Huge drop in value - Mining/Gas/Ag town - what to do??

G'day

I've got a house I bought in a resources town which is also in an agricultural area. I bought it on the way up in the gas boom of a few years ago. I'm familiar with the area & considered it to be safe enough the problem is all the gas companies have changed the goal posts with accomodation & now instead of having the choice to live in town anyone who wants to work in the industry is forced to live in camp overnight causing mass walk out of town & empty houses everywhere, disappointing that governments allow these types of things to happen when they promoted 40 plus years of growth in that particular region plus encouraged development. Put it this way we now have a house that is potentially worth $150-200 K less & it's in a discretionary trust so we can't even claim the losses on our tax. Looking for people opinions who've been caught out similarly & what to do. Could sell at a huge loss & trade against it in the future. Shift into personal entity to claim losses but trigger a revaluation & stamp duty charges. Or cop the losses on the chin & starve cash flow for future investing. Have spoken with accountants, no real clear option as yet. We could hang n wait for the market to recover some what but how longs a piece of string? Hindsight is a wonderful thing & we've learnt a hell of a lot of what not to do in the future but if anyone has any ideas to lesson the pain fell free to contribute. The house is in the Surat Basin in South West Qld.

 

Don't blame the government for your poor investment choices.

 

No point in transferring to a personal entity. You'll get hit with stamp duty plus a capital loss in the trust, which will need to be offset against a capital gain.

 

You are not alone someone from this site has a book out about what can happen in mining start-up towns..
Lost MILLIONS of dollars in property ... and still smiling

 

Get out and get out now (ie sell).....the situation is not likely to improve anytime soon.
Take the loss as a learning and move on.
Transferring to personal names is only going to cost more and you'd still have a dud asset.

 

What town? There is still gas work to go, but on the back burner. depends on the town your in. Dalby?

 

I'm really sorry for your experience MBO. If it's any consolation, you are not the only one caught out in this. @Kate Moloney also invested heavily in mining towns.

No Cookies | The Courier Mail

 

Not far from Dalby, it's at Miles. I grew up in the area so am mildly optimistic about a recovery but it maybe a long time. There are heaps of projects on the drawing board but it's time held, how long until things recover to a degree.

 

Im

I'm not Ed but they don't help when they change the goal posts. We're all responsible for our decicions & try & do the best due diligence possible with what's in front of you at the time, I've seen ups n downs in resource towns, they always come back. Miles was a regional agricultural town before it became a mining town. It's been spoilt now unfortunately due to a lot of poor planning from council & government. Back in the day if a mining company was to set up in an area they were made to support the region. Whilst it should Unfortunately that does not happen anymore. I was asking for advice not looking for someone to blame!

 

There is a number of projects and industries that are working in these "mining/gas towns",each has different arrangements for accommodation. It may not be as simple as the gov kicked them all out of town to camps. There is also the support and supplier jobs created which are based on town and "feed" the work, with the slow down these jobs dry up. Plus the cooks,cleaners, maintenance persons that look after camps

 

I think the gov throws the council's in the deep end, which are pushed by private companies wanting to push the jobs to be finished so quick. Councils can't keep up, at the best of times they struggle to tie their shoe laces so when they need to approve housing construction, infrastructure upgrades, maintenance etc etc they struggle and ultimately make mistakes. Meanwhile gov is pushing along with has companies to get things going.
Camps are often cursed by locals but without camps an additional x,000 houses and associated infrastructure would equal even more pain, they are a necessary evil.

I see your in Emerald so you know the towns can stand on their feet, as you said it's how long till things improve.
How is emerald going? Last time I passed through 18months ago (2014 show was on) and there were a lot of toys for sale along the highway - utes and jet skis etc and generally quieter than the previous year I was out there.

 

Hi @MBO I don't own any properties in mining towns. But I hear what you're saying. I've worked on federal government committees looking into FIFO arrangements of mining companies and the effects that these have on community towns. Quite often, the government has to legislate after the fact because of what's left in the wake of big mining companies.

Is there some kind of support or community group where these issues can be discussed/thrashed out and people can speak of their experiences? Has a community representative spoken to your local federal member? What has he/she said?

 

Yeah the Mining side of things has slowed right down but town etc is getting back to where it was when I moved here 12 years ago. It's quite a diverse town with agriculture getting stronger & people remembering what built it in the first place. That being said a small but strong mining sector is a welcome boost for the local economy & businesses. It just got to big & way out of hand. I grew up in the Wandoan region so was familiar with Miles but even with all the due diligence I did it still caught me out. It'll come back but I'd rather have a underperforming house in a major or capital city with more exit options. Your bang on right about councils. They just aren't equipped to handle these things hence the huge infrastructure charges. Camps are ok if they are taking the pressure off town but as long as they don't replace the towns.

 

Think of it this way, you could sell it at a loss, but put the money to use elsewhere, which could make you back the money in a couple of years. Or you could hold on and hope the market rises again. That could be anything from 1 year to 10 years.

Opportunity cost.

 

How has the government (which level) changed the goal posts?

 

Take the loss, sell now. Make money again else where.

 

1. If you did sell, can you withstand the loss or is it unacceptable amount to you?
2. If you sell, what do you plan to do with the proceeds of sale? reinvest into property? keep it in super/retirement money? or something else?
The oil/gas prices don't look like rebounding anytime soon.

 

Sorry to hear MBO
Hope you find a solution that works for you. Others here are going through the same thing.

 

Ed Arrangements between governments & resource companies, at the start it's all yes we'll support the region 110% governments allows mass development & R&D & rightly so, but once up & running resource companies dictate terms when the market is on a feline by ruling 100% camp accomodation only if u are working for them pulling all there workers & families out of the towns it has a real knock on effect. Governments both local & state have an obligation to make sure resource companies are doing the right thing & putting back into the communities that they sometimes rio apart. I'm all for progress but for the right reasons. I'm not sure of ur situation or where u grew up nor am I interested in that but when u live and grow up around these areas only to see them decimated by false hopes its shattering to a lot of communities & families. Anyway none of what you've said Ed is in anyway a positive contribution to my question. I'm not blaming them I'm simply looking for smarter creative ways to offset or trade out of a lull.

 

Thanks BigKahuna, as far as I'm aware in Miles the local chamber of commerce formed a committee & tried to encourage the Gas companies to allow workers to live in town & bring families out to the region for a better well life balance. I don't think they've had much luck. Unfortunately this is the case quite a bit. They just look at the numbers game & are solely focussed on that as workers are dispencibl & they generally work on the theory they can always get more of them if they don't like it. Bobshovel summed it up pretty well. Camps are necessary in the right balance but people need a choice & no one should be forced to live in a dog box if they don't wish to. Different if your in the middle of nowhere but these gas sites are no more than 10-50km from any one town. Some people don't mind living apart but I've seen many families bust break up & be torn up as a result. Even suicide which is tragic. Anyway there's been some good feedback on here, thanks to all.