Developers
5 min read
At Opes, we need to find 800+ properties each year for investors to choose from.
But every single one must pass a strict checklist before it makes its way in front of an investor.
After all, no one will be happy with us if we recommend a dud investment.
In this article, you’ll learn about our 8-step process to vet developers and triple-check every property before it reaches investors.
Behind every developer Opes works is a strict 8-step vetting process, covering financial checks to independent valuations.
If a developer wants their properties to get in front of Opes investors, they always start with a first meeting.
The developer meets Micky (South Island) and Sammy and Scott (North Island).
Their only job is to hunt for good investment properties for Opes investors.
And this meeting acts as a first litmus test. They ask: “Does this stack up as an investment?”
They also discuss pricing. How much does the developer want? And at what price would we consider them a good investment?
If developers make it to stage two, they need to fill out our (very involved) onboarding questionnaire.
We don’t just ask about the current project; we want to know about their entire operation.
We ask things like:
It’s long-winded. We ask for a lot of information, and we intentionally made it that way.
We want to gather every detail upfront to avoid surprises later.
It also means we have all the information we need to do a full deep dive into the company later on.
We won’t accept a property, even from the best developer, if the numbers don’t work.
So, we look at:
This means we need to involve property managers and an independent valuer in the conversation.
Then we use Opes+ to model the cashflow and potential returns. The property has to meet our minimum standards (in terms of yield and Return on Investment) before being approved.
If the numbers don’t stack up financially … the property is declined.
Every Monday new projects are reviewed in a roundtable meeting with Opes directors Andrew Nicol and Ollie McKenna.
They’re presented with everything we have so far. They use their experience and judgment to ‘OK’ the property before we proceed further.
At this point, the property has had input from:
If the answer is “yes, we think it’s a good investment” then the project moves into deeper checks.
This is where the rubber hits the road. It’s time for due diligence. This is where we really check out the developer. That means we:
One of the most important parts of this stage is discovering where they are getting the money for the build.
If they refuse, or if something looks suspicious, that’s an immediate red flag. We won’t move forward.
Sometimes it will be from a main bank; other times it will be from a non-bank lender like Vincent Capital.
We at Opes have relationships with many private funders, so we can often call them to find out if a developer pays their bills on time.
Anti–money laundering (AML) is a legal requirement, and we take it seriously. So, we contract another specialist provider to run the AML checks.
This means that all developers need to go through an identity check and be assessed for their money-laundering risk.
Needless to say if they fail … we won’t be working with them.
Finally, once everything else has been done, and all the checks have been made, I write my internal risk assessment report.
I’ll include:
The report is then signed off by Opes directors (Andrew and Ollie).
This document keeps us accountable, and it makes sure we have a clear paper trail if anything goes wrong.
The last step is to get the legal agreements signed. These are the:
We then prepare the property pack with all the key information, and launch it to our stock list.
At Opes, we count properties by the number of units. So, a development with 20 townhouses counts as 20 units.
Each year, we bring on around 800 units – spread across more than 50 projects.
And we plan months in advance; often projects are lined up around 6+ months ahead.
This means we can better control the quality of units. And it means we don’t need to approve properties quickly just to have properties available; we can take our time.
That is why we turn down more projects then we onboard. To approve 800 units in a year we need to actively go through and review 1600+ a year.
Opes Property isn’t just another property company or real estate agent. Our goal is to find properties that Opes Partners (a financial advice provider) can recommend to investors.
That means we have to meet different standards than regular real estate agencies. Rather than selling any property, we need to find ones that Opes Partners can recommend.
Running all these checks upfront reduces risk for investors. It gives you confidence that the properties we recommend are genuinely good investments.
Licensee (Eligible Officer) and Team Leader for Opes Property
Brittany graduated from the University of Auckland with a Bachelor of Property and later became a qualified financial adviser. She's now the licensee (eligible officer) and team leader for Opes Property.
This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.
We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.
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