Port Headland

[younguns]

Hi all. Any thoughts on Port Headland (WA)? A friend has just purchased property up there for $680,000 and they are renting it for $1,200 per week. We are looking to get a positive cash flow property (still with good capital growth potential) into our portfolio to help balance things a bit.

Any tips would be greatly appreciated.

 

[Bigtone]

G'day Young Guns,

I think having positive geared property in the portfolio is great but at that buy in price I would be a bit careful.

Port Headland for that price you get an absolute dump that is priced purely on the rental yield. If something happened to the mining in the area then the value of property would drop to basically nothing.

I prefer to buy cheaper properties for cashflow as the risk on value is much lower. Of course if you bought 5 years ago in PH you would be a genius and paid probably $200k. Really comes down to how much longer it can last and how much it would hurt your portfolio if their was a drop in value and or rental value,The bigger the portfolio the lower the risk I would suggest.

Good luck!

Cheers

Bigtone

 

[Modal Harmony]

Bigtone is spot on; the same thing happened here in Queensland with the Bowen Basin coal mining towns.

It's certainly a risk you take but if you have a diverse portfolio, then probably OK if you factor in the resources upturns/downturns which shall significantly impact on property values.

 

[aussierogue]

dont do it! Huge risk. The entire area relies on Chinas growth. many fo the properties are owned by the mining companies who have more money to spend than you. It means if there ever was an irrational market its Port Hedland (not headland)

 

[INVSTOR]

I guess everyone's got heads on their minds now!!

 

[Ausprop]

conversely, many of those older properties are sitting around replacement value, if not less than. the growth up there will contimue unhindered.

I would say the entire aussie economy is more at risk of a china stumble than port hedland itself is

 

[aussierogue]

I agree ozprop - its just that the prices are BIG. Therefore its more risk. If you have a spare AUD 700-1 mill floating around then go for it.

From memory - last year the prices dropped a massive amount leaving quite a few people in their wake. Those that held on were lucky.

 

[Ausprop]

yep. my preference, as usual, would be to develop soemhting and hold - at least that way you have a buffer against fallign prices. tho with credit evaporated it is getting hard to do anything - by the time you get a 60% lend after jumping thru hoops for 6 months and then get the thing built you could go develop a business that returns higher.

 

[The Chaser]

Hi all. Any thoughts on Port Headland (WA)? A friend has just purchased property up there for $680,000 and they are renting it for $1,200 per week. We are looking to get a positive cash flow property (still with good capital growth potential) into our portfolio to help balance things a bit.

Any tips would be greatly appreciated.

Hi Younguns

You might to have a look at this post for some tips on Port Hedland.
http://www.somersoft.com/forums/showthread.php?t=58740

Cheers
Angela

 

[whitey]

Heddo didn't come down last year - just steadily creeping up. I was looking all year and finally bought a place to live in for $1.25 mil.

K-town down the road did dip around when my IP finished being built - Novemebr 2008. Prices have rebounded well, maybe thanks to Pluto.

700K-ish in Heddo will buy you a fibro shack I reckon. Would make me nervous holding a 700K fibro shack.

Port is a one-industry town (fe ore) whilst K-town has a bit more diversity. Both obviously want China to keep booming.

Also - I've just been doing some repairs on the Karratha IP. Prices for this sort of thing are stupid. Keep that in mind if you're buying an old place for cash flow.

Cheers,

Rob

 

[natmarie73]

Not to mention Brendon Grylls's grand plan is to swamp the whole area with enough housing so rents come down to Perth levels. Whether it will ever happen or not is another question but I see it as a pretty big risk.

 

[reeco]

Im thinking of Buying Near K town. Ill be heading up there soon for work so im looking at the small towns like wickham etc.

Anyone with thoughts on the satellites around K-town or Broome?