Property Investment
7 min read
At Opes, we help Kiwis and investors buy investment properties every day.
About 2 out of 3 people who sign a contract to buy a property go ahead, but roughly one in three decide to pull out. We call this “withdrawing” from the contract.
And that’s perfectly normal … sometimes we even encourage it.
But Kiwis are sometimes too nice. That’s why (sometimes) when people withdraw from a property, they ghost us. Often they feel bad, because they liked working with their financial adviser and feel bad about it.
But, you don’t need to worry.
My commitment to you is that when you withdraw from a property that’s not the end of your relationship with us.
In this article, I want to go through the 10 main reasons people pull out of a contract. Rather than keeping this a secret, we want to be open and honest.
That way you can feel that it’s normal, and we can keep working together.
Life happens.
You may lose your job or get an unexpected job offer in Australia.
Things can change your plans which means it’s no longer the right time to invest.
If this is you, let us know. We can always pick up where we left off when you get another job … or return to New Zealand.
We also work with investors overseas if the time is right for them.
When you buy a property you’ll work with a lawyer, accountant, and a mortgage broker.
While you can use Opes for some of these services, you might also use some of your own advisers.
And sometimes those advisers have different opinions on what makes a good investment.
So perhaps an adviser has told you not to invest in a property we recommended. We’re always happy to collaborate. In fact, we often organise a call to discuss any concerns with those advisers.
If their concerns are valid, we can explore other properties that might be a better fit.
At the end of the day, we’re not offended if you don’t take out advice. Our goal is simply to help you make the right choice for you.
Many people ask: Is this the right time to invest? Will house prices keep rising? What about interest rates?
Then you see a scary article in the New Zealand Herald and you think: “I need to pull out of this property.”
It's easy to invest when the market is booming, but much harder during downturns or when interest rates are high, and we’ve seen both in recent years. These concerns are completely valid, but often they can be fear in disguise.
We often call these the “Sunday Scaries” because they almost always happen over the weekend. That’s when you’ve got time to read the paper!
So it’s important to make a logical (not emotional) decision. The best thing is to write these concerns down on paper. Get them out of your head. Then you can have a logical discussion with your financial adviser.
Sometimes it can make sense to wait, but just make sure this is thought through.
When you’re about to invest $600k, investing becomes very, very real.
You naturally start thinking through other strategies: flipping, renovating, developing and land banking.
Sometimes people go through the Opes process and realise New Builds aren’t the right fit.
That's totally fine. Many still use Opes Mortgages or one of our other services ... even if they buy an existing property instead.
Just be careful. Some people withdraw, say they’re pursuing a different strategy, but then do nothing.
So, while another strategy can be logical, it can also be a psychological crutch to procrastinate.
Make sure your decision is based on action, not hesitation.
Sometimes we have people who thought they could afford a property, but then the bank says “no”.
This is common, especially for business owners who thought their business was making good money, but tax returns tell a different story.
In that case, you can either:
1. withdraw and find a cheaper property, or
2. work with a mortgage broker to find out what you need to do to get into that property.
We still want to help.
Some developers use creative marketing tactics to make a property seem like a better investment. Things like:
For example, in 2023 Golden Homes advertised a property for $869,500 with a rental guarantee of $820 per week.
That gave it a high yield of 4.9%, but the actual rental appraisal was only $650–$675 per week. The rental guarantee was at an inflation rent.
Once the guarantee ended, the investor’s rental income could drop by $150+ weekly.
Our property team at Opes often turn down 2 out of 3 properties we’re presented because we don’t think they’re good investments.
It could be possible that you’ve found a better deal through a developer (or someone else). But just make sure it really is a better deal.
Your financial adviser can always run the numbers on this other property to make sure it’s the right investment.
The media loves a doomsday housing market headline and, for investors, these stories can be unsettling.
But here’s the thing: news articles aren’t designed to help you make informed financial decisions.
Take Covid-19, for example. During the pandemic, headlines from the 2008 Global Financial Crisis started resurfacing, even though the two events were completely different.
Or consider the couple who saw a headline declaring: Rents are falling! They panicked, until they checked the actual data and found rents were rising in the area they wanted to invest in.
The takeaway? Don't stop at the headline. Dig deeper, look at the bigger picture, and make decisions based on facts, not fear.
Sometimes I hear investors say, “This is all moving too fast.”
I get that. Buying a property is a big decision, and it’s natural to feel uneasy if things seem to be happening too quickly.
If you ever feel rushed, just let your financial adviser know.
You do need to move at pace when buying property, but we can also take the time to go over what’s making you uneasy and make sure you feel confident before moving forward.
Here at Opes Partners we primarily deal with off-the-plans, New Build properties.
So often investors buy properties that haven’t been built yet.
Some people don’t want to buy a property they haven’t seen. They withdraw because they prefer to buy a completed property ... they can see it, and get a feel for it.
If that is something really important to you, let us know. We do have access to completed homes, or near-completed homes you can look at.
Just one thing to remember when buying completed properties. If the property is older than 6 months, it’s no longer a New Build.
For investors, this means the deposit jumps to 30% instead of 20%.
One of the most common questions I get from investors is:
“I found this property online, and it’s cheaper than what you’ve shown me. Why aren’t you recommending me this instead?”
A cheaper property can be tempting. But often there’s more to the story. Sometimes, those properties are priced lower for a reason ... and it’s not always obvious at first glance.
The most common reasons we see are:
My team is constantly scouring the market looking for good deals, but there is a chance we’ve missed one and you’ve found it.
But just before you say “Sweet, I’m buying that one” talk to your financial adviser to make sure the deal really is what it’s cracked up to be.
If you decide to withdraw from a property purchase, that’s OK. We want to help you make the right decision for your situation.
You can always use the clauses from the Property Power Position to get out of the contract.
If you want to withdraw, there’s nothing wrong with that. The contract you sign has a clause that allows you to cancel. It’s actually called “the right to cancel clause.”
You might wonder: “Andrew, you’re crazy. You’re literally telling me the reasons I could not use your service!”
But here’s the thing: Kiwis are so nice that sometimes they think, “I'm not taking his advice, so I can never talk to him again.”
If you don’t go ahead with a property now, we’d still love to work with you in the future.
There are legitimate reasons why you don’t go ahead. The only thing we ask is that you don’t ghost us! If you stay in touch, we can help you in lots of other ways.
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.
