Hi everyone, I was looking at buying an investment property in either QLD or WA. Based on growth of the industry there, I see it may be a good option to see some positive returns. Can anyone recommend a good company to help me out in this area?
Also weighing up the idea of investing overseas… I hear some pretty encouraging stuff but I am not exactly an expert
Liam
There's plenty of experts on this forum, depending on which country you're looking to buy in that is.
Hi,
This probably is the opposite to what I posted on the thread about defense force housing.
Once again it is risk / reward. Mining towns are giving some great returns…but there are risks. Julia and Swanny love mines so pay for endless cash handouts to by votes. Some mines may become unprofitable overnight with a tax increase. I used to work on a lead mine that shut down due to regulatory issues. Events like this may change a IP overnight – loose the tenant, have the capital value halve and no bank wanting to secure finance to the property.
If you are to invest in a mining town you really need to do your DD. Is it more then one company that has mines around the town, how cashed up or those companies, what commodities are being mined, what’s the life of mine?
Regards
Gibbo
I remember a few months ago I was looking into the same thing. A friend of mine went to go work in the mines, and I saw that the place the company put him up in rented out for $1,800 a week, similar houses in the town were selling for about $600,000. So obviously it would be positively geared.
Unfortunately as soon as the mine runs out, the value of the house becomes nothing pretty much, since it is out in the middle of nowhere, and a lot of the time these places are really nothing more than fibro shacks out in the sticks.
Still with the high rental returns, it seemed it was almost too good to be true. I ended up making a spreadsheet to see what it would be as a long term investment. It was not too complicated, basically just had an input of how long the mine would last, typically around 10 years, and after this, the value of the house would dramatically drop off.
The spreadsheet was fairly simple, but it let you look at your total value after 5, 10, 15, 20 years, whenever you want. It was interesting to look at this compared to a typical investment where you might get around 8% gross yield, but with some capital gains available, you almost ended up worse off by investing in the mines.
Of course there are plenty of variables, but it is nice to be able to just assume some figures and looking at what your expected returns might be.
Being able to invest in a mining town seems very lucrative. How can I invest in such property?
LiamT wrote:Hi everyone, I was looking at buying an investment property in either QLD or WA…
Also weighing up the idea of investing overseas… I hear some pretty encouraging stuff but I am not exactly an expert…
Go Gladstone, or any other industry and manufacturing (as opposed to "pure" mining) areas – better chances for it to be a bit longer term than a mine.
If overseas, make sure you buy in a highly regulated, corruption free country. There are sometimes some very attractive deals in some very shonky places – try to avoid those.Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
Liam T How did you go? Did you find someone to help you out?
Did you end up investing in a mining town?
Streamlining investing- that is a great idea. I am not so good at spread sheets so must dust up in my excel skills.
I am thinking of investing in such a place – I like Gladstone as I dont see it just dying when the mine moves out………….I agree that Gladstone would be an idealistic area to invest in. Actually, Gladstone could be a wonderful investment opportunity. It seems like a convenient investment.
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