All Topics / Help Needed! / Investing near mining towns
- charliefaddoulParticipant@charliefaddoulJoin Date: 2022Post Count: 0
I have found a few properties that meet Steve McKnight’s “The 11-Second Rule”.
These positive cashflow properties are located in Emerald and Mackay, where vacancy rates are low and there is great positive cashflow.
However, although these towns are well diversified, they a good amount of there revenue is brought in from mining.
So my question is, are these safe investments? Should I stay away from locations that rely on mining?
I would appreciate if someone could point me in the right direction or perhaps guide me as to whether or not I should be looking at properties like this?
CharlieBennyModerator@bennyJoin Date: 2002Post Count: 1,416
Check out the “Training Centre” on the Home Page. There are hundreds of articles about all aspects of property investing. They are broken down into categories (e.g. Buying, Selling, Renovating, etc) so you might be interested in those to do with Buying.
Other than that, in a nutshell there are plenty of variables to consider. Common ones are :-
Is mining the ONLY employer in town? If so, what happens when it suffers a downturn? Where do the workers go? Do they leave town?
What is the ratio of rentals to owner-occupied? If heavy on rentals (>30%), then these are all your competition. (Especially in bad times !)
Is the mine thinking of providing their own accommodation for FIFO workers? It has happened before! What happens to your IP then?
Can you get finance? Some lenders won’t look at some regional towns.
How difficult is it to manage a remote property? To get tradies to fix things? Is the town big enough to have a few RE agents? If only one or two, you are CAPTIVE to them – what if they are both no good?
Whenever you buy, you should always have an Exit plan worked out. e.g. If times went bad for the mine and its workers, how would you exit this property? Who would you sell to if times were tough? Can you hold on until better times come around again?
Just a few thoughts out of left field Charlie. Keep on searching – the answers will come,
BennycharliefaddoulParticipant@charliefaddoulJoin Date: 2022Post Count: 0
Thank you Benny for this insightful answer.
I am going to continue researching the town and gather the data you mentioned. I have also taken a hard look at the training centre articles, which as well were very useful.
I am concerned though as a lot of online articles mention climate change, and the transformation to a carbon neutral world, so I am in two minds about investing in these areas.
Ideally, I would like to invest in cities close to metro locations, however I cannot seem to find any positive cashflow properties in these areas.
If you ever come across, I would greatly appreciate if you would let me know, as I am really keen to make a start.
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