Property Investment
7 min read
Author: Nefe Teare
Financial Adviser and Property Investor in Auckland
Reviewed by: Scott Collings
Scott is the Property Development Liaison Manager at Opes Partners. He manages the onboarding and reviewing of developments all over New Zealand. Scott has a background in construction, he progressed from qualified builder to roles in project, construction, and development management.
One common question I get from investors is:
"Hey Nefe, I’ve been working with you to find a good investment property. But, I just found this property online, and it's cheaper/a better deal than ones you showed me. Why?"
And this makes total sense. When you look at investment properties with Opes … you’re probably going to check out properties online too.
Sometimes you might come across a cheaper property. And that can seem like a better deal.
But just before you rush off and buy it. Just keep in mind that there’s often more to the story.
Sometimes, that ‘better’ deal isn’t all that it seems at first glance.
Here are 5 key reasons you might find a cheaper deal online. That way you can figure out whether the properties you’ve found are genuinely better deals.
Before jumping to a cheaper property, ask yourself if this property is genuinely comparable to the one you're considering.
Size is an obvious factor. For instance, of course a 2-bedroom property will have a lower price tag than a 3-bedroom property.
A property with a garage costs more than one without a garage.
And you’ll typically pay more for a house than a townhouse.
So it’s important that if you’re talking about a property being ‘cheaper’ or a better deal, that you’re comparing apples with apples.
For instance, imagine two townhouses side by side. One has a car park; one doesn’t.
The townhouse with a car park costs $25k more. Is the lower-priced property (without a car park) the better investment?
Probably not. Townhouses with car parks often cost $50k more than those without one. So the higher-priced property with a car park is likely the better deal.
I’ll give you another example. I was working with an investor who looked at properties in Auckland.
They were looking at a property in Blockhouse Bay; then they found a similar property in New Lynn. These two properties were just 4km apart:
On the surface, the second option is lower-priced, so it might seem like a better deal.
But when you compare the two suburbs, there are some key differences.
Blockhouse Bay is considered central Auckland, while New Lynn is West Auckland.
They are different markets. Right down to you can buy alcohol in the supermarket in Blockhouse Bay, and you can’t do that in New Lynn.
And property prices have tended to go up faster in Blockhouse Bay than in New Lynn.
Even rents are different. Currently, two-bedroom rentals in Blockhouse Bay range from $530-$750 per week. In New Lynn, they range from $430-$670.
So rents are higher in the higher-priced suburb.
The point is to make sure you compare apples with apples before assuming one property is the better deal.
A car park can add around $50K to a property's value.
A few years ago the team at Opes were recommending properties in Mangere Bridge, Auckland.
Properties with a car park cost $700k. Those without started at $650K.
Does it really matter? Maybe, maybe not.
If you buy an inner-city apartment, maybe your tenants don’t need a car park.
But further out of the city, properties that don’t have car parks are often harder to rent.
Tenants will either need to park on the road or rely on public transport. And as New Zealand’s cities become more dense, more cars are competing for parking on the street.
But, when you go on Trade Me, it’s easy to search for properties with 2 or 3 bedrooms. It’s harder to see if the properties have car parks or not.
Trade Me doesn’t provide those filters.
So if you find a cheaper property online, check if it comes with a car park.
Often developers use creative marketing tactics to make a property seem better. Things like:
A rental guarantee means the developer promises a set rental income for a year or two.
But there's often a catch.
Take Golden Homes, for example.
In 2023, they marketed a four-bedroom property for $869,500 with a rental guarantee of $820 per week for two years. This gave the property a 4.9% gross yield, which is very high.
If genuine, that would be a great deal.
But then once you dug into the details, the rental appraisal was closer to $650-$675 per week.
After the two-year guarantee ends, the investor's rental income could drop by $150+ per week.
So it’s worth checking the details of the rental appraisals before making a long-term investment decision based on a short-term gimmick.
Our rule of thumb, for a property to be a good deal, the property has to perform well without the incentive.
Sometimes properties are cheaper because the developer is in financial trouble.
So they slash prices.
Now, this on it’s own isn’t the worst thing. There is a chance you come out better off and get a good deal.
For instance, if the property is finished, then you might get a bargain.
But, if the property is under construction, this could be a red flag. Because either:
If you are buying a complete property – there’s something else to look our for.
If the property was finished more than 6 months ago … it's no longer a New Build. That means you need to pay a 30% deposit as an investors, instead of 20%.
A cheap property from a struggling developer could mean inheriting their financial problems. Always do your due diligence before being lured in by a cheaper price.
And finally, if you find a cheaper property online … it could genuinely be a better deal.
While the Opes real estate team scours the market for good deals … there is a chance we genuinely missed it.
If that's the case, hats off to you!
We work hard to scour the market for the best deals, but we can't see every single property in New Zealand.
If you find a deal that seems better, let us know. We'll run the numbers with you.
Recently, one of our financial advisers, Jeremy, had a pair of investors looking at a home in Manurewa.
They ended up finding a similar property in Wattle Downs (not that far away) they thought was a much better deal.
They told us about it, and we went through the numbers together.
If it's truly better, we'll say so. They ended up buying that property.
Sometimes if an investor finds a ‘cheaper’ deal online … they ghost us.
They feel bad about buying a property from someone else.
And I always say to investors: “Don’t worry about that. We want you to make the best decision for your portfolio.”
So it’s better to talk it through. And if you buy something else, we promise we won't burn you for it.
We 100% stand behind our investments, but we also know there are 40,000 properties out there. And a small percentage of the time we might have missed a deal.
Rather than pretend that doesn’t happen – I prefer to be upfront and honest about that.
Our goal is to help you get the best investment possible, whether that's through us or somewhere else.
We can still help you with your Wealth Plan, your mortgage, property management or accounting later on down the line.
Financial Adviser and Property Investor in Auckland
Nefe Teare is a Financial Adviser and Property Investor, with previous roles including Loan Writer and Senior Investment Adviser in KiwiSaver, Managed Funds. Nefe has helped hundreds of Kiwis plan for retirement and successfully guiding them towards achieving their financial goals.
