Opes
9 min read
Author: Laine Moger
Journalist and Property Educator, holds a Bachelor of Communication (Honours) from Massey University.
Reviewed by: Ed McKnight
Our Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.
Most property investors don’t realise how much time it takes to buy a property (the right way).
That means many investors get overwhelmed when buying a property.
That is especially the case in the due diligence part of the property buying process.
There are a lot of decisions to make in this time, and investors sometimes feel pressured to make decisions.
That’s why in this article you’ll learn exactly what you need to do in due diligence.
You'll also learn how much time you need to dedicate in this two-week period.
After all, buying an investment property could be an $800,000 decision.
So you don’t want to make mistakes, and you want to have the time to do it right .. if you don’t it could cost you.
Due diligence usually takes 2 weeks (10 working days).
But most of the heavy lifting is done by your professionals. That’s your financial adviser, lawyer, accountant and mortgage broker.
But you'll still have to do some work. Here’s how much time you’ll need to spend on each task during due diligence.
Time commitment – 1 hour +
When you work with Opes Partners you'll work with a financial adviser. We also call this a Property Partner.
You'll also get to work with a Customer Relationship Manager (CRM).
These two are here to help you work through due diligence.
Think of them as your project managers.
You'll have at least two 15-minute meetings with them. This is so you can:
If you’ve got any questions about the property you can always call your Financial Adviser.
Some investors also ask for another meeting to run through the numbers again.
Time commitment – 2 hours, but up to 10 emails back and forth over a 2-week period
Your lawyer is the person you’ll speak to the most.
Often they'll need to onboard you. That means filling out a lot of forms before discussing the contract with you.
What does your solicitor do?
The solicitor negotiates your contract with the developer’s lawyer.
Your lawyer will send you lots of documents. For instance, they’ll send you a reporting letter showing you what you need to know about the contract.
You need to spend 10 minutes reading this.
If you want to adjust part of the contract (e.g. adding or removing a clause) your lawyer will negotiate this.
The back and forth can take a couple of days. That’s especially if the developer isn’t budging, or if their lawyer is slow.
You may need to extend due diligence if you’re still negotiating when you get to confirmation.
Time commitment: 2 hours, but with 3-5 phone calls
When it comes to finance, you’ll spend most of your time sending documents to your mortgage broker.
There is a lot to send. And you need to disclose everything.
This means:
And you'll need to evidence almost everything. That means bank statements, passport, rental assessments.
They’ll let you know what to send, but this can take some time.
But here’s where investors shoot themselves in the foot.
Many investors don’t submit all their documents to their mortgage broker at once.
They might do a little bit, then come back to do some more later.
Your broker can’t put your application into the bank until they get all your documents.
You’ll also need to spend a bit of time on emails and phone calls with your mortgage broker to:
Time commitment: 30-minute meeting, although you may not need this
The time you spend with your accountant depends on when you pay for the property (settle it).
If settlement is a year away, you may have a quick 10-minute phone call with your accountant. This is where you discuss whether you should buy the property in a:
Although if settlement is closer you may need to spend more time with your accountant. This is to set up your trust or look-through company.
If that’s the case, they'll need to onboard you.
Yes, that means a little more form filling so they can get the details right.
Time commitment: 15-minute phone call
You want to talk to your Property Manager during due diligence to confirm
1) That their rental appraisal is fair
2) Who your potential tenant may be
This only takes a quick phone call. Some investors skip this if they’ve invested in property before.
Investors often get stressed during due diligence. That’s especially the case if it’s their first investment property.
But truthfully, the time itself usually isn’t the issue.
Investors usually don’t get stressed about the 1 hour to submit mortgage docs.
Nor do they worry about the 15 minutes it takes to phone a Property Manager.
Instead, they get stressed if they feel they haven’t had the time to make a good decision. The time to think about it.
To handle this, some investors take a week off work when they put a new property under contract.
Don’t worry, you do notneed to do this.
No-one should spend 8 hours a day talking to a lawyer.
But, you need to schedule time to think about your investment. That means:
The most successful investors schedule an hour a day to do all this thinking and reading.
They don’t usually spend a full hour doing this; there’s not that much to do. But they create the space and time so they can think and not get stressed.
If you are investing with your partner, it’s a good idea to schedule this time together.
That way you can both get on the same page.
Often couples have busy work lives. They don’t spend enough time talking to each other before making a $550,000+ decision.
Don’t worry, you don’t have to block out your evenings forever. You just need to commit a few hours over this two-week due diligence period.
The key message is, buying a property takes time.
That’s especially relevant once you’ve put a property under contract.
So you don’t want to go through due diligence while you’re on holiday (although some investors will do this and still do due diligence the right way).
You’ve got to be deliberate with your time. You need to make time so you can make the right decision.
At the end of the day, this is a $500k, $800k, or even a $1 million decision. It’s the largest financial decision you will ever make, outside buying your own home.
It’s worth setting the time aside to make the most informed decision possible.
Journalist and Property Educator, holds a Bachelor of Communication (Honours) from Massey University.
Laine Moger, a seasoned Journalist and Property Educator holds a Bachelor of Communications (Honours) from Massey University and a Diploma of Journalism from the London School of Journalism. She has been an integral part of the Opes team for four years, crafting content for our website, newsletter, and external columns, as well as contributing to Informed Investor and NZ Property Investor.
