Why Opes recommends New Builds
Thanks for wanting to book a meeting with Opes. First things first: no meeting has been booked.
But, since you wanted to know why we only recommend New Build properties, here's the honest case for New Builds.
Including both the pros and the cons.
If, after reading the page, you think "actually, maybe I would consider investing in New Builds," then go ahead and book a session.
If you're still not into New Builds, no worries. Hopefully, we just saved you an hour of your time.
Why we only recommend New Builds 👇
1. You need less cash to get started
New Builds only need a 20% deposit. Whereas you need a 30% deposit to buy an existing property. Plus any renovation costs.
So let's say you have 2 investment properties. Both cost $600,000.
It's the same price tag. But, the New Build needs a $120,000 deposit to get started.
The existing property needs a $180,000 deposit, plus (potentially) $60,000 for a renovation budget.
So the existing property could need twice the money to get started. Not everyone has that.
2. A smaller deposit can mean a bigger return
Take those same two properties. They both double in value over the next 15 years.
Both made you $600,000.
But the New Build only needed $120,000 of your money. So you made 5x the deposit you put in.
The existing property needed a $180,000 deposit. So you made 3.3x the deposit you put in.
The houses went up at the same rate. But you got a different result.
It isn't about the property being new. It's about how much of your own cash is tied up in the property.
3. Your income is less likely to hold you back
Since July 2024, the Reserve Bank has capped how much you can borrow under the Debt to Income ratios.
Investors can borrow up to 7x their income. So if your household income is $100,000, that's a $700,000 ceiling.
New Builds are exempt from those debt-to-income rules.
So if it's your income capping your borrowing, the bank might say 'no' to buying an existing investment property – but 'yes' to a New Build.
Keep in mind that the Debt to Income ratios aren't the only check the banks do though.
4. There's less to look after
Maintenance can run around $500 a year on a New Build, against $1,000 to $1,500 on an older property, and $3,000 or more on a really old one.
So buying new could save you somewhere between $500 and $2,500.
Most come with a 10-year guarantee on the building work, warranties on the appliances, and a house built to today's building codes rather than whatever passed in 1968. When something does go wrong, there's usually a warranty behind it instead of a bill.
What we look for in a New Build
We recommend:
- Standalone houses – 3-4 bedrooms on their own section, with a garage.
- Townhouses – 2-4 bedrooms in growth areas
- Dual-keys – higher yield properties
Whichever type it is, we're either picking it for growth or for cashflow.
Picked for growth:
- townhouses and standalone houses.
- we target 5% capital growth or 6% in Auckland (over the long-term)
- we target yields sitting between 4% and 4.8%.
Picked for cashflow:
- dual-keys. Two tenancies under one roof on a single title
- we target 3-4% capital growth (over the long-term)
- we target yields from 6%.
Who do New Builds tend to be right (and wrong) for?
More often right for
- You've got a deposit but not a huge one, and want to start sooner
- Your income is capping your borrowing, not your savings
- You want a property that's tenanted and earning without needing work first
- You're investing for a decade or more and want your weekends back
More often wrong for
- You want to renovate and add value yourself
- You're chasing a bargain below market value
- You want plenty of options to choose from
- You want to walk through the property before you buy it
Want to run the numbers?
Spend an hour with a registered Financial Adviser, working out whether a New Build actually stacks up for you. You'll get a written plan you keep either way.
Book your free session