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WA Kununurra, WA

Discussion in 'Where to Buy' started by B-Mac, 6th Oct, 2015.

  1. B-Mac

    B-Mac Well-Known Member

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    Hey Guys,
    I have been doing some prelim research on a ‘speculative’ investment.
    It’s a small town in Northern WA (about 37kms from NT border).
    Main driver for investment in this town is Project Sea Dragon ($1.45 billion Prawn Farm). The town’s Population is circa 7,000 and this farm is expected to generate another 1,600 jobs. Essentially, the population will increase > 20% over construction & operation phase (within next 5 years).
    My play here would be purchase relatively new 4bed, 2 bath house in desirable (newish) area. The houses are only just negatively geared and purchase prices circa $450k. target market would be upper/executive management due to quality of tenants & less maintenance/repairs. I’m predicting rents will increase due to the desirable area & also the majority of executives/upper management will be relocated by their employer, eliminating most price negotiations.
    I’m looking at a buy & hold strategy for 5 years, selling at some point along the upswing. Looking at it simply, supply & demand increases prices & I believe this type of dwelling will be in high demand due to population growth.

    Note: i would not be purchasing until the project is certain to go ahead, to eliminate risk of getting stuck with a property in the middle of nowhere with minimal GC prospects.
    Thoughts anyone?
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    @$450k it sounds like the price has already factored in approval of the prawn farm. What are crappy houses on similar sized blocks selling for? Is this a lot less than buying ready-made?
     
  3. MTR

    MTR Well-Known Member Premium Member

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    High risk, and considering the returns, you could do better buying in lower risk areas with similar returns, so why take a risk. Middle of no where, I am from WA. Would I buy, no way.

    Would you get finance, my guess would be banks wont be too keen on this postcode???
     
  4. catsteve

    catsteve Active Member

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    I fear you may be sold a raw prawn...
    I have lived/worked in Kununurra.
    KNX is a town that has seen the promises of big $$$ and industry come and go. The sugar mill is/was out of action and all sorts of crops have failed for various reasons. KNX and its surrounds are an amazing place to visit and tourism is one of its main industries. House prices have stagnated for the last decade. High house prices probably reflect that building materials come from darwin (900 kms away) or perth(3000).
    And there lies its greatest problem. getting product to market. including prawns.
    I would consider buying a kunnunurra investment property as pure high-risk speculation.
    But go check it out. its worth a visit for sure.
     
    Last edited: 6th Oct, 2015
  5. Knx

    Knx New Member

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    Kununurra is a not a one trick pony. Over the last 30 years it has had plenty of booms and a few down turns but no busts. There is mining, tourism, farming and government all heavily invested in the town. The market has come off the boil the last two or three years and prices I believe are where they should be and will offer good returns and steady GC as of right now. If the prawn farm does go ahead then obviously everything will increase significantly.
     
  6. MTR

    MTR Well-Known Member Premium Member

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    Its still a high risk proposition which ever you paint it. Banks also consider it high risk postcode for a reason??
     
  7. Knx

    Knx New Member

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    I am a little confused why you say it is high risk? I have had no problems with Banks lending me money for Kununurra property nor has anyone else I know. Can you please expand on why you say this?
     
  8. Sonamic

    Sonamic Well-Known Member

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    It smells like a mining town scenario (pardon the pun). My sister just moved away after 2 years there. She described it as Bumfuc7 Idaho and couldn't wait to get out. Wait for the farm at least. But there are better prospects for 450k in about 50 other regionals for my money.
     
  9. Knx

    Knx New Member

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    Mining is way down the list well behind Farming, Tourism and Government services. It is not considered a mining town at all. A few facts are always good.
     
  10. Sam Yue

    Sam Yue Well-Known Member

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    $1.45 billion is not that much IMO. but it is interesting. Can you buy land and build yourself if that is cheaper?
     
  11. jodes

    jodes Well-Known Member

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    While I can't comment about the prawn farm, I can offer some general observations about the town itself. I grew up in Kununurra and still have family there- there are pros and cons.
    Infrastructure is pretty good considering the population, given it's so far from anywhere- there are also direct flights to Darwin and Perth. The primary school is excellent, high school not so much- a lot of kids (myself included) went/ go to boarding school.

    It's a beautiful town on the Ord River, lots of tourism, many people who work at the diamond mind live there. Prices were ridiculous for awhile but seem to have muted recently. Population growth has always been pretty decent- about 3,000 people when I was growing up (ugh which I now realise is almost twenty years ago...)

    There are huge social problems though- some of the stories I have heard (first hand) are pretty worrying so keep that in mind also.
     
    Knx and Sam Yue like this.
  12. Sonamic

    Sonamic Well-Known Member

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    Yes facts are good. Fact is that while Kunnanurra may be the "Gateway to the Kimberly" and have some tourism because of that, a "Gateway to Capital Growth Property" I think not. Never was it mentioned as a mining town. I wish the OP well in their endeavours, but it would not be somewhere I personally would be buying. I hope I'm wrong.
     
  13. Sam Yue

    Sam Yue Well-Known Member

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    These kinds of speculation will scare off most people, which can be a good thing. It is a not so well explored area, where can have hidden treasure.

    If you are still not daunted by other people's opinions, you should do more dual diligence. If I were you, Firstly, I will research: have anyone done any of this kind of adventure successfully before? Are those successful story repeatable? If it is repeatable, what are those success factors? If someone failed, what caused that? Secondly, you need to know your risk profile? How much risk you can take? If you are a beginner with ordinary income, please don't do that. Thirdly, more research on the ground, talk to council, talk to the business, talk to locals,,,

    There are huge risks that I can think of:

    1. Abundance of land. Why your house will rise price, if there are cheap lands in surrounding area?
    2. No continuous growth drivers. Bust will happen when the major driver disappears.
    3. Single industry town. Risk on the change of bigger economic environment.
    4. The construction company will build their own accommodation.

    If you buy a property which you think will not be profitable for long term, then it is speculative and gambling. It's a fool's game.
     
    Last edited: 7th Oct, 2015