Case Study: Investor makes $315,000 during construction

Thinking about working with Opes? You’re probably wondering: “How much money have your investors made?”

That’s a fair question. And an important one, too.

After all, a good property investment company should be able to pick a good investment.

Here is an example of a dual-key apartment an investor purchased through Opes. All up the investor made $315,000 while the property was still being built.

If you have any questions or thoughts, please leave them in the comments section below.

What’s the property?

This property is 405/111 Dixon Street, Te Aro, Wellington.

In 2017, an investor bought this dual-key apartment in Wellington.

A dual-key apartment is where you have two apartments in one property. In this case there was a 1-bedroom apartment and a studio apartment.

They signed up to pay $525,000 for an apartment in March 2017. The developer expected the build to take 2 years, so construction was due to finish in May 2019.

But there were big delays in the build.

Apartments often experience delays, but on top of that there was also Covid. In the end, the development took an extra two years to complete. That’s 4 years in total.

How much money has the investor made?

By the time the property settled (4 years after signing), it was worth $840,000, and the investor had made $315,000 just while the property was being built.

At the peak of the market (late 2021), this home was worth up to $1,000,000.

But since then Wellington house prices have fallen in a big way. Wellington City property prices are down 24.3%.

Today the property is worth $730,000.

That’s a 39% increase from when he bought the property. The investor has made $205,000 over the last 6 years.

Bear in mind, we forecast that apartments will increase 3.5% a year.

So, if the value of the property followed our modelling, it would have increased by 23% in total.

Since the property went up in value by 39%, the investor has made about $85,000 more than they thought they would.

But you probably want to know how this compares to an investor buying a different property.

Wellington City prices have gone up 30% since the investor bought the apartment.

As mentioned, the investor’s property has gone up in value by 39%, so they have made about $47,500 more than if they’d purchased an average property at the same price.

The investor is currently renting this for $960 a week.

- The studio is renting for $440 a week

- The 1-bedroom is renting $520 a week

When the investor first looked at the apartments, he expected they would get $650 per week together.

That means the rent on these apartments has gone up by 6.7% per year (on average).

That’s faster than the 4.7% a year we typically forecast here at Opes Partners. But, it is on track with the broader market in the Wellington Region.

Do Opes investors always get above-average returns?

After reading this article, you might wonder ... “Do Opes investors always make more money than the rest of the market?”

The answer is “not always”.

(Sadly), we are not property investment oracles. We don’t have any special magic power to predict the market. Every. Single. Time.

But we do our best to try to get it right more often than not. That’s why we use data and number-crunching to inform our investment recommendations.

We aim to help you be a more successful property investor than if you found a property on your own.

But even after that number-crunching, high investment returns aren't 100% guaranteed. They’re not locked in.

Investing comes with risk. The question is then how you manage it.