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
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