Thoughts on Morwell - Latrobe Valley

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wannaretire!

Hi there.

Wondering what folks in the know on the forum think of Morwell these days as a growth prospect?

Already have a property in traralgon bought about 3 years back and I'm being seduced by low entry cost and pretty decent yield prospects in its near (but probably more economically depressed) neighbor Morwell.

Obviously brown coal is the factor in this area and with reports every now and then suggesting significant (pilbara scale) expansions might one day occur... Well it's exciting.

Plus there are other industries at play in the area. Any thoughts appreciated. Anyone buying there? Anyone buying in Victoria?
 
Morewell also appeals to me, even though everyone thinks I'm crazy.

I doubt the Morewell area will ever be like the Pilbera, however it has one of the lowest prices in Melbourne, has a train connection to Melbourne so it's possible to live there and work in Melbourne and it is only about 2 hours away from Melbourne. The yields are attractive and there will always be demand for it due to the low rents. You may have an issue with quality of tenants, however in my experience this can be an overrated fear.

At worst you'll have average growth as I can't see it going down in price too much.
 
pickle pickle said:
Morewell also appeals to me, even though everyone thinks I'm crazy.

I doubt the Morewell area will ever be like the Pilbera, however it has one of the lowest prices in Melbourne, has a train connection to Melbourne so it's possible to live there and work in Melbourne and it is only about 2 hours away from Melbourne. The yields are attractive and there will always be demand for it due to the low rents. You may have an issue with quality of tenants, however in my experience this can be an overrated fear.

At worst you'll have average growth as I can't see it going down in price too much.
Click to expand...

Not sure too many would be living in Morewell and commuting to Melbourne for work. Even if you take this factor out its still by far the cheapest major town in Victoria. Maybe even Australia?
Im sure with a bit of bargaining you could pick up a 3 bedroom for $75k and rent it out for $140 a week.

Growth there could be good and even if not then its pretty much positively geared.

I reckon investors will start to get on this one at these low prices. It seems that any place where the median creeps below 120k will see a lot of investors swarm the place due mainly to its low entry point (eg Sea Lake median in Jan was around $70k).
 
Yeah it does seem really good yield wise.

Anyone know anything more on tenant quality. The tenants I've had have been great in traralgon. Strong demand good choice
 
Got a couple of props in traralgon. Had started to look in morwell but decided the bad tenant issue was a bit beyond my liking.

Not sure whether growth has been a good in morwell our moe.
 
can any of the locals explain something ive noticed,

despite the fact that morwell is closer to teh city and centre of the region

the prices in morwell entry level seem to be higher then traralgon's entry level

sometimes you can pick up a 3bdr unrenoed for $105k asking price,

yet in traralgon, equivalents seem to be $130k+
 
Property Meister said:
can any of the locals explain something ive noticed,

despite the fact that morwell is closer to teh city and centre of the region

the prices in morwell entry level seem to be higher then traralgon's entry level

sometimes you can pick up a 3bdr unrenoed for $105k asking price,

yet in traralgon, equivalents seem to be $130k+
Click to expand...

I grew up in the area, but don't live there anymore.
First addressing some of the comments in this thread (to the best of my knowledge):
-Haven't heard of any choosing to live in Morwell because it's 15min closer to the city than Traralgon.
-Don't know of anyone doing a daily commute to Melbourne from Latrobe city, I'm sure there is some, but I don't think it happens alot. I have heard of people doing Warragul to the city. this page states it's 0.4%... 114 people total

Most of the population in latrobe city is within Traralgon/Morwell/Moe... and I think it's in that order. The flow on effect is that the large centre has stronger commericial areas, which leads to more growth. From what I've seen Moe is going backwards (empty shops), Morwell tracking sideways, and Traralgon growing. There was always some local politics over which areas would attract council spending, with the tussel being between Morwell and Traralgon and Moe appearing out of the race.

I can't see any strong growth prospects for the area, but I'm not across what industry is doing. The feeling I get is that people will choose Traralgon if they can afford it, it does appear to be the location of choice at the moment.

It's worth looking at the councils website for information about the area. I think this page is good for showing what's happening with population movement, and also the history of the area.
 
Its because locals view Traralgon as the 'better' part of town.

So just buy in Morwell for better yield and maybe crappier tenant ;)
 
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You may be interested to know that Ryders Hotspotting reports 'likes' these areas.

His main reasons are the prospect of building a new power plant and the recent announcement of coal export projects.
 
I'd say it makes little/no difference as they are right next to each other - probably prefers Morwell though due to lower entry price point, closer to Melb and better yields.
 
I spent a night in Morwell recently and asked the motel owner what he thought of the towns future. He was telling me that the area has something like 9% of the worlds coal reserves.

Labor/Greens is trying to close the whole industry down, but the towns folk believe that a change of Federal Govt to Liberal will change its fortunes by pledging funding and infrastructure to greatly benefit the area, ....... It was an interesting chat, but I am not rushing out to buy something on the flimsy rumour.

The town still has a gloomy low socioeconomic feel to it, ... houses are cheap-ish, but wishing for something to happen is not a good enough reason to purchase. The reality is that it is all hearsay and what actually happens is any ones guess.

Mystery .... :confused:
 
Why bother mining brown coal when there are plenty of better black coal seams up in QLD? Sorry I don't see this as a drawcard to the area. Brown coal is a dirty equivalent to any other power source and it's amazing that they are still mining it.

You can not compare it to the Pilbara at all. Pilbara = best deposits of iron ore in the world. Brown coal is the worst type of coal!

Im not saying the area will not boom, but I would not rely on the brown coal industry creating the stimulus for the boom.

I wonder if they even export any of this brown coal?
 
hematite said:
Why bother mining brown coal when there are plenty of better black coal seams up in QLD? Sorry I don't see this as a drawcard to the area. Brown coal is a dirty equivalent to any other power source and it's amazing that they are still mining it.

You can not compare it to the Pilbara at all. Pilbara = best deposits of iron ore in the world. Brown coal is the worst type of coal!

Im not saying the area will not boom, but I would not rely on the brown coal industry creating the stimulus for the boom.

I wonder if they even export any of this brown coal?
Click to expand...

Not to my knowlege. There is definitely talk of such a plan but ONLY talk atm.
I had family in Moe until recently and a friend who has two properties in Morwell. I looked for property there around 4 years ago now and honestly the prices have not 'obviously' lifted. By 'obviously' I refer to the average property for the area and not the odd few that are at the lowest end of the scale (I remember you could get a very rough 3 bed housing comission place for about $80k or thereabouts).
My friend has definitely experienced the wrath of bad tennants in his time which is sad, but don't go in with blinkers on.
 
wannaretire! said:
Yeah it does seem really good yield wise.

Anyone know anything more on tenant quality. The tenants I've had have been great in traralgon. Strong demand good choice
Click to expand...

I did some research on Morewell earlier this year. If I can put my hands on it easily this week I will scan it and post for you on this thread.

To answer your tenant related question, I do remember the following:

1) There is one place to avoid - it is still housing commission and none of the locals would purchase in this pocket. It is the cheapest pocket and it sits on the non shop side of the rail way in the most northern section. (think rusted cars in front lawn)
2) The ex housing commission homes on the non shop side of the railway was better for rental return.
3) I found that the 2 bedroom homes offered a better yield, unless you could buy a 3 bedder under value, then that would work out better
4) More 2 beds were built and were on market than 3. There are really only 2-3 house designs - so not alot of difference bt home sizes and whats on offer
5) Not a massive difference in asking price bt a well presented, refurbished property and a home that wasnt in good condition.
6) The price variance bt a renovated and non renovated wasnt large enough to build in quick equity with a reno and it only changed rental amount by $5 -$10pw
7) The rental market was slower at the time of my research, so it would be wise to do your own DD as things change very fast in property markets sometimes.
8) Most tenants are likely to be on government benefits, the better agents had very low arrears and those were the ones who only DD from tenants bank account, interview carefully for a property manager.
9) Taralgon had more range in purchase prices but yields were not as high as Morwell.


That is all I can recall from the top of my head, I hope this helps.
Good luck and let us know how you go and what you decide.
 
Lisa - thanks for the info. Would be really interested to see the more detail if you get a chance to find it.

Hard to tell as individuals what the future holds for an area (latrobe valley).

One of my "rules of thumb" is whether there is any investment in the area.

Bunnings have recently opened a superstore in Traralgon - which is in addition to the original store in Morwell. This suggests to me they are thinking the area has future.

Just a thought.
 
Matto,

Personally, unless I could force equity via renovations and the property paid for itself, it wouldn't be my first choice.

Having said that, in Vic we do not have a lot of options for great rental yield. (IMO), personally I prefer NSW at the moment, however, I understand many people do not feel comfortable purchasing interstate.
 
I know its been awhile but has anyone got any updates on Morwell. thinking of buying in due to low entry level for my first IP but not sure on capital growth prospects and looks like most properties are not getting enough rental yield to achieve +CF.

Anyone have any thoughts on the area at this present date?
 
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