Emerald, QLD advice!

[Pugwash]

Hi all,

We have a property in Emerald, QLD we bought 2 years ago. As you know rental returns have dropped from $850 a week to $300 and below. If we sell now we could lose up to 90-100k but the foreseeable future is not great.
Any advice from long term investors or those in the know with Emerald would be really really appreciated.

 

[TMNT]

man, $850 to $300 per week!!!

thats some serious ouchy!!!!

my head spins from just reading that

dont worry, ive got a property thats dropped 40% in rent so you're not alone

 

[cenz]

Is it anywhere near the Alpha coal mine?

 

[norwoodman]

Is it anywhere near the Alpha coal mine?

It is within distance of Alpha, yes.

 

[RPI]

I would run a quick calculation on what your holding costs are v what your losses would be if you sell.

Then compare what you would get if you bought elsewhere for what you realised from the sale of above.

Gas projects in QLD aside, I agree with the view that we are moving from the investment phase in mining (ie construction of new mines) to the production phase and the production phase is a lot less labour intensive.

 

[Arnoldus]

Hi all,

We have a property in Emerald, QLD we bought 2 years ago. As you know rental returns have dropped from $850 a week to $300 and below. If we sell now we could lose up to 90-100k but the foreseeable future is not great.
Any advice from long term investors or those in the know with Emerald would be really really appreciated.

It seems like conditions are going to get worse leading into Christmas. Kestrel is laying off ~100 staff at the end of September and council plans to slash 60-80 positions (but hasn't outlined how/when). There is quite a sizeable estate being developed along Codenwarra Rd (beyond Big W) that's going to add to supply.

Folks are saying things *might* start to improve in 2016 but at the moment the town feels like it's in a death spiral with long-time businesses going bust and receiver sales becoming a regular event. If you've got your place rented you're fortunate, I know of one real estate agent who wont take on any more rentals because of the huge overhang of supply.

90-100k is a massive hit, but I could see it becoming 150-200k in a couple of years unless there's a catalyst that massively boosts the population of the town. You have my sympathies, it's a tough choice.

 

[longterm]

Emerald has got a strong future and although the market is down now, the time for Emerald will come soon. It will boom again and when it does the market will skyrocket very quickly.

 

[Truly Exotic]

and this is exactly one of those examples for people NOT to look at historical price graphs and assume that since the price has dropped X% off the peak, its a bargain of a lifetime

 

[strongy1986]

Over 300 places for rent in a town of 12,000

That's scary stuff

 

[Pugwash]

Thanks for the comments and replies. Was my sister and I's first IP and looks like our last. Very hard decisions.

 

[powderfingers]

Know how you feel, we are in a very similar position. Very hard decision, and the worst thing is even if you heavily discount the price and stand to lose $100k there is still no guarantee to sell quickly. It is a no win situation whether you keep the rent low and hopefully keep it tenanted, but then have risk of further future market drops, or sell at a loss now. There are many in the same position who didn't see this coming so suddenly, and some still being duped by spruikers.

Is your property currently rented? If you are going to sell, far easier to sell if its rented.

 

[strongy1986]

Know how you feel, we are in a very similar position. Very hard decision, and the worst thing is even if you heavily discount the price and stand to lose $100k there is still no guarantee to sell quickly. It is a no win situation whether you keep the rent low and hopefully keep it tenanted, but then have risk of further future market drops, or sell at a loss now. There are many in the same position who didn't see this coming so suddenly, and some still being duped by spruikers.

Is your property currently rented? If you are going to sell, far easier to sell if its rented.

I would of thought a cheap renno and sell it vacant

Seeing the rents are low why would an investor buy it

I'm sure there's still plenty of people who live there with a lot of money Just need to appeal to them

 

[LeoT]

Thanks for the comments and replies. Was my sister and I's first IP and looks like our last. Very hard decisions.

When Michael Jordan was asked the secret to his success he replied:

"I have failed many times over and over, and that is the reason why today I am a success"

As hard as it may be, as soon as you give up. that's it. Its over. you've lost.

 

[Arnoldus]

I would of thought a cheap renno and sell it vacant

Seeing the rents are low why would an investor buy it

I'm sure there's still plenty of people who live there with a lot of money Just need to appeal to them

Just anecdotally, I know a few long-time locals shopping for a bargain PPoR.

Personally, I'm pondering selling up and leaving town. Work is getting a bit thin now the flood recovery works have finished and all the work has moved to the coast.

 

[Jenko]

Some more bad news for central queensland coal miners. 700 jobs to go the article doesn't say which mines will be effected.

 

[Arnoldus]

Some more bad news for central queensland coal miners. 700 jobs to go the article doesn't say which mines will be effected.

I've heard 3rd hand that Goonyella is shedding up to 210, Peak Downs 136. Also heard Blackwater BMA, Daunia, Caval Ridge, and Saraji are handing down the bad news.

 

[strongy1986]

I've heard 3rd hand that Goonyella is shedding up to 210, Peak Downs 136. Also heard Blackwater BMA, Daunia, Caval Ridge, and Saraji are handing down the bad news.

What are your thoughts on coal and also australian coal long term arnoldus?

I think we might need a downturn for australian coal to start looking good again

However it might also be fair to say the 'glory days' of coal are behind us with less polluting fuels to become increasingly popular

 

[Ricky Tarr]

Gossip in my industry says Theiss are laying off 3,000 jobs (not just in Qld), Santos are cutting their head office staff too apparently. Construction industry in the Surat basin is definitely in for a quiet period.

 

[pinkboy]

What are your thoughts on coal and also australian coal long term arnoldus?

I think we might need a downturn for australian coal to start looking good again

However it might also be fair to say the 'glory days' of coal are behind us with less polluting fuels to become increasingly popular

Demand for coal is still here. The demand to build more infrastructure and expansion is what has waned. The construction phase at this current part of the cycle has slowed and we have moved to a more production and maintenance period in the cycle. I do maintenance at a Coal Port and they have been running at capacity for months.

There is 100 ships off the East Coast of Australia waiting to be loaded:

View attachment 2014 09 15 Port Congestion Graph.pdf


pinkboy

 

[jameso]

Coal prices will rise once the massive oversupply caused by mining companies drops down. I doubt you'll see the same levels as the boom. The winners are the developers and spruikers who got in early and ripped off investors with their inflated predictions.

Production roles will continue to be phased out by autonomous implementation. I'm working on a project for the hunter valley at the moment that will see operator jobs go. Unfortunately it's just the way it's going.