Mining centres are they stable

[kingchevy]

Yeah commercial property is defiently the way to go in the weipa area I also have the perfect tenant already if I can find a area "ME".

As for the banks giving money for buying proerty in weipa most banks will lend with a 20% deposit instead of a 10% like the norm. rates are normal as far as I know and the is no local council wich I think is an advantage except for the problem of us paying gst on rates from memory. RTA looks after the area very well and weipa is looking to be the hub of the cape with from memory a 14 million dollar hospital going in soon. plus other infastructure like the customs are basicaly making there base in weipa for all our indonesian friends fishing our waters etc.

As for the chalco mining operation I dont think they will base there upper managment in aurukun if they can avoid it. Especialy with the infastructure that is in weipa and the family orientated lifestyle. also I think I remeber talk of them building a road across the mouth to weipa. so maybe they thinking about getting RTA to mine the area for them or maybe they will just sit on the commoditie?.

 

[Sunfish]

Have a look around you Kingy. Is Comalco(?) about to pack up and leave if China does a bit of a swan dive? They were profitable with far lower alumina prices than exist today. Miners don't take their bat 'n ball and go home if prices drop. They hang in there because they have already invested their risk capital.

Towns relying on a marginal gold miner should be avoided but anything in the known mineral belts has had a long history of profitable ownership. Bet you can't think of one good reason why this should change.

Trust your gut! SS is not the ultimate knowledge base.

 

[pulse]

Miners don't take their bat 'n ball and go home if prices drop.

Sunfish, I'm afraid they do. When prices are up they try to expand and make money as quickly as possible, if the prices drop they close the mine the minute it becomes unprofitable. If the prices improve later, the mine re-opens.

Cheers
Pulse

 

[kingchevy]

Well I know one thing for sure I have a brother in port headland and that place was the next big boom mine after weipa had its little 10 year cylce a few years ago he bought a property last year and has already picked up 100,000 capital gains and rents over there are more horendious than here about 650 for a 3 bedroom on a 5 year lease house prices are about 300,000 from what I have been told. anyone that is a bit smart who is happy to take a risk would be looking for the next mine to expand and go in for short term capital gains could be highly profitable with the correct research.

 

[Sunfish]

Sunfish, I'm afraid they do. When prices are up they try to expand and make money as quickly as possible, if the prices drop they close the mine the minute it becomes unprofitable. If the prices improve later, the mine re-opens.

Cheers
Pulse

Do you own shares in mining companies? I do and I don't expect my managers to mothball a mine lightly. We are currently experiencing bonanza prices for coal/metal/uranium etc to such an extent that any mine today which has already recovered development costs could operate profitably on far lower spot prices than they get now. Should such prices occur we have much greater concerns with Australia Inc. (including city property) generally than a slump in RE values in mining towns. The point that may have been missed is that miners are still needed to dig the stuff out, regardless of price. Lower prices will however reduce the pressure on demand caused by exploration and mine development. IMHO Mt Isa has more going for it than Perth.

City RE does not exist in a vacuum.

Have you forgotten (or do you not believe) that we are in a resources super-cycle?

 

[TheBacon]

One thing to consider is whether demand is based on construction or on operational housing needs.

CONSRUCTION requires far greater numbers of people for a short period of time. So, if you know something is about to start up, but hasnt yet, there is a good chance the rental demand will rise dramatically. Look at what the staffing levels will be during the construction period compared to during regular operations.

Construction salaries can often be higher than regular operations. Staff turnover is high on construction projects as there is often a lot of pressure and conditions can be tough.

OPERATIONS requires a smaller workforce. So beware if the mine that is booming during construction or a major expansion is about to drop back to steady-state operating.

Whilst regular operations might not pay as well, and there are not as many people, the workforce if often a lot steadier.

Not recommending one over the other, both have pros and cons, just need to know what you're heading into.

Good Luck

TB

 

[kingchevy]

All very interesting isn't it has anyone on the forum purchased any properties in mining towns recently or in the past it may give us a better idea of what a property is worth the flip side is I am currently renting at 500 a week I think I might be a lot better of buying for my ppor hmm decision's decision's.

 

[Ausprop]

KPH is your man, drop him a PM.

I have and will continue to be involved in mining centres. I like to construct where there is a healthy demand with cashed up buyers and this certainly fits the bill. My only regret is selling WAY too early. by the time some of us investors had sold off the plan and settled the buyers had picked up about $300k in equity and rents had doubled to about $1200+ a week. IF I had held my properties they would have been very cash flow positive

 

[WBG Redcliffe]

Hi Kingchevy

Yes (Mt Isa) I purchased in feb 06 and sold in Sep 06. Paid 235k inc costs and sold for 306k. Was rented for 480p/w during this time (cash positive). Very happy with the deal.

Wayne

 

[kingchevy]

I always get very nervous when it comes to making quick money like that but I suppose it is safe enough if you do it properly.

 

[james_w]

mining cycle in blackwater

thought would just drop in my 2 cents my mum owns a transport company in

blackwater and also works for curragh mines current contracts for BMA

will last another 8yrs was 10yrs last time I hit up the old girl

being a local and growing up in the area surely makes me shy off from buying

there as the town was not a good place and houses got a fair share of

damage from tenants although the current high rental prices have shifted out

some of the riff raff plenty are still there I have considered a few times

to buy there but always get warned off mum says as soon as the bma

contracts are up and mines as they do shutdown everything will go bust

bit of history 88 mines shutdown lots lost jobs and houses were worth nothing

although rents have always been around $120 in the area 1998

laylam shutdon many workers were redundant so thats 10yrs between

bust so honestly run away from that area anyways but who knows there could be 100yrs left I would rather invest in emerald as it

has other industries other then mining.

but I do whish I could go back in time you could pickup them standard

houses in 98 for $8k and manager houses for around 30k


if I were to buy say with $450 a week I would plan that investment to be for the next say 5yrs and no longer.

hope this helps

James

 

[kph]

All very interesting isn't it has anyone on the forum purchased any properties in mining towns recently or in the past it may give us a better idea of what a property is worth the flip side is I am currently renting at 500 a week I think I might be a lot better of buying for my ppor hmm decision's decision's.

Yes, both recently and in the past.
The risk as I see it for me is to NOT invest in mining areas.
Risk being that I will not make as much CG and profit if I invest elsewhere.

I acknowledge its hard for others to understand where I am coming from if they are not located in, or have visited a mining town/s recently.

I can only see upside for the next few years based on the chronic shortage of quality housing in these areas.

I am speaking specifically of Mt Isa in Qld. and the Pilbara region of WA.

I have been tracking this for the last six yrs and actively investing since 2004.
This year we have 16x to build in Isa with 8 presold and another 6 under negotiation with a govt department.

In Karratha we currently have 15 to build for investors/owner occupiers as well as for myself.
We would happily build 50 a year but we are not quite geared up to do this just yet.

The place requires approx 1000 houses and that is based on current demand, not future demand.

I have a list of happy investors from as far afield as Sydney, Melbourne and Perth who followed my lead and started buying vacant land when it was available back in 2004/5
Most of them flipped the blocks for healthy profits, but the ones that have held on are now reaping the real benefits.

Is it sustainable ???
Till you can satisfy the real demand for housing, yes it is.

How long will it last ??
It will take YEARS to sort out this current shortage.

Kevin

 

[pulse]

I have a place in Cobar, development and selling in a few years is not that risky, because you know the market will still be good when you sell. However, if you invest in a small mining centre for the long term ie 30+ years you have to know that if half the mines shut in 10 years you might have to get creative to keep making money...

like anything risk/return is a balance in any portfolio.

cheers
pulse

 

[APerry]

The place requires approx 1000 houses and that is based on current demand, not future demand.

Adding to KPH's comments, there are people in Karratha living in the back seat of their cars because there is literally no accomodation. There are workers camps everywehere and massive expansion going on in the mining industry. I would say its actually one of the lowest risk destinations in Australia over the short term as there is no way that supply will be able to keep up with demand and pretty much everyone is on a very high wage and/or receive rental subsidies from their employer, so can afford expensive rents.

I don't think every mining town is like Karratha, but it is a good example of not grouping all mining towns together.

Regards
Alistair