All Topics / Help Needed! / Broken hill – anyone own property there?

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  • Profile photo of Jamie2013Jamie2013
    Member
    @jamie2013
    Join Date: 2013
    Post Count: 5

    Hi. 

    Im new to the website and property investing. I'm currently looking for my first ip. I can only spend upto $100,000. I'm looking at broken hill as you can get something for $60,000 and rent for $150.  There are around 400 properties for sale ATM and only 50 available for rent. 

    Does anyone have property here?  Or any info on this town? I hear its not a single industry town anymore and relies on tourism now also. 

    The house prices are at their lowest and the rents are at their highest… Any info would be great.

    thanks in advance.

    jamie

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Hi Jamie

    50 vacant rentals sounds like a lot. What population is that spanning? Or perhaps I should ask what is the vacancy rate?

    We place our clients into properties in areas with high tenant demand (vacancy rates below 1.5%).

    May I ask why the budget is $100k? Plenty of ways around such constraints. :)

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Tony FlemingTony Fleming
    Participant
    @the-dark-knight
    Join Date: 2008
    Post Count: 396

    I don't have any there but you used to need a 20% depoist minimun for any of the big four to consider it (not sure if thats still current though)

    Tony Fleming | Triumphant Property Group
    http://www.triumphantpropertygroup.com.au
    Email Me | Phone Me

    NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi DK

    Yes you are correct at least 20% deposit is required however away from that you would want to credit score up well.

    I agree with JacM you could certainly do a lot better.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Jamie2013Jamie2013
    Member
    @jamie2013
    Join Date: 2013
    Post Count: 5

    Thanks for the info. The population of broken hill  is 19000 or there abouts.  Why do you need a 20% deposit for this area?  

    JacM- I'm self employed and my borrowing power is only up to $120,000 at the moment. 

    Also been looking at moree, mt Morgan, and mildura. What does everyone think of these areas?  It's hard to find good areas with such a low budget so any info is really appreciated. 

    Thanks again in advance.

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Cheap with a high rental yield doesn't necessarily equate to a good investment. I can't see there being a lot of growth – especially given that there's so many properties for sale. What is the vacancy rate like? A strong yield is useless if the property is hard to rent. Also, lenders requiring a 20% deposit also suggests that they see it as a risky proposition also.

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi Jamie

    Sometimes there are areas that mortgage insurers won’t touch because of the perceived risk.

    It is funny you mention Mt Morgan as at some stage over the last 12 years i used to own to half the town and my SMSF still owns large chunks.

    I can certainly tell you some stories about the town!

    I still ask myself the question with the products available in the market why the budget limit is 100k.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Jamie2013Jamie2013
    Member
    @jamie2013
    Join Date: 2013
    Post Count: 5

    Hi guys. Thanks for the response. 

    I have done a bit of research on the vacancy rate in broken hill and from what I can see its low. Around 1.47%

    Im unsure why there is so many for sale there though? I know the properties here have really dropped in value over the last few years but it makes me wonder if it could get worse?? Or go up a little? Maybe it's the right time to buy here?  At this stage I'm looking at the high rental return rather than capital gains (although it would be nice). Also with a population of 19000 it's not like the town is just going to stop over night, right? 

    The most difficult part for me is saving the deposit for my first IP which is why I'm looking on the cheaper side of things, I'm really keen to get started ASAP lol

    Here is an article I found.  http://www.propertyobserver.com.au/hotspots/broken-hill-and-kalgoorlie-no-longer-as-risky-for-property-investors-but-some-mining-towns-unsustainable-westpac/2012071955639

    And another

    http://www.propertyobserver.com.au/hotspots/tourism-helps-broken-hill-shed-its-one-horse-mining-town-investment-status-as-deloitte-s-questions-mining-boom-longevity/2012072255635

    would still love to hear from someone who is also looking at broken hill to invest. 

    As for mount morgan, I have been looking here for a while too but the property is more expensive at around 110,000 which is fine but more time saving is needed :(

    QLDS007 – so you no longer have property in mt Morgan other than your SMSF?  I heard the gold mine is opening again ? 

    Thanks in advance :)

    Profile photo of Tony FlemingTony Fleming
    Participant
    @the-dark-knight
    Join Date: 2008
    Post Count: 396

    There are plenty of other areas at or just below $100k with rents around $150 to $165 and the banks don't require such large depoists aka LMI is available. You really want to have your first IP as a property that will have both capital growth and cashflow. The capital growth will help you branch out to your second and third through equity etc I personally would only ever buy at broken hill if i had money lying around and wanted to take a gamble. Management/ maitence will be the biggest killer to cashflow as well. The properties look worn and in need of work in the coming future. Most country town tradies have a field day with out of town investors.

    Tony Fleming | Triumphant Property Group
    http://www.triumphantpropertygroup.com.au
    Email Me | Phone Me

    NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    BH is rubbish which is reflective in banks' policy. I would look at a price range of at least $120k -$150k before considering investing in an area. 

    TheFinanceShop | Elite Property Finance
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    Residential and Commercial Brokerage

    Profile photo of rhino101rhino101
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    @rhino101
    Join Date: 2008
    Post Count: 31

    Have you heard anything recent or concrete regarding the mine reopening?  We bought a place there in 2004 and still own it. The mine was supposed to be re opening "soon" back then, and nothing seems to have changed yet. I know the company looking to reopen it had gotten a fair way into the process when the GFC hit and it seemed to get put on the backburner from then.

    That being said – it has been a great IP for us – more than doubled in value and the rent has increased by 60%. I initially went there to buy 2 places, but chickened out and only bought one…………………..always regretted not sticking to my guns.

    Profile photo of rhino101rhino101
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    @rhino101
    Join Date: 2008
    Post Count: 31

    You must have done reasonably well from it Richard, you would have been buying back when places were in the sub $50k range?

    What are your thoughts on the place at the moment?

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Quite well is a slight understatement.

    Bought one house in my SMSF for 32K which i then onsold thru a Rent to Buy scheme to the existing Tenants.

    They pay just over $22K per annum and have been there for a further 10 years. They still owe my SMSF $76K plus a balloon at the end.

    Not a bad cash on cash return.

    As for buying in know at todays prices i wouldn't touch it as the clientelle of the area has changed dramatically.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi Jamie

    Yes i still own multiple properties in the area in my SMSF but of course purchased when prices were considerably cheaper than they are now.

    In regards to your saving for a deposit there are a few 100% finance IP schemes around (without having to use existing equity) which we have access to so would depend on other details as to whether you could go for a higher purchase price.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of gyungRgyungR
    Member
    @gyungr
    Join Date: 2013
    Post Count: 1

    Hi Jamie2013

    I just discovered/registered for this site.  I have been considering Broken Hill and the forum posts are very helpful.  I'm keen to find out what you decided to do; invest in Broken Hill or not?

    Thank you.

    Profile photo of dezabilitydezability
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    @dezability
    Join Date: 2014
    Post Count: 16

    Just digging this thread back up from the 2013 grave.

    I've recently put a deposit down on a property in BH, and it looks very promising. Going from my numbers, it ticks all the boxes and I should be somewhere in the 20%+ yield once all is said and done (after reno and capital costs). I'm a first time investor so a place like this fits the bill for finance and low-risk outlay.

    I went there last week by train and coach from Sydney (take the plane if you can), it is one unique experience – and if you are unsure, do the same thing and actually go there for a few days. I hired a car and went all over the place, checked out 20+ properties and spoke to many people. All my doubts and perceptions flew out the window.

    The town is not dwindling by any means, has all the major eateries, retailers and mining is still going strong. Great national parks and tourism is building. There is a new Coles development underway just near the existing Centro shopping centre so plenty of jobs on offer.

    I also know of at least 3 investors who do very well in BH, each having at least 3-4 properties with low vacancy rate and laughing all the way to the bank with high yield positive cashflow.

    For those who say stay away and scaremonger, there's a difference with actually doing due-dillidence and research compared to going from opinion and numbers in the media.

    Profile photo of Tony FlemingTony Fleming
    Participant
    @the-dark-knight
    Join Date: 2008
    Post Count: 396

    Hi Dezability,
    Just curious did you have trouble with finance. I remember a while back even if you did pay a 20% deposit you still had to jump through hoops to get it across the line. Good work though and good luck with it all.

    Tony Fleming | Triumphant Property Group
    http://www.triumphantpropertygroup.com.au
    Email Me | Phone Me

    NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury

    Profile photo of dezabilitydezability
    Participant
    @dezability
    Join Date: 2014
    Post Count: 16

    Hi Dark Knight

    I'm just about to find out! Going through that process now, but so far looking good, few lenders knocked it back straight away, but CBA my current lender just needed further docs and info (self employed) and also ANZ are ok with it.

    I'm considered 'high risk' since being self employed under 2 years on a minimal income but lenders are still willing to service provided I supply required docs.

    BH is now a Category 3 so things aren't as bleak as some make it out to be!

    Profile photo of mattstamattsta
    Participant
    @mattsta
    Join Date: 2011
    Post Count: 604

    When looking at BH properties, don't forget to check out the costs of holding property there. I think from my previous research, the council rates were generally higher than other places and also the property management fees are higher too. I think the reason being the distance away from other major towns bumps up the rates and fees. As long as you dig into the numbers, and it still works out, then you should be able to find some good CF+ properties in BH. I often see properties in BH that still have good numbers at face value.

    Profile photo of SandtrackersSandtrackers
    Participant
    @sandtrackers
    Join Date: 2009
    Post Count: 32

    Hi there, am glad this post has resurfaced, as I was also looking at BH for my next investment. I am from WA so it is my 1st time looking interstate.

    Can I get your thoughts people, on the following.

    i am considering and comparing investing here to perhaps that of a wa mining town – Karratha and surrounds? Any thoughts? It would also be a buy without viewing if it is BH.

    i need low risk and money in my pocket each week. I can’t afford for potentially high vacancy rates, due to cf.

    Also, I have approximately 90,000 in Super, and wanted to consider smsf?  I believe it is costly to set up, but can someone advise on how it works. Ie as it is a Superfund doing the investing, would I still have access to the +ve CF? or would i need to let it build up again and use as a deposit for another IP?

    I also have my ppor valued at say 490,000 and one IP valued at say 400,ooo, with loans of 635,000. Equity therefore of  255,000. Is it better therefore to use my equity here or go the smsf?

    We have a household income of around 100,000 PA so would hope serviceability isn’t an issue…

    thanks for your help anyone and everyone :)

     

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