Extent of Mining Town Despair

Exactly. None of them were complaining when they were making 10%+ yields and charging FIFO workers $1000+ a week.
Pilbara mining rents: the seven most expensive WA boom towns

 

Nope it was during this time they should have been paying down debt instead of bragging about it at bbq's and calling themselves astute investors

 

Looks like a great place for apprentices to practice their skills...with supervision

 

We don't hear much about this in the east. I have a friend in Perth. It was a surprise the other day when she said that it's getting awkward going to BBQs because so many people have lost their jobs and she feels a bit guilty being okay - gov't job.

 

how bad is the economy in Perth especially the mining towns, e.g. Karratha or Port Hedland?

 

very bad, 45% drop in values and rents in Port Hedland, Karratha, Newman.
Especially those who have purchased at peak will feel the pain, as I mentioned $1,000,000 around 2013/14, image 45% drop in value. The rents at the time were probably around $1800-2000 pw, image also 45% drop. Hard to get rid of stock.

 

Have a read of this
http://www.theaustralian.com.au/bus...s/news-story/e10bf385317adbe28c6eae75f55e9162

 

Times must be really hard. They won't even let you read without paying money!

 

Nothing new.
You really got to expect to lose sometimes when taking part in speculative investments.
They know, or should know the risk vs reward when entering, so if it doesn't go your way then too bad, so sad.
Dude selling in the OP may have had many other good payoffs in the past that have gone his way.
Could have been some play money he was throwing around.
No need to feel sorry for them when you don't even know their situation or past experiences.

 

can't read the link?

 

Not just mining towns, just making bad decisions or ignoring markets etc etc
I think its something like 80% developers lose money??
We have also read where people buying in regional towns, with 1 dog, 1 horse have lost money, or just cant sell.

Also just posing a question does anyone think investors holding property that is negatively geared for 10 years where they have had no growth is losing money? the banks wont let them off the hook....Not trying to be silly, but a serious question?
All investing is speculative because many buy hoping for growth, just read threads on Brissy and Adelaide and no one expects rents to fall, investors do their calculations on rents when they buy, same with interest rates not rising.

MTR

 

I would agree 80% of developers lose money, the more risk the more reward but also more risk means more people lose money too.

I know of investors who NG and have retired comfortably well before 60, typically NG properties are ones in Syd, Melb, Bris where people are banking on capital gains to come. Lower risk, lesser rewards lesser chance of losing money slower financial freedom. Think of someone who bought in Port Headland if you bought at a property every 100k increased value and sold at the peak you would have 200, 300, 400, 500, 600, 700, 800, 900 or 8 houses for 4.4M and if sold at 1M each that is 8M or 3.6M profit in 8 years.

Lets say you had 3M clear profit after all expenses if you were able to achieve 5% p.a. that is 150k p.a. a year you would be receiving. So if you started at 30 you would be retired before 40.

Retire in less than 8 years on 150k not bad hey!

However the NG ones buying stock that doesn't flacturate immensely wont get rich quick. Typically these houses will double in 10 years (not all houses double in 10 but it is pretty common in Syd, Melb, Bris) and you buy every time it doubles. Using rough numbers 200k, 400k, 800k and wait 10 years - equals 3 houses paid 1.4M worth 4.8 or 3.4M.

Again lets just say 3M is the takeaway, the only thing this way took 30 years (10 to 400, 10 to 800 and 10 to 1.6M). So if you started at 30 you would retire at 60 roughly speaking.

Again I have factored in a heaps of costs but I have posted it somewhere on the forum before.

However I think it demonstrates the NG/Slow and steady vs high risk/high reward.

 

We had two properties that were NG to the extend of $250K+ during 2005 - 2011. Fortunately granny flats and interest rates have fixed things quite a bit and of course the Sydney boom has made that pain worthwhile - but they still don't generate any cash.

We have used the equity to invest elsewhere - but none of them generate much cash either.

The NG losses were very real but took a while to realise - doesn't fit your scenario but we very nearly sold them because of NG and no CG.

 

While it may be understandable that people may think values could not drop so far, you would have to be a real green to think 2k a week in rent income could last for long ?

But then again many getting 500/week would/will be shocked if they lose any of the latest CG in Sydney too, people are buying 900k houses near me for 500 return, they must feel confident that Sydney is going to party forever

 

Completely agree. Its just life - you win and lose and have to be prepared to take the hits if you want to play the game. A lot of people have a fantasy about investing and what it really takes to succeed.

 

Really what it comes down to is having unrealistic expectations. Unrealistic expectations are disappointments waiting to happen. Its easy to judge others who are in these circumstances, but when prices plummet literally over night, people are going to feel extremely challenged and have moments of disappointment, anger, blame, depression etc. Its human behaviour, we all do it. The beauty is many do move towards acceptance and solutions. Its a process.

 

Welcome back Kate been a while since you posted

All the best

 

Thanks @MTR ,have been checking in regularly, just haven't had much to contribute.

 

Hi Kate, just wondered (in all seriousness) how your recent book is going?