QLD mining regions (Bowen & Surat Basins & Gladstone): Willing to help anyone with questions

Hi Jack,

Heres my thoughts and experience on the estates on the southern side of Emerald. I have developed, held, and sold in just about all of them over the last few years. The vines estate is the most in demand estate on that side of town. It has majority owner occupiers, large houses with great street appeal. This does however mean that prices are very high in the estate. It is a number of years old now so there is no land available. this estate joins “selma rise” developed by council over a number of years, again, all sold and built but great street appeal and a high percentage of owner occupiers. The catholic high school is in this estate. Across the road from this estate is another council development that they did over the last 18 months. This was a good estate, now all sold and built out as of the start of this year. There weren’t really any bad builders in this estate as all the land was sold at auction which means that it didnt really suit the builders who try to secure as many as they can to build 10-20 of the same home.

Continuing down rifle range road is the riverview estate. It has around the 85% investors as the development was taken over in some form by the banks in its early days. Somehow a very large project marketing firm got involved and they mirror reversed a couple of designs over approximately 70 blocks. This has unfortunately reduced the appeal of the estate on a local level. However a number of local builders have started to build in the estate this year and street appeal seems to be improving. Further to the very end of rifle range road is Pilot farm road. There is a new estate going here (they have just scratched the surface) and there is a marketing firm advertising a number of properties there. However talking to the local agent who is pre-selling all the stages assures me that there is only one marketing agency/builder that is allowed in the estate. I am not aware if the designs are all the same or not, and do not know who the builder is. The other allotments are allocated for people buying up to 3/4 lots only i am told. This estate is the furtherest out of town that development has been. There is no infrastructure in way of shops etc out this way. it is 6.5km to the centre of Emerald. A new light industrial site is starting on the corner of Pilot farm road and gregory highway.

Off Gregory highway is the Mayfair ridge estate. there is well over 200 lots now developed and sold. They are continuing development further to the south in the coming years. Being 4km from the centre of town, they saw it prudent (as well as a good business opportunity) to provide commercial/retail facilities to the front of this master-planned estate. To the front of the estate they have a very large tavern, motel, restaurant, convenience store, hairdresser, chemist, fish and chip shop, and dentist. The estate is also right next to the Emerald Christian college. Unfortunately when they first started the estate, one builder who is now long gone and broke was building panel homes, that is, not brick veneer. As these were not built properly, they experienced a large amount of movement due to the adverse weather condition that regional QLD experiences. This was not the best for the estates name at the time. However many issues have been addressed and the estate is moving forwards with leaps and bounds with two of Emerald most quality builders in there. They have also firmly said no to large marketing firms and or builders securing large amounts of land in their next 300 lots as they wish to maintain and build further the local appeal to the estate by having as many owner occupiers as possible.

I do find it frustrating that many builders and or developers/marketing companies find it ok to build sub-standard homes just because they sell to investors. An investment property should not lack in any of the quality that an owner occupier home does in the majority of cases. To provide or even think otherwise is quite unethical I believe. By doing so brings the prices of surrounding houses in the area down which is very disappointing. I have had this happen to me and was not impressed. I built in a new area where it was unknown of the end use for the majority of properties and the standard/quality of the builders. This impacted my end sale price. I also look for areas first where there are established part of the estate so you can understand where the developer is heading. This is not always possible in areas like Emerald or say Gladstone where land is selling before machines have even driven on the site!

In order to mitigate the risks especially if you are an interstate investor there are 3 things to do in believe:
1. Conduct your due-diligence on the estate and what local agents think of it. When buying through an investment firm, get them to tell you (in an email) what their intentions are with the estate and the intentions with the other houses they are selling. ie: how many different designs are there, what will they do to the façades if designs are the same and near each other? how many lots they have etc. anyone savvy will be able to tell if the person knows what they are talking about. Ask the seller if they own property in the area they are selling, if you are buying through an investment firm, and they are recommending an area, than you would assume that given the persons experience in investing in property that they will have property in the area themselves. Also ask if they have built personally with the builder either in that town or in another area. and if the answer is yes, ask for the address or something?

2. I would be asking the seller if the builder sells property on a local level also. if they don’t, this is alarming as they may not have an interest in ensuring that the properties are of good quality or well thought of. hence they may just be there to build there 20 or so properties and they are on to the next town. If they are a new builder to town, ask where else the builder has had an influence and call agents in that are to see what the local perception is of the properties.

3. Ensure that the firm selling the properties is going to be there for the entire process especially if you are building. A lot of local agents don’t have the knowledge to project manage as such so you essentially get left to deal with the builder or an agent that doesn’t truly understand the building process. This is why investor firms exist, although some provide the same service as local real estate agents, that is, they leave you to deal with the process. they are just there to make the “introduction”. Make sure that the firm inspects the properties on your behalf, and photos supplied from the builder is not sufficient in my books. Ask for photos of the whole street when they are building too. ask the firm selling when was the last time they were in the town and when will they be there next.

When conducting your due-diligence, you may make many calls to local agents builders, investor firms etc. Just understand that no matter the person, ,everyone always has their own agenda. If a local agent doesn’t have stock with a particular builder or in a particular estate than they may be biased against it to sway you to something that they can provide. This is fine, and seems to be a part of the real estate industry, you just need to be aware of the fact and take everything with a grain of salt and come to your own conclusion. This includes the person selling you the property you are looking at also.

I hope I have provided some in depth answers/thoughts here!

Hi,

Its great that you are going the mining regions again! Here is a link to our facebook page http://www.facebook.com/pages/Portfolio-Property-Investments/145575895515539 . Have a look at the last two articles/video from the Australian today, it is great reporting straight from the ANZ banks study. It shows how the economic fibre is in a way changing due to the mining investment. It really proves to me what I have been saying for some time now, that is, as investors we need to change our perception on what “reality” is in regards to the property market. People where often too shy or scared to invest in regional areas, especially due to what has been experienced with some smaller mining towns in our history. Whilst the risks of your investment being negatively affected are still there when investing in SOME mining towns, it is really important to mitigate them and stick to what are and will be solid areas that are adversely affected by the mining industry. This does however depend on each persons risk strategy, personally, I do like security whilst seeking high return and growth in my properties. I will forego 2% in rent in return for guaranteed longevity and market stability. But that is me.

I hope your due-diligence is going well