Broken Hill

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Hi Margaret,
I'm currently looking to get an investment property in Broken Hill for $69000 which is currently tenanted and is rented out for $180 a week.
 I want your opinion on whether or not it's a good investment as the rent from it is more then double the repayments. 
And it got tenanted within about three weeks of being advertised for rent.
Thanks,
Marcus
 
Hi Marcus,
It can be very tempting to invest in a property whereby the rent more than covers the cost of the mortgage on it. Cash flow is a very important aspect of property investing, as when a property can cover its own expenses and loan interest, then you only have to worry about getting a tenant in.
However, I urge you to think about an investment such as this one over the long term, and understand that capital growth is equally important in every investor’s strategy.
Over the past 5 years, the median value of Broken Hill has decreased by an annual compounding rate of -0.7%. Over the past 10 years it has had an average annual growth of -2.6%
Let’s imagine the next 10 years brings the same result. Your $69,000, after 10 years, would be worth $56,000, having lost for you $13,000 in that time. Sure, you haven't had to put in any money along the way, but if you have borrowed to buy this property, you are in the red by $13,000.  Even if, during that time, you paid of a chunk off the mortgage, the overall outcome has been a negative one, and not the kind of result we would like to see in a sound strategy.
In addition to being able to find a property which has a good enough rental yield to be able to cover its own expenses, the area must have growth drivers. Towns like Broken Hill have a notoriously bad track record for growth, due to itinerant population, lack of infrastructure and lack of population growth.  
When you become a property investor, price should not be the driving factor. You must also understand that growth has no relationship to the price you pay for a property. You would be far better to pay, say, $350,000 in an area that has all of the growth drivers, and get only a 5% return, than you would spend less in an area with a 10% rental return but a negative growth figure. Over time growth compounds so that, by the time you get to retirement, the property is worth far more than the bank loan on it, and the difference belongs to you. Do this often enough and you build a great net worth.
The final point to make is that, when a property loses value, your ability to leverage is also lost. Buying properties which grow means that you can, in the future, borrow against that growth to add more properties to your portfolio. When a property loses value, it’s harder to do this unless you are paying significantly more than the loss off the mortgage. If you cannot leverage into more property, then you cannot build a larger portfolio, and it’s really only through building a portfolio, rather than owning one or two properties, that you really start to see the value in property investing.
Stick to properties in areas with significant infrastructure development, a growing population and lots of families, and you will do far better with your property investing.  
Kind regards,
Margaret
Have a property question? <a href="mailto:askmargaret@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
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mlomas-KC9MUPZ6Ca

Ask Margaret: Should I invest in a tenanted property?

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Broken Hill tops CoreLogic RP Data's latest list for top NSW investor rental yields.
Median Gross Yield
<table class="table">
<thead><tr>
<th>Suburb</th>
<th>Median Rent</th>
<th>Gross Yield</th>
</tr></thead>
<tbody>
<tr>
<td>Broken Hill</td>
<td>$230</td>
<td>10.1%</td>
</tr>
<tr>
<td>Cobar</td>
<td>$280</td>
<td>9.1%</td>
</tr>
<tr>
<td>Tuross Head</td>
<td>$580</td>
<td>8.6%</td>
</tr>
<tr>
<td>West Wyalong</td>
<td>$240</td>
<td>8.5%</td>
</tr>
<tr>
<td>Malua Bay</td>
<td>$700</td>
<td>8.2%</td>
</tr>
<tr>
<td>Condobolin</td>
<td>$238</td>
<td>8.0%</td>
</tr>
<tr>
<td>Darlington Point</td>
<td>$228</td>
<td>7.9%</td>
</tr>
<tr>
<td>Wellington</td>
<td>$210</td>
<td>7.8%</td>
</tr>
</tbody>
</table>
Property Observer profiles Broken Hill in NSW from a rental perspective.
The median sale price of a house in Broken Hill was $118,000, compared with a national average of $485,000. 
The median price change over one year was 10.50 percent.
While Median Rent was $230pw against a national average of $395, the median gross yield was 10.1 percent. 
Property Observer went looking for dwellings around the median price up for rent or rented and came up with these: 
<img src="/images/2016/04/11/Screen%20Shot%202016-04-11%20at%208.43.05%20AM.png" alt="" width="830" height="537"> 
1. A furnished three-bedroom house at <a href="https://www.realestateview.com.au/rental-properties/10-king-street-broken-hill-nsw/property-details-rent-residential-9844026" target="_blank">10 King Street</a> (above) is up for rent for $250 pw, at a rental yield of about 13 percent. This property sold for $99,000 in June 2015.
<img src="/images/2016/04/11/hill2.jpg" alt="" width="574" height="381">
 
2. A two-bedroom house at <a href="https://www.realestateview.com.au/rental-properties/49-bonanza-street-broken-hill-nsw/property-details-rent-residential-9844025" target="_blank">49 Bonanza Street</a> (above) has a rental of $240 pw. This one sold way back in 2004 for $55,000, according to CoreLogic RP Data.
<img src="/images/2016/04/11/hill3.jpg" alt="" width="575" height="349">
3. A three-bedroom house at <a href="https://www.realestateview.com.au/rental-properties/628-argent-street-broken-hill-nsw/property-details-rent-residential-9844024" target="_blank">628 Argent Street</a> (above) matches the median rental of $230 pw, and yields 13.3 percent. This one last traded for $90,000 in 2014.
<img src="/images/2016/04/11/hill4.jpg" alt="" width="578" height="379">
 
4. A three-bedroom house at <a href="https://www.realestateview.com.au/rental-properties/38-cummins-street-broken-hill-nsw/property-details-rent-residential-9835311" target="_blank">38 Cummins Street</a> (above) is also available for $230 pw. The last sale price for the property was $142,000 back in 2005.
<img src="/images/2016/04/11/hill5.jpg" alt="" width="563" height="342">
 
5. Another three-bedroom house at <a href="https://www.realestateview.com.au/rental-properties/627-chapple-lane-broken-hill-nsw/property-details-rent-residential-9810772" target="_blank">627 Chapple Lane</a> (above) is available for $220 pw. This last traded price for this property was $35,500 in 2003, CoreLogic RP Data shows.
 
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prateek24-ezbwHMbNAk

Broken Hill tops property rental yields at 10 percent

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Broken Hill is the cheapest place to purchase a house in New South Wales, according to Investar’s latest report.
The property investment firm says the average price of a house in Broken Hill is $102,000.
This is followed by Wellington with $139,500 and Coonamble with $140,000.
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="69">
Suburb
</td>
<td valign="top" width="57">
Postcode
</td>
<td valign="top" width="60">
Bedrooms
</td>
<td valign="top" width="117">
Current median price
</td>
</tr>
<tr>
<td valign="top" width="69">
Broken Hill
</td>
<td valign="top" width="57">
2880
</td>
<td valign="top" width="60">
2
</td>
<td valign="top" width="117">
$102,000
</td>
</tr>
<tr>
<td valign="top" width="69">
Wellington
</td>
<td valign="top" width="57">
2820
</td>
<td valign="top" width="60">
2
</td>
<td valign="top" width="117">
$139,500
</td>
</tr>
<tr>
<td valign="top" width="69">
Coonamble
</td>
<td valign="top" width="57">
2829
</td>
<td valign="top" width="60">
3
</td>
<td valign="top" width="117">
$140,000
</td>
</tr>
<tr>
<td valign="top" width="69">
Deniliquin
</td>
<td valign="top" width="57">
2710
</td>
<td valign="top" width="60">
2
</td>
<td valign="top" width="117">
$149,000
</td>
</tr>
<tr>
<td valign="top" width="69">
Cowra
</td>
<td valign="top" width="57">
2794
</td>
<td valign="top" width="60">
2
</td>
<td valign="top" width="117">
$159,000
</td>
</tr>
<tr>
<td valign="top" width="69">
Junee
</td>
<td valign="top" width="57">
2663
</td>
<td valign="top" width="60">
2
</td>
<td valign="top" width="117">
$159,000
</td>
</tr>
</tbody></table>
A two bedroom home at <a href="https://www.realestate.com.au/property-house-nsw-broken+hill-124282206">325 Wandoo Street</a> in Broken Hill (above) is listed for sale for $108,000 through LJ Hooker.
A two bedroom home at <a href="https://www.realestate.com.au/property-house-nsw-broken+hill-123876202">218 Cornish Street</a> (below) is listed for sale for $107,000. It hit the market at $170,000 in late 2015.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/11/218%20Cornish%20Street.jpg" alt="">
A house at <a href="https://www.realestate.com.au/sold/property-house-nsw-broken+hill-122329398" target="_blank">140 Bromide Street</a> (below) sold for $107,000 having last traded for $100,000 in 2014, showing 2.9 percent annual price growth.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/20/140%20Bromide%20Street.jpg" alt="">
A two bedroom home at <a href="https://www.realestate.com.au/sold/property-house-nsw-broken+hill-124304338" target="_blank">54 Thomas Street</a> (below) was recently sold for $130,000. Set on over 1,000 sqm, the home last sold for $37,000 in 2006.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/20/54%20Thomas%20Street.jpg" alt="">
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j.ballantyne1990-6AQqhLzZaK

Where $102,000 can buy you a home in NSW: Investar

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NSW’s Broken Hill has the highest mortgage arrears in the country followed by Queensland’s Armstrong Beach, followed by South Australia’s Currency Creek and Butler in Western Australia, according to S&amp;P.
“Mortgage delinquencies in regional areas traditionally have outpaced metropolitan areas,” the latest report said.
“This often has been the case because regional centres are more vulnerable to a downturn.”
Erin Kitson, an analyst for S&amp;P, says that mining and manufacturing regions, especially those in Queensland and Victoria, are struggling due to job losses.
The Australian also noted that Geelong was experiencing a sharp increase in mortgage arrears rate due to job losses.
<table style="height: 150px; width: 496px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="38">
State
</td>
<td valign="top" width="96">
Suburb
</td>
<td valign="top" width="113">
Loans in arrears (%)
</td>
</tr>
<tr>
<td valign="top" width="38">
NSW
</td>
<td valign="top" width="96">
Broken Hill
</td>
<td valign="top" width="113">
                           8
</td>
</tr>
<tr>
<td valign="top" width="38">
QLD
</td>
<td valign="top" width="96">
Armstrong Beach
</td>
<td valign="top" width="113">
                           7
</td>
</tr>
<tr>
<td valign="top" width="38">
SA
</td>
<td valign="top" width="96">
Currency Creek
</td>
<td valign="top" width="113">
                           5
</td>
</tr>
<tr>
<td valign="top" width="38">
WA
</td>
<td valign="top" width="96">
Butler
</td>
<td valign="top" width="113">
                           5
</td>
</tr>
<tr>
<td valign="top" width="38">
QLD
</td>
<td valign="top" width="96">
Bucasia
</td>
<td valign="top" width="113">
                           4
</td>
</tr>
<tr>
<td valign="top" width="38">
QLD
</td>
<td valign="top" width="96">
Blenheim
</td>
<td valign="top" width="113">
                           4
</td>
</tr>
<tr>
<td valign="top" width="38">
WA
</td>
<td valign="top" width="96">
Maddington
</td>
<td valign="top" width="113">
                           4
</td>
</tr>
<tr>
<td valign="top" width="38">
QLD
</td>
<td valign="top" width="96">
Emerald
</td>
<td valign="top" width="113">
                           4
</td>
</tr>
<tr>
<td valign="top" width="38">
TAS
</td>
<td valign="top" width="96">
Dowsing Point
</td>
<td valign="top" width="113">
                           4
</td>
</tr>
<tr>
<td valign="top" width="38">
QLD
</td>
<td valign="top" width="96">
Alexandra
</td>
<td valign="top" width="113">
                           4
</td>
</tr>
</tbody></table>
“The non-metropolitan regions of Australia tend to have economies which are less diverse compared to metropolitan areas, which means if you lose your job in Wide Bay there are going to be less opportunities than if you lost your job in Sydney or Melbourne.”
The number of regional homeowners in arrears has increased by 18% in the past year compared with only 2 percent for metropolitan mortgagees.
The percentages of loans in arrears in the most affected postcodes are 8.27 percent in Broken Hill, 7.42 percent in Armstrong Beach, 5.44 percent in Currency Creek, and 5.43 percent in Butler.
 
 
 
 
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jchancellor-FAypfDUnLy

Broken Hill has country's highest arrears in property mortgages

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Broken Hill's council-owned film studios, the disused Central Power Station, gifted by mining company Perilya in 2010 has been sold for $680,000 to a married couple.
Selina LaRovere-Nagas and Fisk Nagas purchased the 2.5-hectare site.
The council and state government sunk $2 million into the project for use in the George Miller movie Mad Max Fury Road, however rain forced production to move to Namibia.
Broken Hill mayor Wincen Cuy told ABC News said offloading the film studio was more important for council's financial health than getting a high offer.
"Would I do anything different? No, but it's time to move on and see where we can go from here," he said.
"I think there's probably something like $260,000 worth of depreciation per annum on that.
"If we can get rid of that, that comes off our books immediately and then we start trading a little bit closer to a break-even situation."
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jonathanchancellor-7SQnKwU6yx

Broken Hill film studios sold off

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The total land value for the Western region has increased strongly over the period to 1 July 2016 by 16.4 percent from $2.09 billion to $2.43 billion, according to the latest report from the Valuer-General.
The Report on NSW Land Values at 1 July 2016 found that industrial (15.6 percent) and rural (24.5 percent) land values saw the largest increases, while residential and commercial land values remained generally steady. Good seasonal conditions and high livestock and commodity prices have been the main drivers for land value increases.
Overall residential land values were steady at -1.5 percent. Central Darling (15.2 percent) showed a strong increase in land values while the LGA of Wentworth (7.8 percent) showed a moderate increase. Broken Hill LGA (-11.6 percent) showed a strong decrease due to a downturn in the local mining industry.
Commercial land values remained steady across the region, with the exception of Central Darling which showed a significant increase. The increases in Central Darling (155 percent) are generally small in dollar terms for example, increases in land values from around $900 to $2200.
Industrial land values showed strong increases of 15.6 percent across the region, with the exception of Wentworth LGA (4.8 percent), which showed a slight increase, Bourke LGA which remained steady and Cobar LGA (-10 percent) which showed a moderate decrease.
Rural land values for the Western region increased by 24.5 percent. The exceptions were Balranald (2.0 percent) and Wentworth (4.8 percent) LGAs, which only increased slightly and Broken Hill, which remained steady.
For more information including interactive online land value summaries for all LGAs and 14 regions covering the state go to <a href="https://www.valuergeneral.nsw.gov.au" target="_blank">www.valuergeneral.nsw.gov.au</a>.
<a href="https://www.propertyobserver.com.au/images/2017/01/25/nse-12.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/25/nse-12.jpg" alt="">
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Mixed story for Western land values despite strong growth: NSW Valuer-General

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Broken Hill has the highest house rental yield in New South Wales, according to Real Estate Investar’s latest report.
The property investment firm says that Broken Hill’s house rental yield is 10 percent.
This is followed by Kincumber with 8% and Coonamble, Wellington, Condobolin and North Albury with 7 percent.
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="85">
Suburb
</td>
<td valign="top" width="64">
Postcode
</td>
<td valign="top" width="70">
Bedrooms
</td>
<td valign="top" width="117">
Current median rent
</td>
<td valign="top" width="79">
Rental yield
</td>
</tr>
<tr>
<td valign="top" width="85">
Broken Hill
</td>
<td valign="top" width="64">
2880
</td>
<td valign="top" width="70">
2
</td>
<td valign="top" width="117">
$200
</td>
<td valign="top" width="79">
10%
</td>
</tr>
<tr>
<td valign="top" width="85">
Kincumber
</td>
<td valign="top" width="64">
2251
</td>
<td valign="top" width="70">
2
</td>
<td valign="top" width="117">
$365
</td>
<td valign="top" width="79">
8%
</td>
</tr>
<tr>
<td valign="top" width="85">
Coonamble
</td>
<td valign="top" width="64">
2829
</td>
<td valign="top" width="70">
3
</td>
<td valign="top" width="117">
$200
</td>
<td valign="top" width="79">
7%
</td>
</tr>
<tr>
<td valign="top" width="85">
Wellington
</td>
<td valign="top" width="64">
2820
</td>
<td valign="top" width="70">
2
</td>
<td valign="top" width="117">
$185
</td>
<td valign="top" width="79">
7%
</td>
</tr>
<tr>
<td valign="top" width="85">
Condobolin
</td>
<td valign="top" width="64">
2877
</td>
<td valign="top" width="70">
3
</td>
<td valign="top" width="117">
$240
</td>
<td valign="top" width="79">
7%
</td>
</tr>
<tr>
<td valign="top" width="85">
North Albury
</td>
<td valign="top" width="64">
2640
</td>
<td valign="top" width="70">
2
</td>
<td valign="top" width="117">
$240
</td>
<td valign="top" width="79">
7%
</td>
</tr>
</tbody></table>
A two bedroom house at <a href="https://www.realestate.com.au/property-house-nsw-broken+hill-414321527" target="_blank">307 Piper Street</a>, Broken Hill (above) is available for $190 per week.
Similarly a two bedroom house at <a href="https://www.realestate.com.au/property-house-nsw-broken+hill-414377291" target="_blank">80 Gaffney Lane</a>, Broken Hill (below) is available for $200 per week.
It last sold in 2016 for $46,500, reflecting a 22% rental yield.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/21/80%20Gaffney%20Lane.jpg" alt="">
A two bedroom house at <a href="https://www.realestate.com.au/sold/property-house-nsw-broken+hill-125288174" target="_blank">295 O'Farrel Street</a>, Broken Hill (below) was sold in July this year for $80,000, reflecting a 13% rental yield.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/08/03/295%20OFarrell%20Street.jpg" alt="">
Another two bedroom house at <a href="https://www.realestate.com.au/sold/property-house-nsw-broken+hill-125059282" target="_blank">41 Thomas Lane</a>, Broken Hill (below) was sold in July this year for $65,000, reflecting a 16% rental yield.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/08/03/41%20Thomas%20Lane.jpg" alt="">
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Broken Hill the highest NSW house rental yield: Investar

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Big W has left Broken Hill following closure of its store in Westside Plaza, owned by the shopping centre Sentinel Property Group.
Its managing director Warren Ebert said Sentinel had offered numerous solutions to Big W but the retailer decided not to take up an option to extend its long standing lease. 
“We offered to reduce their rent, decrease their space and numerous other solutions but they just didn’t want to talk to us.
“Big W has gone and left the regional centre of Broken Hill in the lurch with its decision to close its store.”
Mr Ebert said Sentinel has received significant interest from other national retailers in taking over the space.
Westside Plaza is part of the Sentinel Countrywide Retail Trust, having cost $33.7 million in 2015. Acting on behalf of Federation Centres, Steven Lerche, Rino Carpinelli and Peter Isaksson of Savills Retail Investment Sales sold the centre following a national expressions of interest campaign to Sentinel.
Westside Plaza in Broken Hill was Sentinel's second sub-regional shopping centre purchase.
It features a total lettable area of 17,400sqm. It had a 98% occupancy rate on acquisition dominated by national tenants including Woolworths, Big W, Dick Smith, Best &amp; Less, Priceline, Prouds, NAB, McDonalds
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Big W quits Sentinel's Broken Hill property

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The former St Joseph’s Convent of Mercy – The Old Convent - in Broken Hill is set to be auctioned by Colliers International. 
The property, located at 232 Lane Street, Broken Hill is a key part of the area’s history.
At its peak, St. Joseph’s Convent of Mercy was home to over 70 nuns, boasting a school for girls and boarding facilities and was the main convent in the area.
After being destroyed by a fire in 1979, the prominent heritage asset received extensive restoration and renovation. 
The L-shaped parcel of land, with dual frontages onto Lane Street and Sulphide Street has a substantial site area of 6,350 square metres.
It is expected to sell for upwards of $1 million. 
“This is a prime re-positioning opportunity for the complex which comprises six separate buildings including 11 self-contained residential units, an auditorium, function room, commercial grade kitchen and generous on-site parking,” said Clarence Chan at Colliers International.
The property is 900 metres north-west of Broken Hill’s main Town Centre and 1 kilometre from the Broken Hill Railway station. 
The Old Convent, Broken Hill will be auctioned on May 9.
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