NSW Broken Hill - Low debt, very high yield

Hi all, let's talk about Broken Hill! The market dropped hard around the 2015 mark with vacancy rates shooting up (5-6% mark) but have since calmed down to a not-so-bad 3.8% according to SQM. Values of the property here fluctuate with the strength of the mining industry which leads me to think that with the current strength in the mining industry, property values here probably won't drop much lower than this, but I could be wrong. The main advantage that this town seems to have is multiple properties of $100,000 or under where I have see yields of up to 13% - 15%. Low UV which would lead me to think low rates/land tax. Medium risk vacancy rate.

Has anyone else looked into this market or owns any IPs here with mortgage free cash flow? Feel free to add any further comments, concerning risks, related stories and anything I've missed out on.

 

Have a look at the next 20 year population figures and see what you think.

Some have done well investing there.

 

I was looking at it but the population seems trending down m many old houses, n not sure if worth to invest

 

Sure, percentages look good at these yield rates but pure dollars may mean that if there is a problem with the HWS (example only) and it needs replacing there goes the majority of the positive cashflow for the year.

 

I wouldn't touch it.
You won't be seeing much capital growth in that town...

 

they were practically giving the homes away there a few years ago. I would not pay more than 50k, more like 30k on low ball offers.

 

And here's me thinking that houses were not affordable.

 

Kierank you have cracked the nut, Australia's solution to housing affordability is for everyone to move to Broken Hill. But then demand would spike to astronomical levels in a town that is not much bigger than a suburb in the majors, so the prices would reach heights like never seen before. Don't you just love economics?

 

Well what can I say??? Five figures for period homes? I could buy one outright! *packs bags and moves to Broken Hill*

 

I guess another thing to add to the capital growth of Broken Hill is even if it did get good growth percentage wise, relative to all Australian cities it would not be much. For example, say your property goes from $50,000 to $60,000, you have had growth of 20%. 20% sounds fantastic but the reality is, you have only made $10,000. Buy a property in a blue chip city that goes from $500,000 to $600,000, same 20% growth but an extra $90,000 in the bank over the broken hill investment.

 

Easy solution. .....

Buy 10 of them!

 

And before long, there will be a boom in the Hill and prices will double overnight

 

The bottom line is don't be seduced by yield.

 

1) Buy a piece of junk house in Broken Hill for 50k
2) Spend $5k on a tart up
3) Make a youtube video saying its now worth $300k using comparables of newly built house
4) Book the excited investors in for a session on how they too can achieve financial freedom

 

I looked into broken hill a while ago and after some research it scared the crap out of me. Such cheap prices. Declining population. Huge yields. All the houses seem run down big time. Google maps the town centre. Ie a few shops and many are for lease

Other than for work or family. I couldn't imagine anyone choosing to live there.

........ says the person who bought in trash mont

 

Especially if you are a first home owner and you can get a place for a price less than the FHOG.

Apparently it wouldn't be the first time it happened in the Hill.

 

255 Brazil Street Broken Hill NSW 2880 - House for Sale #124852982 - realestate.com.au

Lick of paint. Pull up carpet. Install $500 kitchen and you got yourself a house!

 

I had a client looking at broken hill properties 15 years ago. He was looking at $50k properties then - a declined to assist him.

So if those $50k properties have doubled in value to $100k it took about 15 years.

 

I just looked at the link posted by TMNT - maybe those $50k houses are now worth $35k

 

That just got me thinking

Imagine the agency fees on sale!!
2% is $700! I could imagine the lack of passion from the agent