladstone.

    But then again, missing 10% last year on gladstone was a worry of mine that has been and gone. Still looks good and if you try to time the market at the bottom all the time you usually miss (apparently).

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