rental – My Property Investor

Rental tenant complaints on the up as the mines go down

Reports have emerged mine contracting companies cut from Bowen Basin operations are leaving resource towns such as Moranbah and Dysart in droves, taking with them employees housed in rental properties.

THE global coal market downturn is believed to be contributing to an increase in the number of complaints lodged with the Rental Tenancy Authority.

The RTA confirmed 50 disputes from the two mining towns were lodged with the government organisation in the past three months.

RTA chief executive Fergus Smith said the number of disputes was a “significant increase” on the same period last year.

“This largely involves mining accommodation,” Mr Smith said.

“The disputes are mostly about repairs and maintenance and bond disputes.”

There are more than 200 properties available for rent in Moranbah. A search of realestate.com.au found 217 properties available for rent, with prices steady at about $900 a week, a stark reduction from previous highs of about $3000 a week.

The RTA is a statutory authority that provides tenancy information, bond management, and investigation and education services. It also acts as an arbiter between landlords and tenants, and can provide dispute resolution between the parties.

The rental market squeeze is expected to ease further, following the State Government’s release of the second (and final) round of land-only lots at Moranbah.

The 29 land lots and 51 house and land packages were expected to further relieve pressure on the crippled property market.

Deputy Premier and Minister for State Development, Infrastructure and Planning Jeff Seeney said the Bushlark Grove estate would put 151 new homes in town.

“Moranbah has been subjected to severely limited housing options and very high housing prices and the accelerated release at Bushlark Grove is alleviating housing stress in the community,” Mr Seeney said.

Moranbah and Surrounds

Here’s a recent post about Moranbah and Surround on the Property Investing site:

Submitted by ayjae on June 9, 2012 – 6:32pm.
Joined: 07/11/2004

Just a post (a first for me on this forum) on this for anyone interested in an ‘on the ground’ view of what is the flavour of the month around Moranbah and Dysart. I am a local who works for BHP currently living in Dysart and working in Moranbah. My wife and I have been involved with PI.com pretty much since it began and have a medium level of investing experience under our belts just beginning to ramp up. We recently moved from Mackay into our first real mining town living (Dysart) after avoiding it for many years instead being part of the FIFO / DIDO crew. After only being settled in Dysart for a couple of months, I was part of the BHP mine which has been put in ‘care of maintenance’ (note this mine has not been closed as reported by many media sources) and been lucky enough to move to BHPs biggest site which will mean being relocated from Dysart to Moranbah. So it is with being on the ground I am happy to share information viewed from a layman’s eyes (disclaimer goes here).

First and foremost; I will note that I am not invested in any mining town at present. I find that there is always potential, and have talked to many people invested in mining areas with very successful returns. However I have seen the opposite also. It comes down to the simple term in general, the higher the risk, the greater the return (and therefore the greater the potential loss). I have told anyone asking about investing particularly in Moranbah and Dysart, as with any investment, calculate your worst case scenario: can you afford for this property to rent for less than half the current value or not rent at all ? Can you afford for the value to drop by half ?

I know a number of people investing, developing and renting property not only in Moranbah but in other Bowen towns. In talking to these people, reading media reports, looking at government and private sector activity for these areas (especially in the Fly-In-Fly-Out consideration), and actually working on the ground for a mine it’s easy to see that the coal resource is particularly strong and the outlook is favourable. Even such things as BHPs issue with strike action has its benefits in the reduced availability of particular blends of coal which can help inflate prices due to scarcity. There are a few things which I think are unique to being on the ground which I have observed over the last few months which are not necessarily easy to see from a distance – which may be important. I see a lot of investing media still advertising Moranbah as a green light for investors – I don’t necessarily disagree, but just as in tough times for standard residential require options, it would appear at present investors will need to be very creative to keep cashflow going the right way, into the bank account!

Some of the things which may not be easy to find out are:

At present, BHP does not lease private residential homes for employees. This differs from town to town, but the majority including Moranbah, Blackwater, and Emerald will not be adding any new lease agreements and it has been removed from the new accommodation agreement. On the ground it doesn’t add up looking at the current vacancy rate. When I am in town things are seriously busy. It’s favourable when a McDonald’s is opening in a town with such a small population – it’s not often that they get it wrong.

BHP is using a major contractor to build some very respectable modular housing to replace its need for having to outsource accommodation. In Dysart (not sure about other towns) the same contractor is also renovating existing houses to a high standard. From what I have seen, these houses are fabricated in one of the capital cities and shipped to the new location. They are very quick to put together. Something of note here, due to the style of housing, they may not necessarily be included in the median stats for these towns, yet will have an impact on overall supply.

One of the biggest providers of camp accommodation, The Mac services group while already having a substantial sized camp on the outskirts of Moranbah, has recently gained approval for one of the biggest mining camps to be built out of Moranbah – this has been opposed by the Mayor and many locals. However, when rents are so high local industry cannot support running business in town, a solution needs to be found. Part of the agreement with the mayor if this camp is built is that a certain number of rooms will be made available for town services which cannot afford to rent and make business profitable. Just a quick note here for those who have not seen a mining camp before, new camp accommodation would be close to a 4 star hotel quality room, with flatscreen TVs and Foxtel – some even have electrically operated blinds ! The advantage also is very good food hall facilities and very respectable watering holes

In conjunction with this BHP has also almost completed its own camp on the outskirts of town accommodating any BHP employees and sometimes contractors who do not live locally.

Rentals in Moranbah appear to be moving very slowly again, however, the rent range for houses with 3 BR now starts at $500 pw – still ranging up to as high as anyone would wish to pay pw for a premium property. Looking at Dysart, things are similar with some rentals being advertised reasonably ‘cheap’ to attract tenants. Also despite the suspension of mining at the Norwich Park Mine (which was accommodated out of Dysart), BHP is now housing new starters for its Peak Downs Mine – previously (and still for the majority) housed in Moranbah. This is located close to halfway between Dysart and Moranbah. So if anything, Dysart is actually gaining more people than less. In my opinion though, the commercial infrastructure does not support this – even to the point with one of the small shopping squares being closed down in favour of building residential units – that’s how great the difference in returns are.

So all in all it makes for adventurous investing. Am really happy for any readers to agree or disagree, or even PM if you have any questions. I don’t claim to be an expert in the area as it is not our location for investing, however I have learnt over the past few months of living in the region, even being a local doesn’t mean it’s easier to pick how to invest locally.

Happy Investing.

Alan.

Everything that’s really worthwhile in life came to us free — our minds, our souls, our bodies, our hopes, our dreams, our ambitions, our intelligence, our love of family and children and friends and country.
All these priceless possessions are free.

Earl Nightingale.

Exorbitant costs cripple Hedland businesses

Once-profitable Port Hedland small businesses are closing their doors at an alarming rate, with many crippled by rocketing rents and wages.

Several non-mining related businesses have been forced to shut or trim staff in the past year, with the number of empty shops at South Hedland Shopping Centre increasingly evident.

Specialty shops such as Bright Eyes, Sunwonder Health Foods, Zagnits Clothing Co. and Trax have disappeared from the commercial landscape, and Port Boutique is having a closing-down sale.

Pilbara Boats N Bikes owner Tony Russell has seen his monthly rent rise from $5800 when he first entered into the lease for his Wedgefield store six years ago to more than $20,000 a month and is set to drain almost $250,000 from his pre-tax profit this year.

“It’s just taking the cream out of the business,” Mr Russell said.

“We’ve gone from being a profitable business to one that’s just going month-to-month now.”

Over the same time period, Mr Russell said staff had been cut from 10 to six.

The 44-year-old father of two said all staff lived on-site because he could not pay them enough to afford a Hedland rental property.

“I think all small businesses that are non-mining related or haven’t got a mining company they can pass the costs on to are struggling,” he said.

“It’s not just the rent – it’s attracting quality staff, it’s the accommodation for the staff, it’s trying to get them a wage so they want to stay working for you instead of driving a truck or something.”

Mr Russell said businesses such as his could ill afford to raise prices to counterbalance rising rents because people would order the product from Perth and have it sent up.

He said once his lease ended, and if he had not already gone out of business, he would scale down.

South Hedland Business Association president Gloria Jacob said the decline of local businesses was a “travesty”, and Hedland’s chances of becoming a Pilbara city were receding with every store closure.

http://au.news.yahoo.com/thewest/a/-/breaking/13877076/exorbitant-costs-cripple-hedland-businesses/

Rents down, but yields still high, in Moranbah

It’s been nearly three months since mining giant BMA imposed its controversial ban on signing new rental leases in Moranbah, the central Queensland boom town arguably at odds with its own success.

The BHP-Mitsubishi Alliance put its very large foot down after rents in Moranbah went ballistic over Christmas. January is always busy for rental markets, but prices in Moranbah really were hard to believe: decidedly unglamorous three bedroom shacks jumped up to as much as $2,200 per week. Anything nicer was rented in a heartbeat for over $3,000 per week, and investors everywhere drooled over the thought of returns around 15%.

But by March, BMA had had enough, and refused to sign any new leases for its staff. The company might not be re-entering the rental market in a big way in the short-term either: it’s about to hand over the keys to 100 brand new homes it built itself, for its own employees – and there are another 280 homes underway in Moranbah, Dysart and Blackwater.

So what impact has the action of one big miner had on the Moranbah market?

Nikki Oldfield, the Principal of Vision Real Estate in Moranbah, says the freeze by BMA quite simply drove rents down by a few hundred dollars per week across the board.

Now there’s an ‘oversupply’, with over 150 properties for rent this week, compared to ‘next to nothing’ available over the peak Christmas/New Year period.

“A basic new home was fetching $2,800 per week – now that’s dropped back to around $2,200 or less,” she says.

Older homes – many of which are fibro shacks – have dropped even more substantially to around $1,000 per week, with some as low as $850. Tellingly, many ads on the internet now say ‘negotiable’, so rents may well drop further.

“It has been quiet, but things are picking up again. Other companies are still taking leases, and I think prices have stabilised,” she says.

Oldfield says the action by BMA also affected sales of investment properties, with more houses coming on the market and prices heading south for the first time in quite a while.

“You get a few rentals come on the market, so people get scared and prices come down. Yields are still high though – 10% is a good yield, but we’re not seeing the 13% yields that we had over Christmas,” says Oldfield.

The sudden oversupply has stunned the Principal of Moranbah Real Estate, Bella Exposito.

“I own two houses myself and I haven’t had an empty house for 25 years. The vacancy rate right now is shocking to me, it’s very, very quiet – but I do believe it will bounce back,” says Exposito.

“It went crazy (over Christmas), we didn’t have any properties for rent – so anything that did come on the market was rented for $1,800 or more. Now it’s coming back to reality. Prices went really high, which is great for investors, but $900 per week is still a very good return on an older house here. You wouldn’t get that rent anywhere in the city for the same purchase price,” she says.

In fact, now just might be a better time to buy, if you’re confident rents won’t drop further.

Exposito says property prices have dropped substantially in just a couple of months; older homes that were selling for around $700,000 are now going under contract for $550,000.

“It’s all about supply and demand in Moranbah, and the demand will come back,” she says.

ENDS

Source: http://www.hotspotting.com.au/article/2336-rents-down-but-yields-still-high-in-moranbah

Price slumps but rent still high

IT HAS a reputation as a high-cost town when it comes to housing but Moranbah rental prices have slumped since January.

However, the rate still outstrips the cost of renting in Mackay and Dysart, a fact that’s forcing residents to leave the mining town.

Moranbah Vision Realty property manager Trish Bridghouse said rental prices were higher last year.

“From December 2011 through to January (2012) rents were up to $3000 a week,” she said.

“For an average three or four-bedroom house the rent (now) could be $1200-$2000.

“The prices have dropped considerably. Sales have slowed down quite a bit.”

Families were leaving town due to the high rental prices, Ms Bridghouse said.

“Older miners have retired and left and a lot of people who don’t work in the mines, who work normal jobs, can’t afford to live here because rents are so high.

“A lot of people in this town rent properties off companies, so their rent gets subsidised.

“Unless (residents) can get a company house it’s a struggle for some of them.”

A study by RP Data shows Moranbah’s housing prices have risen by almost 30% in the past two years.

According to realestate.com.au a four-bedroom, four-garage, two-bathroom home could cost up to $950,000.

Moranbah was number one on RP Data’s list of top 100 house price growth in suburbs in Australia. Median prices for the town were $474,000 in 2010 whereas last year they were $612,000, up 29%.

Clermont was 22nd on the list. Median price there in 2010 was $317,000 compared to $353,000 last year, a rise of 11.3%.

Emerald was 35th, up 8.9% from $354,000 in 2010 to $385,000 last year.

The Australian Bureau of Statistics study, Employee Earnings and Hours Australia, May 2010, puts average weekly total cash earnings for employees in the mining industry at $2206.90.

GOING UP

Residential Tenancies Authorities (RTA) media weekly rental data for the 2012 March quarter shows rent for a three-bedroom house in Mackay was $460, compared to $375 for the 2010 March quarter
In Moranbah, three-bedroom house rent for the 2012 March quarter was $2000, compared to $550 in 2010
In Dysart it was $1400 in the 2012 March quarter, well up from $650 in 2010

http://www.dailymercury.com.au/story/2012/05/14/rental-prices-high-moranbah-mackay-rta/

Meet the cash flow kings of Australia

If you’re looking for the best rental yields in the country, look no further than Palmerston in the Northern Territory or the resource centres in central Queensland. These and other markets top our list of the best cash flow hotspots in Australia…

You can’t have your cake and eat it, they say. We say: what’s the point in having cake if you can’t eat it?

Professional property advisors tell us that capital growth is king and that aiming simply for cash flow is a short sighted strategy. You and your bank manager may think a little differently.

When it comes to meeting your monthly mortgage repayments, there’s no substitute for a property that pays for itself. Capital growth will always be a requirement, but few could argue that having a property that covers your mortgage obligations and leaves you with a little cash leftover is a gem. It’s lower risk too.

With that in mind, we’ve dug through the latest RP Data figures and uncovered the country’s 20 markets with the best rental returns.

Queensland is king

While the top rental yields in the country can be found in the Northern Territory, it is Queensland resource towns that make up the lion’s share of the top listed best yielding markets.

It’s not hard to see why. In towns such as Moranbah and Dysart, where the average house is 4-bed, 2-bath, landlords are typically charging weekly rents between $1,300 and $1,500 and largely staying tenanted..

This may not be any news to savvy investors, however. Both Dysart and Moranbah are ultra-popular with buyers. Dysart auction clearance rates are at 100% – meaning that anything that goes onto the market via auctions is getting sold.

RP Data figures also indicate that Dysart properties typically take just 49 days to get sold and that sellers have the upper hand in the negotiation process – the average vendor discount is just 3%.

Compare this to, say, Bondi in Sydney, and the popularity of Queensland mining centres starts to show. Only 57% of properties that are auctioned get sold in Bondi, according to DSRscore.com.au, while vendors are typically giving away 11% discounts on the properties they sell.

Mark your Territory

Palmerston, an emerging area around Darwin, also features prominently in the high end of the list. Southern suburb Bellamack takes the top honours for having the best rental yields in the country at a whopping 15.3%.

What this means is that investors are typically getting $31,460 a year in rent on properties that cost $205,000.

The list

State	LGA	Suburb	Median Price	Average Annual Growth	Weekly Rent ($)	Yield
NT	Palmerston	BELLAMACK (H)	$205,000	12.6%	605	15%
QLD	Isaac	DYSART (H)	$478,750		1300	14%
QLD	Isaac	MORANBAH (H)	$610,000		1500	13%
WA	Roebourne	PEGS CREEK (H)	$690,000	14.4%	1650	12%
NT	Palmerston	FARRAR (H)	$249,000	26.4%	580	12%
QLD	Moreton Bay	BELLARA (U)	$116,296	5.7%	270	12%
TAS	West Coast	ZEEHAN (H)	$65,500	24.3%	150	12%
QLD	Rockhampton	LAMMERMOOR (U)	$182,000	10.3%	400	11%
QLD	Whitsunday	BOWEN (U)	$155,000	14.2%	330	11%
NSW	Narrabri	BOGGABRI (H)	$157,500	27.4%	330	11%
WA	Port Hedland	PORT HEDLAND (U)	$728,500	25.1%	1500	11%
QLD	Cent. Highlands	BLACKWATER (H)	$365,000	29.3%	750	11%
WA	Roebourne	MILLARS WELL (H)	$740,000	13.9%	1500	11%
WA	Port Hedland	SOUTH HEDLAND (H)	$754,250	21.2%	1500	10%
WA	Coolgardie	KAMBALDA WEST (H)	$133,000	9.6%	260	10%
WA	Port Hedland	SOUTH HEDLAND (U)	$640,000	28.3%	1250	10%
WA	Roebourne	BULGARRA (H)	$745,000	17.2%	1450	10%
QLD	Dalby	WANDOAN (H)	$315,000		600	10%
WA	Roebourne	BAYNTON (H)	$965,000	30.4%	1825	10%
WA	Roebourne	BULGARRA (U)	$450,000	22.5%	850	10%

This list was compiled using February RP Data figures. Always do your own research before making an investment decision. For stories with a greater depth of analysis, forecasting and comment, grab a subscription to Your Investment Property here.

Australia’s most outrageous rents

How does a rental income of $12.5k per week sound? This is what the owner of an extravagant Sydney apartment expects his property to fetch. Or how about $4.25k per week for a four-bed house in Port Hedland, or $3.8k per week for a seven-bed house in Moranbah? Your Investment Property reveals some of the highest asking rents on the market.

Advertised as a “lives of the rich and famous – one of the world’s great apartments”, this opulent waterside apartment in Pyrmont is on the market for an incredible $12,500 per week. So what do you get for your money?

The harbour-side property has five bedrooms, four bathrooms, a private lobby, a martini bar, a “sumptuous” master suite with his and hers bathrooms and a wine cellar for starters. It also offers what it calls “exclusive access” to a 60ft Sunseeker cruiser, but you’ll have to shell out a separate day rate to make the most of that privilege.

Perhaps unsurprisingly, Sydney’s prime suburbs serve up the lion’s share of Australia’s outrageous weekly rents. Take this extravagant estate just north of the Sydney Harbour Bridge in Kirribilli, for example, which is on the market for a cool $6,500 per week. Or how about this “magnificent family home” in Vaucluse, which is yours for just $6,000 per week? If that’s not quite to your taste, then this modern five-bedroom palace in Bellevue Hill might fit the bill if you have $5,500 per week in spare change.

That’s not to say that the country’s other major cities don’t offer rock star rental properties. Take this “prestige European design executive home” in the Melbourne suburb of Brighton, for example, which is advertised for a whopping $4,500 per week. Or for $3,000 per week it’s possible to rest your head in this waterside mansion in New Farm, Brisbane.

But it’s not only the prestige suburbs in our state capitals that contain some of the country’s highest advertised rents. The mining boom has pushed rents in certain areas up to unbelievable levels.

Take this modern looking four-bedroom, two-bathroom house in Port Hedland for example, which is on the market for an incredible $4,250 per week. Meanwhile, this seven-bedroom, three-bathroom home in Moranbah is advertised at $3,800 per week.

Moranbah blacklisted “months ago”

In response to yesterday’s breaking news about the Moranbah rental crisis, a number of property groups claim to have cautioned investors ‘months ago’ of the risks associated with areas primarily dominated by mining.

Speaking to Smart Property Investment, NextHotSpot’s Luke Berry explained that they had been cautious of Moranbah since August 2011 when they listed it as a ‘BlackSpot’.

Mr Berry explained that when they did list it as an area to avoid, they received criticism from both investors and other property groups.

The reasons behind his initial concern included the reliance investors were putting on stories of record yields and endless growth.

“It seems many didn’t consider the long term volatility of a market like this one and in light of what’s going on with the rental freeze we are quite proud we held our ground,” he said.

“Our biggest concern last year, and it still is today, is that the Moranbah property market lacks diversity and its growth has been fed and will continue to rely on a ‘single large employer’,” he said, explaining that he advises avoiding ‘One Trick Pony’ areas that are easily manipulated by big companies.

“Mining should be treated as a bonus,” he said.

“Our tip to investors is to focus on areas in this region with more diversity, ones with a lower price point and that have more competition for rentals, not just the big faceless corporates.”

Rumours of a 5,000 man camp in the region is another reason Mr Berry calls the area a high risk investment.

One investor, Lucy [surname withheld], purchased a three bedroom, one bathroom 1970s property in Moranbah in late February that is still untenanted.

Lucy told Smart Property Investment she did her due diligence on the Moranbah market in the final months of 2011 before putting in an offer this year.

“I found a property through Moranbah Real Estate and put in an offer in January. It was accepted that day,” she said.

“The advertisement said the property would achieve $2,000 and I was told by Moranbah Real Estate that it would achieve between $2,000 and $2,200 a week.”

She decided to use Ray White Mackay Beaches & Moranbah as property manager.

“In the first week of March [I was] told by Ray White that Peabody Energy, one of Ray White’s main tenants, were no longer renting properties in Moranbah.

“The two emotions I’m feeling right now are sick and terrified,” she said.

Moranbah Real Estate said that untenanted property will not sell, nor will that which is achieving a yield under 11 per cent, Lucy explained.

“If the property can’t be tenanted or sold the very last thing for us would be bankruptcy.”

Market Review information provided by Ray White said that, on average, there were 225 sales per annum, marking Moranbah as a “competitive market.” In the 12 months to November 2011, $126 million worth of real estate was sold.

Positive Real Estate’s Sam Saggers, however, explained that it was an obvious “not-spot” as picked in his July 2011 list.

This is not a new occurrence, Mr Saggers said, and no doubt will happen in the future.

“The reality is Moranbah value increase in property has been a story told time and again,” Mr Saggers said.

“House prices of over a million dollars in towns that offers nothing more than employment in the coal or iron ore or gas industries. Surely there will be a tipping point!”

By: James Mitchell and Jennifer Duke

http://www.spionline.com.au/2012/04/investors-cautioned-about-moranbah-months-ago/

Moranbah rents collapse as mining giants freeze leases

Moranbah is in the grip of a rental standoff led by a number of mining companies unwilling to pay up to $3000 a week to accomodate workers, Smart Property Investment can today reveal.

The Moranbah property market is one of the favoured investment hotspots in the country with investors averaging yields of between 10 to 15 per cent.

But with mining companies refusing to rent any more properties in the area, according to some sources, investors could see a quick contraction of their yields and a sharp increase in vacancies.

“Moranbah is in the grip of rental crisis right now,” LJ Hooker Moranbah’s Craig Aitcheson told Smart Property Investment.

“The town is in the early stages of a rental freeze imposed by coal miner BHP Billiton-Mitsubishi Alliance (BMA) as well as other mining groups in an attempt to bring the market back under control,” Mr Aitcheson said.

“Basically what it means is that for three months no long term leases can be signed by the company,” he said.

As a result of this action, property investment mentoring group Real Wealth Australia, which was previously advising its clients to invest in the mining town, is now urging them to avoid the Moranbah market entirely.

“Our recommendation is not to buy in Moranbah at this point in time,” Real Wealth Australia chief executive Ed Kogtevs told Smart Property Investment.

According to RP Data, the weekly median advertised rent for houses in Moranbah is $1500.

However Mr Kogtevs said prices reached $3000 towards the end of 2011.

“By the end of the year they were running at $2000, sometimes high quality houses on better blocks were fetching $3000 a week,” Mr Kogtevs said.

“BMA, in collusion with other miners saw this rental increase happening and they didn’t like it, so they decided that they wouldn’t rent anything, so for the last three months they have hardly rented a property in Moranbah,” he said.

“Rents have started to drop and there are not many properties being sold as we speak, which is driving the prices down.

“If you have already bought a place and it’s still conditional, then we would suggest to our clients that they either pull out of the deal or they reduce the price that they purchased by negotiation.”

Other educational groups, such as Positive Real Estate and NextHotSpot, have been warning investors of the risks associated with purchasing in a mining town where the local economy is ultimately supported by a single industry.

“Investing in Moranbah and in Port and South Hedland is the crack cocaine for property investors, lured by the idea of endless growth and cash flow,” Positive Real Estate director Sam Saggers said.

“Investors seem to be only buying off other investors whom themselves decide to get off this drug, and have checked out of what can only be called the greatest Ponzi scheme in Australia today,” Mr Saggers said.

“When will the bubble just burst?”

BMA was unable to comment at the time Smart Property Investment went to press.

By: James Mitchell

http://www.spionline.com.au/2012/04/moranbah-rents-collapse-as-mining-giants-stop-leasing/