Broken Hill

[minki]

Hi All,

I am a newbie to PI and am grateful for any guidance anyone can provide me.
I am currently looking at purchasing a block of land in Broken Hill, NSW to progressively build houses on it to rent out for positive cash flow.

I was attracted to Broken Hill due to it's affordable land price and rental.

After 2 months of research, I am beginning to doubt myself and beginning to question my decision to build in Broken Hill due to it regional location and the extra building cost I have to factor in.

I have till Monday to pull if I still wish.

The land I am purchasing is 1000 square metre and it is situated in Broken Hill CBD.

What does people think of this idea?
Is it crazy to put my money here, knowing the mining is at a downward spiral and the only hope is natural gas and solar farming.

 

[TMNT]

Hi All,

I am a newbie to PI and am grateful for any guidance anyone can provide me.
I am currently looking at purchasing a block of land in Broken Hill, NSW to progressively build houses on it to rent out for positive cash flow.

I was attracted to Broken Hill due to it's affordable land price and rental.

After 2 months of research, I am beginning to doubt myself and beginning to question my decision to build in Broken Hill due to it regional location and the extra building cost I have to factor in.

I have till Monday to pull if I still wish.

The land I am purchasing is 1000 square metre and it is situated in Broken Hill CBD.

What does people think of this idea?
Is it crazy to put my money here, knowing the mining is at a downward spiral and the only hope is natural gas and solar farming.

I would have to vote the 'you are crzy" category

Building costs are high, sales prices are low

What does. New dwelling in broken hill sell for?? $200k?

 

[Brady]

Been a thread on broken hill before, most didn't like the declining population as it limited demand/growth.

 

[Mr Damage]

I've seen investors successfully transport built kit homes into Broken Hill from SA. It saves costs and time. They always seem to have tenants. As for the cost of this procedure, I don't know? But, one would think that they have crunched the numbers and it works. Being all shiny and new, they would probably get juicy depreciation too.

 

[jrc]

Hi All,

I am a newbie to PI and am grateful for any guidance anyone can provide me.
I am currently looking at purchasing a block of land in Broken Hill, NSW to progressively build houses on it to rent out for positive cash flow.

I was attracted to Broken Hill due to it's affordable land price and rental.

After 2 months of research, I am beginning to doubt myself and beginning to question my decision to build in Broken Hill due to it regional location and the extra building cost I have to factor in.

I have till Monday to pull if I still wish.

The land I am purchasing is 1000 square metre and it is situated in Broken Hill CBD.

What does people think of this idea?
Is it crazy to put my money here, knowing the mining is at a downward spiral and the only hope is natural gas and solar farming.

I'm probably more optimistic than most about the future of mining inBroken Hill. But i'd use a different strategy if I were investing in Broken Hill.

 

[minki]

Hi All,

Thank you for your comments.
I do feel like we are crazy and want to cancel the deal, but my husband had done the feasibility study and it indicated it will work.

As this our first regional investment and first time having a go at development, I am just so nervous.

We thought we could buy the land now and take our time to really think how we can maximise it.

We have already signed the contract, but we are still in our cooling off period.

We paid $15K for the block. I thought we got a bargain as the land is in the CBD.

We have been looking at kit home option, but because the land is sloping the one we like will need extra cost for retaining wall etc...

I really appreciate all your comments.

 

[cimbom]

Why not just buy an existing house there if you're happy with the area?

 

[jrc]

Why Broken Hill? You appear to be in Sydney, so a 12 hour drive or a complicated airflight often via Adelaide. Do you or your husband have local contacts,experience of the area?

Are there any issues with lead contamination that affect how you build etc?

 

[Spades]

Why not just buy an existing house there if you're happy with the area?

I agree with cimbom.Plenty of houses listed,either need a reno or have been reno'd.

$15k for land + buy a kit home?Do the maths and look at what's on offer *established*.

Cheers Spades.

 

[Scott No Mates]

There is a lack of newly built houses in many regional areas as much of the stock was built in the 1950's and are fibro. If you can get a duplex from Prebuilt in Melbourne it may be worthwhile.

 

[knightm]

I'm concerned about that feasibility study, unless you have some inside knowledge of the town of Broken Hill or a solid source of rental clients willing to pay a premium for new stock. With so much liveable housing stock under 100k how can you compete when building new? Others have commented on the fundamentals of the town, which has history of mining and has had a bit of a renaissance in the arts in recent decades but even so the population has fallen.

I have a little knowledge of the area, have friends out there but you do need to understand what you are doing before you pump a lot of time and money into building a new dwelling out there.

IMHO it will take several good sized mining/infrastructure projects (none of which appear to be guaranteed currently) to make it really jump.

If you have a hunger for cash flow, and the discipline to renovate very cheaply, and the patience to repeat the process multiple times, I could see it working, but most people would fall over as its a lot of work for small gains.

 

[knightm]

ps vacancy rates are now sitting at 2.4% out there meaning a balanced to soft rental market with little likelihood of raising rates in the near future. As I said you would want some secure tenants keen on new stock to make this work.

 

[datto]

The only thing I liked about BH was the topless barmaids at that pub, Duke of something. The place is full of clubs...went down the south mine..1km. Strong union town with incredible weather.

I can remember when the local council was selling off houses really cheap due to unpaid rates. Honestly, I'd be scared to invest there but thats only me.

 

[minki]

Thank you so much everyone.
We have made the decision to let it go. Your comments has helped us question whether we want such a challenge as a first project.

We will look at our second strategy and will focus on other opportunity for IP which have a low entry point, with large land and existing house.

What does people think of Christies Beach, Morphet Vale in Adelaide and Smithfield Plains ?
We would like to buy one in each end of Adelaide. Are we too late ? Has the price already gone up. Any recommendation ?

I have been reading lots of very exciting post on this forum in particularly in regards to Adelaide North.

 

[mins]

I looked at broken hill last year. The cashflow is positive on a lot of properties. After speaking to a few agents, my husband and i decided there could be better options. At the time, vacancy rates were increasing, the agent rates fir managing were higher because of the regional location and they said it can be hard to secure good reliable tenants. One agent said there is such a variety of choice that it is a renters market. The other feedback was that tradesman charge quite high because of the lack of competition. Granted we were looking at buying sub $100k and existing. Hence we havent said no forever, just for now.