NSW Broken Hill for first IP?

Albury you can get units starting 100k up the ex housing commission houses starting $140k.

 

lol

 

Both mining companies in town are hurting with the current price of lead and zinc. With a poor outlook for both imo.
Town is looking more run down by the month, many leaving, shops closing.
Know someone who purchased 2 blocks about 1200m each at auction a few months ago for the price of rates, think around 1300 and 2000 each.
They will be fairly positive, but just at the cost of capital growth imo. If anything i think prices will decline fairly quickly.

 

Broken Hill Railway station to be closed as announced today.

 

Where did you see this ?

 

No point having a property worth x that has market rent of y

But is going to be vacant 3 to 4 months of the year

 

I don't know about it being different - Perylia announced last week they're laying off about 150 people.

Agreed - you're basically gambling on commodity prices - you might as well buy the mining company shares.

 

So for my mate, if he's making money in his pocket now - about $400/wk apparently - what does it matter if he spent nothing getting in to these deals? They were all purchased with no money down. i.e . $40K home equity for 3 properties. He says he's sourced long-term tenants, so all going well, they'll all stay like they intend to, and he'll continue to pocket the rent. I can't really see the issue. Clearly, nothing is guaranteed, but neither is continued decline. It's purely speculation. Who knows what the City Council have planned. Councils know how to turn these things around right? Has anyone here studied this stuff? ie. How regional councils can control their populations?

 

And how much or how little control do they actually have?

 

In the $150k + range you could look at some of the outer northern suburbs of Adelaide. Potentially dodgy areas, but I would see it as less risk than Broken Hill.

 

Sounds like you've already made your mind up

 

What did they decide?

 

The issue is the level of risk. If you understand the level of risk involved and you're still happy to buy in Broken Hill then go for it!

I don't know what influence council could have over the local population? They are largely limited to roads, rates, rubbish. If businesses are leaving the area and taking jobs with them there isn't much council can offer to keep them there.

 

Dont spend over 100k

10%yield minimum

Make sure you understand the areas

 

Spot on!

Were not nit picking for the sake of it or jealousy

5k profit per year if your going to make a 20k capital loss in a few years is a poor result

In fact i have a property thats yielding 14% based on purchase price and reno. However i have refinanced. But even if i hadn't. I still want to sell the thing asap

 

That's totally beyond the ability of any local council and even if they have been trying they have failed. The population has been in decline for decades, in 1994 it was 23,000, today it's 19,000, in the 1960's it was over 30,000.

I think the level of risk needs to be considered, extended vacancies would greatly affect the potential yield. What if you want your capital back? Can you sell at a similar price in less than 6 months? What's the average time on market?

If you are just looking for a low entry cost income play then why not consider something other than property? Commonwealth bank Pearls, bonds, corporate notes, LICs etc etc

If it's high yielding property your after I would stick to large regionals with stable diverse economies and population growth or lower socio economic metro areas where decent but more reliable yields can be obtained.

 

I've considered BH many times. I would never do it for a first IP or even second, third or fourth maybe further down the track when you have enough resources and want steady profitable income. From what I researched once you have a tenant they are their for life. With the APRA changes you need to build a sound portfolio from the get go, cash flow alone can't build a solid portfolio anymore unfortunately . A few years ago you probably could build a large portfolio on cash flow cheapies alone. I was considering purchasing a few years 2011 when the mad max movie was supposed to film there. Rain foiled the plans and they moved to South Africa. I still consider BH every now and again but you need an exit strategy. Until I find one I personally wouldn't invest there. Good luck with it all and let us know how you go

 

How about they build a wall around the town, dissolve the ATO, and position the former tax agents on the border to prevent migration? Trump style

 

There is a reason why it yields/pays so well on rent as there is little to no chance of capital gains.

Take this house in Moranbah (http://www.realestate.com.au/property-house-qld-moranbah-109484486) lets say you rented it for $3,000 pw but paid 1M for it (15.6% yield, sounds similar to BH) however the reason it is so high is because of the risk there. Prices have since gone backwards in a long way and you would be lucky to get 200k for it or $300 pw in rent so your awesome yield actually was a negative and it is yielding 1.56% now (horrible).

Yes if all of a sudden 10 new mines are going to be opening in the next 12 months prices increase and rents would blow out to crazy levels. However is this going to happen, I would think unlikely.

Looking at RE.com - Broken Hill Investment Property Market Data

2008 median house price - 130k
Today (2016) - 115k

So your extra 5k per year (if bought in 2008) gave you an additional 5k p.a in rent (40k total less tax) but you lost 15k capital so 25k effectively. Lets say you bought 4 (total investment 520k)that is 100k overall positive (not including tax).

Lets say you bought 1 house in Parramatta in 2008- Parramatta Investment Property Market Data

2008 median house price - 430k (~100k less invested than BH)
Today - 1.06M

You have now gained about 600k in capital but okay yes you didn't get the 5k p.a. on rent so minus 40k (8 years) you are still in front by 540k (640k if you include the 100k less paid).

Now you keep your BH being 100k after 8 years with 4 properties but I would rather one house in Parramatta and be 600k ahead (500k further ahead than where you are).

Also remember with CF+ properties they are only positive if they are rented.

End of the day understand the risk and if you still proceed that is okay no skin off my back. If BH boomed then I wouldn't say you are an expert but rather got lucky or you had some insider knowledge as everything at present is pointing to not much is happening in BH.

Maybe sell a course if you do well, seems to work well to supplement your income further like some other firms have in the Property Expert section.

 

How can you compare the drop in a 1 million dollar property in moranbah to 200k to 100k properties in broken hill ?
You realise that most queensland properties went backwards in cg from 2008 - 2014
Not saying broken hill will have gains in the near future But those examples arnt really relevant