Do Your Research When Buying In Mining Towns

As a result of commodity prices dropping and the demand for those commodities reducing (which I believe is to be short lived) certain mining operators have decided to close down their operations in some mining towns in the past few months. One such devastating announcement for example was by BHP to close down its nickel mining operation at Ravensthorpe and axe 1800 jobs in June this year. A little over a year when it was officially opened. I recall certain property spruikers (i.e. slicked salesmen) and their seminars saying that buying properties in these types of areas was good as the yield on these properties were high (as a result of property prices being low and rents being high). I have heard that vacancies in Ravensthorpe are rising as people are leaving this area as unemployment is now rising. Also property prices are gradually declining. What I am trying to get at is if one is going to buy properties in these types of areas/towns, obviously one must do their homework to ensure the security of their investment.

Ask questions like:

1) How long is the mining lease to go for, and has that mine(s) in that town had a history of closing down previously when such a situation like commodity prices dropped.

2) Is there infrastructure to be developed in that area? One can check sites like the Department of State Development, Infrastructure and Planning www.dsdip.qld.gov.au as a source for information on infrastructure developments. Another site is the Department of Transport and Main Roads Project's Site http://www.tmr.qld.gov.au/Projects.aspx for road projects. Some of these projects do lead into mining towns. This is an indication that the state government is spending money to ensure that the roads are capable of further expansion in these mining regions. You may call it investing for the future.


Even though some of the websites are Queensland based, there is similar government departments that one can obtain information on infrastructure projects that is occurring/to occur in other Australain states.

Yes it may sound nice chasing the yields, but if one is to pursue such a venture wouldn't it make sense to do your own diligence instead of being lead by spruikers? It pays to also visit the town and get a feel first hand for what other economies are driving growth in that town apart from mining.

A Story For Landlords

Did you ever wonder how certain real estate agents in Australia select tenants for their clients, i.e. the Landlord. It is an important job being a property manager, as they assist the Lessor/Landlord in determining the right tenant for their property. I believe that the property manager should have in their mind, that when selecting a tenant for their client, they should treat it like they were selecting their own tenants for their own property. I think it is very important for even the lessor to think like this of their property manager (even mention this to the property manager that they select the tenant as if it was for their own property) before signing any forms concerning the appointment of agents.

There are a number of selection criteria that the property manager should consider when selecting tenants. This selection process should also be documented by the property manager (e.g. in Queensland this is done by using the REIQ’s Verifying Tenancy Agreement Form). Some of these checks are:

·        Positive Identification – In this criteria the property manager should check the validity of the prospective tenant. This is achieved by checking things such as: The tenant’s driver’s license; Medicare Card; Their utilities bill e.g. Gas, Power. This assures that the person who they are screening is the person who they say they are.

·        Their tenancy record – This is achieved by looking at the applicant’s previous rental record and to see what type of tenant they have been previously . Examples of questions that should be raised by the agent are: Have they breached previous tenancy agreements ? Why are they moving? Have they been refused to rent a property from a previous agent or lessor? This information can also be ascertained from commercial databases such as TICA (Tenancy Information Centre Australasia), and CONSOLE.

·        Financial Status-This is pretty much a no brainer where it basically means can the prospective tenant pay the rent. To check their financial capability things such as pay slips, tax records, Centrelink Statements should be used to assess their financial credibility.

·        References – Just like applying a job one must have references so that your future employer can see what type of an employee you have been. No difference here where the tenant’s references can be checked by the agent to help their screening on the tenant.

  Once the tenant has been screened by the property manager, the property manager should engage the Landlord/Lessor, and go through with them about the prospective tenants and their checks on the prospective tenants. Then after the property manager’s consultation with the landlord it will be the landlord who should select the tenant based on the advice of the property manager.  Once the tenant has been selected then the Tenancy Agreement Form should be filled. In Queensland this is Form 18A provided by the Residential Tenancies Act (RTA). It is important to note that this agreement is only between the lessor and the tenant.  The tenancy agreement will detail such things as:

·        The Lessor’s and Agent’s Details

·        Property Details

·        When and how the rent is to be paid

·        The Rental Bond

·        Number of people to live in the rental property

·        Is the rent a fixed term or periodic tenancy

It is also important for the property manager to do an ‘Entry Condition Report ‘ (In Queensland this is RTA Form 1A) detailing the state of the rental property prior to the tenant moving in. Copies of the condition report are given to the tenant and are to be signed by the tenant. This helps in determining how much of the rental bond is to be refunded  to the tenant after their stay in the property, meaning have they kept the premises in good order e.g. didn’t punch any walls, stained carpets with liquids.