What is a property investment company?

If you want to buy a New Build as an investment property, you have 3 options.

You can:

• Purchase directly from a developer (e.g. via Trade Me or their website)

• Go through a real estate agent, or

• Use a property investment company.

Here at Opes Partners, we are an example of a property investment company. And even though we have been around for 10 years, people still ask: “What does Opes actually do?”

Because most property investors are familiar with the first two options, in this article you’ll learn

a) What a property investment company does

b) The differences between a property investment company and your other options, and

c) If using one is the right fit for your situation.

Do you have a question or comment about property investment companies? Feel free to leave your thoughts in the comment section at the end of the page.

What is a property investment company?

In one sentence: a property investment company helps people find the right investment properties for their financial situation.

Opes Partners is one example of a property investment company, but there are others. For instance, Propeller Property Investments, Positive Real Estate, and iFind Property, but there are others too.

These types of companies tend to focus on New Build, off-the-plan investments, although this isn’t always the case.

Often (but not always) these companies:

• Help you create a long-term financial plan, so you’re not poor in retirement

• Will offer property education, for example coaching, online webinars, articles or blogs

• Recommend the right type of property to buy for your plan

• They also have industry connections to help you with your purchase. For instance property managers, lawyers and mortgage advisers.

Working with a property investment company means that all property purchases support your financial goals.

It also reduces risk, because they are guiding you through the property investment process, so all the i’s are dotted and the t’s crossed.

Property investment company vs real estate agent vs developer

Many investors who focus on New Builds wonder: “Why would I use a property investment company? Why not go to a developer, or a real estate agent directly?”

This is a great question and an important one.

Of course, you don’t have to use a property investment company. And the truth is they aren’t always the right answer for everyone.

Here are three alternatives to compare – developer vs real estate agent vs property investment company.

Use a property investment company

First, you have a property investment company. The main difference between this and the other options is that you will work with a financial adviser as your main point of contact.

People who choose to use a property investment company do so because:

• A property investment company will create a financial plan for you. They will then match their investment recommendations to your plan

• Property investment companies pre-vet their developers to make sure the properties are likely to get built on time and on budget

• There are lots of small developers out there who build good quality property and who don’t want to sell through traditional means. They work exclusively with property investment companies to find investors to purchase their properties.

However, there are also cons:

• A property investment company will only show you a select few properties – usually 3 options. That means you don’t get to scroll through Trade Me picking properties; they pick options for you

• The properties come pre-negotiated, so there is often little to no room for you to negotiate yourself. Some property investors don’t like this

• Each property investment company will only have relationships with a set number of developers (for example, here at Opes, we work with 97 developers). That means they won’t access every developer on the market.

Going to a developer directly

For starters, you can approach a developer directly about a property you like. You can do this via their websites or potentially find them on Trade Me.

The main difference between this and the other options is that you will work with a sales person who works for the developer as your main point of contact.

This has its pros and cons.

People who choose to go direct to a developer do so because:

• They like to look at a large range of properties available

• They prefer the idea of dealing direct with the developer

• They believe they will have a better shot at negotiating the price down.

However, this is not without its cons:

• Just because a developer can build solid properties … doesn’t mean their properties are good investments (based on the numbers)

• There is a risk that you choose a developer who can’t complete the project (for instance if they go bankrupt)

• You don’t have the confidence that your property purchase is tied towards your financial goals.

Use a real estate agent

Your second option is to buy a New Build property through a real estate agent. They will represent properties that developers are currently selling.

The main difference between this and the other options is that you will work with a real estate agent as your main point of contact.

This also has its pros and cons.

People who choose to go with real estate agents do so because:

• They like to browse for properties on Trade Me. These investors look at a large range of available properties. In doing so, they’ll naturally end up talking to a real estate agent

• They prefer to scrutinise developers and properties themselves, rather than wanting to rely on a property investment company

• Real estate agents will often represent smaller developers that don’t have their own sales team. So investors can access deals they wouldn’t get by going to a developer directly.

Again, this is not without its cons:

• Real estate agents do not necessarily have skills in determining what is a good investment (or not). They are there to sell properties on behalf of the developer, rather than choosing you a good investment

• After you buy the property, the real estate agent’s job is done. They don’t hold your hand through the build process, although some people may like this

• You don’t have the confidence that your property purchase is tied towards your financial goals.

What happens when I work with a property investment company?

Generally speaking, the steps you take with each property investment company will be similar.

Over several meetings they will:

• Collect all of your financial information (e.g. assets, goals, salary, relationship status)

• Create a financial plan for you

• Recommend 3-5 New Build properties that match your financial goals

• Guide you through the process to make sure it’s the right property (due diligence)

• Send you updates on how the build of your property is progressing

• Help you expand your portfolio

For more detail on what it’s like to work with a property investment company, read this article: What Happens When I Work With Opes Partners?

How much does a property investment company cost?

The primary way a property investment company gets paid is by charging the developer a fee.

So, if one of their financial advisers recommends a property, and you think it’s a good investment, they will get paid a fee by the developer.

Some property investment companies also charge different amounts, depending on what sort of service you get.

Here is an example of the different types of fees you can expect:

• Opes is $0, we don’t charge investors a fee

• Propellor Property Investments charges $6k for the first property, and $3k for the second

• Positive Real Estate charges $10k to get access to their property coaching programme; then they don’t charge a fee to find properties

• iFind property charges a refundable $2500 deposit, and a commission of the property (either 2% or 1.6% depending on the price).

Should I use a property investment company?

The people who get the most value from working with a property investment company are usually:

• Emerging investors or people just starting their investment journey and need some guidance or

• People who are busy (working full-time and/or with a family) and who don’t have the time (or inclination) to do their own research.

But, this may not be you. If you are an experienced investor and prefer to seek out properties yourself, then working with a property investment company may not be the right fit for you.

The main takeaway here is if you are looking for a bit of investment expertise – a property investment company could be the right fit for you.

Write your questions or thoughts in the comments section below.