Broken hill your thoughts?

N

Noknee

Hi everyone

I have been looking on this forum and finally became a member!

Would love to know if anyone has or is looking to invest in broken hill and your thoughts.

It is intriguing me because it is positively geared but I need to buy in a capital city next to diversify my portfolio looking at Adelaide

Thanks
 
I have looked at Broken Hill as an investment option due to the same reasons you state, yield and very cheap prices. The only thing that worries me, from the research I have done is the decline in population. Its falling and has been for a number of years now. Correct me if Im wrong of course.

I have never been there to be honest but that's one red cross for me.

Its still on my watchlist. I have a few 'roughie' towns with high yields that Im considering buying into. It will at least add a bit of excitement to my portfolio :)
 
Predominantly a mining town.

Downside for Broken Hill is that there is little life left in the main parts of the mine.

The main boom time for Broken Hill was during the 70's and 80's when the population was around 30,000.

I think in recent years the population has been falling at one of the highest rates in Australia.

I guess there has been some media coverage stating there is new mines coming online in the area, such as the Potosi lead-zinc mine and an iron ore mine out of town.

At current prices (and even at boom prices) these projects are not going to get off the ground. The iron ore mine will never be able to compete with the low cost Pilbara mines.

There are currently only two mining companies left mining the Broken Hill ore body, CBH and Perilya.

Maybe have a look online and find out what mine life is left for each of these companies, as I'm sure it isn't fantastic, last time I spoke with someone I think there was only 4-5 good years left in these deposits.

I have worked out of Broken Hill for around a year during 2012, this was during the latter stages of the mining boom and the town was doing ok. I wouldn't say it was doing great.

Since then a lot has changed for the longterm outlook for mining and I'd daresay vacancy rates would have been increasing.

BTW those two companies only have 400-500 workers working at the mine. This is a huge reduction from it's hey day.

But Broken Hill has been mined since the late 1800's. Best time to buy would have been around 1887 I think, lol!
 
Quick update,

Perilya's mine has 8 years left,

CBH has 15 years left.

These figures would have been based on higher prices than they are at the moment. I would say at today's prices these mines would be close to break even.

Hence there were some job cuts at Perilya recently:

http://www.abc.net.au/news/2013-05-01/mine-sackings-worrying-for-broken-hill/4661986

I certainly wouldn't count on them extending the mine life of those deposits. So a good 6-7 years left if you count on both companies maintaining their current employment levels.
 
I have also looked at broken hill

Very attractive yields but the population is dropping fast.

But for 50k its worth a punt too somebody.
 
Brady said:
Declining population...

Supply v Demand
Click to expand...

+1

Decreasing demand only does one thing to prices. There is growing urbanisation across the globe, so I'll only buy in regionals if they show strong population growth potential.

You can achieve similar strong yields AND CG in metro areas with increasing populations.
 
Have you been there?

I am not surprised that property is positively geared. We went there just after Easter, and I have never seen so many tiny run down houses in the one place.

We enjoyed visiting, but the town gave the impression of former glories.
Marg
 
As a person who got a house there, this is my situation
Bought late last year for around 50k, revalued this year (after 6 months for $80k - no valuation required)
Renting for 175 per week and it got rented 1 week after I gave them the OK to search for a tenant.

Yes population is declining, but that will most probably affect the mid-high end houses, most tenants for cheapies are those unemployed or on some form of Centrelink, so in my case, Centrepay transfers rent every fortnight.

My feeling is as long as there is Centrelink around, you will find tenants. Cap growth wise as long as you buy right, you will make back your deposit or much more.

Of coz - this is my opinion
 
I've got a handful of properties there - so I have some experience with the subject.

I get approx 48 / 52 weeks fully tenanted. Rents have been slowly rising. Entry level 3br houses that were say $120 / week in 2011 are now around $170 / week. My theory is that the collection of houses there are a valuable thing - no new housing estates and too expensive to transport building materials. You do see some transportable houses though. My tenants are a mix of welfare, govt and retail. None are mining related employees.

Capital Growth?

Google the following which may bring CG in the future:
- New Coles / Target shopping centre (currently being built)
- Silverton Windfarm
- AGL / Fed Govt Solar Panel Farm
- Carpentaria's Hawsons Iron Ore Mine
- New Cobalt discovery / mine

Its not the most glamorous place to invest but it works for me. Low prices / easy to get tenants. The high profile property experts say to avoid it - but I'm comfortable with how things are going. The town has been there a long time and will always be there.
 
I have not been there as I am in the middle of nowhere not that dissimilar to broken hill!

Thanks everyone for your replies I really appreciate it!

I have the same thoughts as mr damage and channon

Unfortunately my other IP s are in remote places so I need to buy in a city then will look at the hill again?!

Out of interest mr damage where is the new woolies complex being built?

Again thanks everyone for your quick replies
 
Mr Damage said:
I've got a handful of properties there - so I have some experience with the subject.

I get approx 48 / 52 weeks fully tenanted. Rents have been slowly rising. Entry level 3br houses that were say $120 / week in 2011 are now around $170 / week. My theory is that the collection of houses there are a valuable thing - no new housing estates and too expensive to transport building materials. You do see some transportable houses though. My tenants are a mix of welfare, govt and retail. None are mining related employees.

Capital Growth?

Google the following which may bring CG in the future:
- New Coles / Target shopping centre (currently being built)
- Silverton Windfarm
- AGL / Fed Govt Solar Panel Farm
- Carpentaria's Hawsons Iron Ore Mine
- New Cobalt discovery / mine

Its not the most glamorous place to invest but it works for me. Low prices / easy to get tenants. The high profile property experts say to avoid it - but I'm comfortable with how things are going. The town has been there a long time and will always be there.
Click to expand...

Mining and grenn engery farms arent good boxes to be ticked for me for investing.
 
Mr Damage said:
I've got a handful of properties there - so I have some experience with the subject.

I get approx 48 / 52 weeks fully tenanted. Rents have been slowly rising. Entry level 3br houses that were say $120 / week in 2011 are now around $170 / week. My theory is that the collection of houses there are a valuable thing - no new housing estates and too expensive to transport building materials. You do see some transportable houses though. My tenants are a mix of welfare, govt and retail. None are mining related employees.

Capital Growth?

Google the following which may bring CG in the future:
- New Coles / Target shopping centre (currently being built)
- Silverton Windfarm
- AGL / Fed Govt Solar Panel Farm
- Carpentaria's Hawsons Iron Ore Mine
- New Cobalt discovery / mine

Its not the most glamorous place to invest but it works for me. Low prices / easy to get tenants. The high profile property experts say to avoid it - but I'm comfortable with how things are going. The town has been there a long time and will always be there.
Click to expand...

Mining and grenn engery farms arent good boxes to be ticked for me for investing.

I like to see govt spending on roads/hospitals/airports and private spending on developments like large commerical centres, hotels etc.

These show the govt and private think there is demand/growth to improve these.
 
The new shopping complex is in the heart of town, on the west side of the railway line.

May the Broken Hill positive cash flow keep lining my regional NSW property wallet. The insightful are happy for less competition.
 
End of the day, as long as Centrelink is still around, I guess those entry level properties will have tenants.

At 15-20% gross rental yield (non inflated like other mining towns...etc) theres really not much to lose
 
channon said:
End of the day, as long as Centrelink is still around, I guess those entry level properties will have tenants.

At 15-20% gross rental yield (non inflated like other mining towns...etc) theres really not much to lose
Click to expand...

Agree good yield now but without growth where does that yield get you?

What happens if there is Capital Loss?

Even if its just flat for 5years.

Wouldn't it be better with 7% yield and 5%growth p.a

Don't get me wrong I've invested in regionals (Wagga and Bathurst) but both have growth drivers, diversed industries with increasing population.
 
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