Investing in Kalgoorlie WA

Hi all,

particularly WA residents/investors what are your thoughts/opinions on investing in rsidential property in kalgoorlie now? The cycle there seems to run opposite the general property market ie it seems to be just turning up from the bottom of a cycle now. Its clear you can get a good rental yield. But the place is dependent on the gold price/mining etc.
I thought now could be a good time to get in, what do you think and why?

Thanks,

Henry.

Hi,

I have several properties in the NW of WA, also reliant on the mining industry, we bought in the bust cycle and every one thought we where crazy, later they where all saying what a good buy it was.
I think you need to be very careful and consider the entire risks, crunch the numbers and think worst case scenario, these towns always have boom & bust cycles and you never know when the next boom will come, so make sure you study the market and make informed decision.
I have seen many properties that have GEHA tenants with long term leases in place, IMO these properties are overpriced you pay extra because of the blue chip tenants & lease.
If this is the type of property that you are considering you need to be careful because if GEHA does not renew the lease at the end of the term you may be stuck with an overpriced property and unable to find a tenant.
Also you may find that the banks will only lend you 60% of the value of theses properties, you may need to shop around for finance.
If you buy well, then the boom times can be very rewarding but the busts have seen many fingers get burnt.

Hope this helps

Regards Cad

Henry

I fully agree with comments made by cad.

I researched a few properties last year in Kalgoorlie that showed good yields but comparable sales were showing negative growth.

I believe Kal is now on the up, but it definitely is subject to booms and I especially concur that the GEHA (Goverment Housing Employees Authority) houses are overpriced because of their longterm leases.

Good luck either way.

Joe D

Look at things like projected population growth figures and talk to agents about vacancy rates. Visit for a week, sit in REA on a Sat morning and see how many people come in wanting places to live.

Also look at prices and rents - don't accept anything much below 9% yield. Before you go, get a map from the tourist bureau sent to you and look at FS ads on the web. IMHO the best possible location is not necessarily the more expensive northern suburbs.

I bought a 3br unit in Kal back in March. It was already tenanted and in a top location (10 min walk from town & uni, 5 min to supermarket). Because of this it should be attractive to tenants even during a downturn.

A well-located post-1985 3br unit is about in the low 90s, though I've saw 2br units for under 80k. Get a building inspection done and shy away from double brick (ring the council building dept re this - brick veneer is ideal).

For a local RE contact, I recommend Alistair Lavendar at Fysons Sthrachan on 08 9021 5187. Give him a call, tell him what you want and that I sent you!

Peter

Hi Spidey

Can you shed any light on the benefits of brick/veneer over double brick? I am under the assumption that most people in WA prefer DB to BV houses....

Ta.

TheBacon

Hi all,

Thanks for the replies. I agree with what you are all saying.
I wasn't actually looking at GEHA properties so I hadn't thought about them being overpriced. I'll give some more info: I lived in kal for abot 10 years from 11 to 21 yrs old so i know the town well. Also, my parents bought several investment properties there when they finally caught on to the idea, but they bought in a boom period (96/97). Everything was great for a while but then the boom ended. At about the same time they left kal & high income to buy business & PPOR in Perth. Lost a lot in business as well as 3 investment properties. Now they still have PPOr & several props in kal but my dad is understandably keen to get out of kal. On the upside though, the properties are good quality units and have been constantly rented, therefore still cheap to hold. I am trying to help them get back on track which I believe involves not selling the kal properties. I see all this as a learning experience that it may be possible to now capitalise on and use to buy more property in kal.
Now look, ive gone off on a tangent, this should be in the agony aunt section.

Hey spiderman, where is your unit, my folks have units on wilson St.

Bacon, double brick isnt favoured in Kal, I think to do with the unstable composition of the earth in the region, although I lived in a double brick house in kal and all seemed fine.
sorry ,bout the length of this post.

Henry.

Bacon: Local council building dept recommended brick veneer + iron rather than double brick + tile due to soil instability. Apparently there are parts of streets in West Lamington that have suffered these problems.

Henry: My unit is not far from yours - it's in Egan St : )

Peter