Am I the only one to mention the Pilbara ?

My South Hedland experience. Purchased 3x2x2 house in late 2007 on 700m2 block. Price $670,000. New letting at the time of $1300 pw to national corporate company, showing a 10 per cent return. Cash flow positive from day one, even without taking into account the tax depreciation deductions.

Just agreed new letting at $2400 pw to blue chip company, one of five applicants who inspected. Even at a rental return of about 12 per cent should show a value of about $1m. If you look on line there is nothing currently available for rental. As for the future, I understand mining towns are particularly volatile, many with a boom and bust reputation. We have to understand high rental or capital returns generally come with some risk.

But you have to consider the confidence the mining companies must have in the Pilbara, currently investing billions of dollars and that China’s iron ore demand is not expected to peak until 2016 and then start reducing from 2018. India is thought to be 14 years behind.

If you purchased now in South Hedland you should get an excellent rental return. Regarding proposed plans to increase the towns size, with rental and capital values it will come down to the normal drivers of supply and demand.

So the astute investor will have to keep watching the situation and know when to sell if the market starts to change. The question? Would I buy another investment property there. Probably not.. I’m focussed on Queensland’s’ coal and LNG areas.

Cheers
Marti
 
Hi Risky Business, Yes air conditioning and swimming pool maintenance is high on the agenda and I expect maintenance costs are a little higher than other parts of the country. However, the rental returns and capital growth have well been worth it todate.
 
How hard is it to get tradies up there?

That looks like a pretty good investment for now!

It’s good. We have 2 properties, South Hedland and Karratha. We use Crawford’s and Pilbara Real Estate in Karratha to manage them. Although they charge very high management fees, as the rentals are so high, they both have a great network of tradies for any maintenance issue that crops up.

As you might guess their charges are quite high, but as mentioned it’s all part of the Pilbara deal. As we live in NSW, its good to know both properties are being looked after by professionals.
 
What is the Mgmt fee?

It wouldn't be a great long term investment imo, but if you can time it well (which I cannot) there is a lot more money to be made in mining towns than any other part of the country.
 
What is the Mgmt fee?

It wouldn't be a great long term investment imo, but if you can time it well (which I cannot) there is a lot more money to be made in mining towns than any other part of the country.

Hmm, good question. Including GST, just under $10k pa. Although high, for me it's part of the reasonable costs of owning this type of property. There is no exceptional service for this amount, but I do compare with other managed properties we have and their Mgmt is good or I would be changing PM's.
 
For the Hedland market what impact on rent/prices will the new housing and fifo accommodation developments have (including the 6000 fifo camp and 600 homes bhp are building)? Anyone with a crystal ball wishing to share an insight ;)

(also First National will do 6.6% mgmt fee + 1 week rent leasing fee, not too bad for WA)
 
There is still a lot of planned expansion by the likes of Fortescue, BHP and RIO in the Pilbara region. I suspect we haven't seen the peak yet.
 
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