Emerald due diligence

[Of The Vultures]

I'm in early stages of investigating Emerald as the location of my next ip. So far the future of the town looks promising (to me), but I've hit a bit of a mental block with regard to my due diligence... other than making sure it's out of the flood zone, are there any issues particular to this area that I should be investigating further? Heard something about black soils and cracked slabs, that kind of thing.

Finances dictate I will be looking at units rather than houses, and I'm aware of the possibility of rent returns fluctuating and I'm able to handle such variations financially (and mentally!).

Appreciate any comments, thanks.

 

[JT7]

G'day mate,

I've got a couple in Emerald. The town is naturally expanding to the south due in some part to the flooding issues and I think we'll see infrastructure follow. Some land has been released recently which was snapped up in 48 hours which shows the viable interest in the town's prospects.

I guess one issue you may have to decide is whether you'll purchase an older type product close to town or new stock being built to the south. I have one of each. Remember maintenance is very expensive and the companies certainly prefer the new stock so I think this is the way to go.

Both the house and unit markets are on the move upwards. With the recent approval of the first of the projects in the Galilee Basin and very positive statements being made by the company things are looking increasingly bright for Emerald. As you mentioned rents do fluctuate. Rents appear to rise quickly then settle back down however it appears at a higher mark then previous which is great for the cashflow.

Population growth is high and average weekly wages are extremely high so the town can support increased value and rents. The town also has a thriving agriculture and cattle industry so it's not a one horse town. A lot of the land surrounding Emerald has been purchased by mining companies and there appears there is long term faith in the need for high quality coking and thermal coal.

Jack

 

[JennD]

We have a 2-page spotlight on Emerald in the September issue of Smart Property Investment magazine that's currently on sale now. Covers some of the latest developments etc written by a colleague of mine.

 

[Of The Vultures]

Cheers for the reply Jack, and I'll check out the mag too.
The Highfields stage one (of ten) did sell out mighty fast indeed. I'll keep an eye on this, do you know which builders in town have good/bad reputations?

Thanks

 

[Muffinman]

I was recently reading the below on another site.
It might interest some

3 days SOLD 103 lots of land under contract Emerald
http://www.reao.com.au/forum/showth...land-under-contract-Emerald&highlight=emerald

 

[Jenko]

BHP to shed 300 jobs in Emerald
Not sure what effect this will have on the town.

 

[JT7]

BHP to shed 300 jobs in Emerald
Not sure what effect this will have on the town.

Well, it's not the best of news and it will have some detrimental effects on the market in the very short term however, it's too be expected in this current environment to be honest. There's no doubt that depressed coal prices are dampening the market and some mines in the region are still carrying huge amounts of water they haven't been able to drain.

However, Emerald is a regional hub and certainly not reliant on one single underground operation. Blip in the cycle.

A change in leadership for the Chinese should see a return to infrastructure investment in China's regional markets and a pick up in commodities in the back end of this year.

Interesting to see companies in the Galilee Basin are very quietly ticking away......

http://www.proactiveinvestors.com.a...estment-and-expenditure-from-cnooc-33258.html

 

[JT7]

Cheers for the reply Jack, and I'll check out the mag too.
The Highfields stage one (of ten) did sell out mighty fast indeed. I'll keep an eye on this, do you know which builders in town have good/bad reputations?

Thanks

Probably best to give a few of the locals a call on this one mate. They're the best one's to ask as they are on the ground. I know Corbett Homes are locals and probably the pick of the bunch from what I've been told. There are a lot of builders up from the Sunshine Coast and it's probably a matter of picking out a descent builder amongst these. Hope this helps a little mate.

 

[Of The Vultures]

Cheers JT7, appreciate it.

Re the job losses, I agree, it's a blip on the radar. Having just read the Coal Plan 2030, it sounds like the region has a good long term future ahead. Not without risk of course, but there's risk in everything.

 

[macca446]

Hey
Watch out Greedy Dumb Campbell Newman will stuff everything up for all another great liberal ha ha
Cheers

 

[Of The Vultures]

Campbell Newman will stuff everything up
Cheers

I don't know much about him, but since one of the risks with investing in coal mining areas is changes in government policies, I'm curious - is he anti-development or something?

 

[JT7]

I don't know much about him, but since one of the risks with investing in coal mining areas is changes in government policies, I'm curious - is he anti-development or something?

I don't think he's anti development but he's been left with a state in absolute fiscal disarray after the Labor government's mismanagement of the economy for so many years similar to what happened here in NSW. Unfortunately incoming governments that inherit an economy in such a mess inevitably have to make hard decisions to get the economy back on track.