Hung up on Mt Isa

[BV]

I would think that places like Mt Isa have little correlation with the property cycle.
One interesting thing about this resource boom is that it is mainly demand driven. Therefore, even if prices drop, demand will still be there for the raw materials. There will still be masses of people employed in places like Mt Isa, even if the companies aren't making the big money anymore.

See ya's.

Topcropper,
I hope the resources boom continues as it is good for all of us.
Ofcourse there is always the risk that China gets very annoyed with the high prices and decides to extract more of it's own resources or to use it's massive buying power to bring prices down.
A month or so ago I read in a magazine that they have been trying to buy and stockpile iron ore in order to damp it back into the world market and bring prices down.

 

[Ol School Skata]

Hi all,

I've just settled my 1st IP in Mt Isa. Its a duplex owes me 215k and returns 490 per wk. I think it's great. Positive cash flow to the tune of about $80p/w.

Is that $215K your loan balance or purchase price?

I have held a triplex there since dec 03

Renting at 21320 year - hopefully up to $22620 within a month.

Bought at 130K
Rates 3300pa
Insurance $1000
PM fees and lost vacancy $2400
Interest & Fees $7400
Mowing $660
Depreciation writeoff about $3500 pa
Allowance for Repairs $2000

so works out close to $90 week postive return after tax

very happy with it

Valued now at approx $230 - $240K

No plans to sell.

I am still looking for other cashflow deals there - can't believe i missed yours!!!

 

[Buzz]

I visited Mt Isa early last year, when you could buy a house for $120k- $180k and the locals were saying 4 months ago they were $80k.

I have similar thoughts to Rolf L. XStrata had just engaged a large developer to build hundreds of homes ( the developer has the sole right to rent these out and was not intending to sell). George Fischer Mine going fine, Blackstar mine just opened, some of the mines further North were insisting their employees move out of Mt Isa as a base to towns closer to create more of a mining community not a fly in fly out society.

I was looking commercial - my thoughts were that if big retailers were about to build there and they saw the potential then great. The real estate agents were then complaining about outside investors calling up looking for whatever they have and said at the time they were only really dealing with those that took the time to show up to their town. There were really people lining up to to rent at each agency.

Amazing what you will find - great CF property next door to a no go zone or community half way house - if anyone actually checked out the property they would see the resale would be difficult.

I visited 3 more times for work - and came to the conclusion, as some Mining Management Consultants are currently that like it always does this is just another boom that will stop. In essence I doubt the boom will bust due to cooper or coal prices slumping. It will be due to lack of equipment ( you can still order 240tonne trucks but there is 12month wait on the tyres to go with it) and fuel prices, and of course labour prices. In Central Queensland truck drivers were getting a $15k sign on and $15k if they stayed a year and $140k a year. My thoughts go drive trucks - you need alot of $80- $90 a week cashflow properties to make that much in one year.

Now for those who picked the boom and invested in towns or stocks prior congratulations, personally I am looking at the next boom - anyone have any thoughts?

Buzz
To Infinity and Beyond

Disclaimer: This info is for general conversation and does not constitute advice, always seek professional advice

 

[RichardC]

This week's hot news item in Townsville is the RE boom and the vacancy rate for housing, effectively zero.

A snippett from the Townsville Bulletin today

WE'VE all been told that it's hard to get a house to rent in the twin cities these days, but those of us who aren't looking probably don't realise just how difficult it's become. A reader applied to rent a large house in an upmarket suburb which was advertised at $520 a week - a big rent in anyone's terms. She had to pay $100 to lodge an application, and while she was filling it in the agent advised her that if she wanted to be sure of getting it, she should offer more than the asking price. A bit surprised, she took his advice and offered a three year lease at $524.13 a week. To her surprise, the owners got a better offer which they accepted. So it seems renting has become like one of those sealed bid auctions ... makes life pretty difficult.

 

[marc1]

My own experience in Mt Isa having held 6 units for the last 3 years is as follows:

Enjoyed fantastic capital gain, and some modest positive cash flow.
However.
I found that tradesman are expensive to the tune of 4 to 6 times what you would pay anywhere else. Forget renovations, building and beware repairs. You will kiss your + cash flow goodbye every time you get the call from the PM. Most units are rented furnished and that adds to the horrific maintenance cost. The worst offenders are the evaporative air conditioning units if they are old.

If your units are duplex, I had 3 duplex, do your best to get water meters on each unit or you cannot charge the tenant for excess water usage. I had to pay every year thousands of dollars of excess water and my application to council to supply extra meters is still in some draw up there. The council also still sends me the council rates at my home and in my name even when I sold month ago. The new owner must be thrilled.

Tenants are mostly very average even when they earn good money if they work underground. My units where located (sold this year) in two very good positions a few blocks from the CBD but on my visits there I found an enormous amount of advertising selling properties that are borderline or even in the middle of true no-go-zones. If you go there you will know what I mean. Such zones creep forward swallowing the one that are close because they cannot be rented but by the local government housing. Owners in desperation surrender their properties to them, and are then bound to pay horrendous repair bills inflicted by the housing tenants who systematically trash the place.
Yes the owner must pay.

Even good locations may be hard to rent once the tenant goes. I had occasional units vacant for months. I had one tenant committing suicide and the unit locked up for month, tenant not paying for month, eviction repairs anyway the usual stuff. Insurance? yes it helped but not always.

I made good money when I sold, yes, but to me to hold on to such properties for cash flow was definitely not worth my while and the bad blood with the real estate agency who behaved very poorly, PM changing at the drop of a hat, very strange attitudes ( As if they are the tenant's ombudsman) and total open slaughter with local tradesman.

 

[kph]

Well I was due to be in Isa last week but I missed the plane.
There are some very interesting developments going on up there.

As with places like Karratha, Pt Hedland, and now Roxby Downs, there appears to be an acute shortage of 'quality' and new houses to meet demand.
The new subdivision of Healy Heights has just gone to auction with 21 lots selling in stage 1.
The underlying message which seems to come up again and again is that no one is specifically responsible to organise or supply housing !!
It is left to the market or local builders to supply the demand.
And as usual, there is a lag between the demand being identified and the markets ability to supply it. We have been told that the local builders will not be able to start building a house for you for around six months if you sign a contract today.

The mining company has a policy of outsourcing the supply of houses and not directly building or owning them.
They are also keen to negotiate with incentives similar to the DHA scheme of long term leases with a refurb at their expense at the end of the lease.

Adds up to an opportunity as far as I can see.

Reminds me of Karratha two years ago before the land prices went silly when they were $73k for a block and not the $200k they currently are. ( for the same block!!)

kp