How much does it cost to work with Opes?

How much does it cost to invest in property? 

There are 3 main costs you need to know about.

Even though our service at Opes is free, working with us to build a property portfolio still costs money.

Why? We are going to help you buy an investment property … and properties are expensive. It’s not just the price of the property, there are other hidden costs too.

That’s why in this article, you’ll learn the costs to expect when buying an investment property.

What are the 3 costs of investing in property?

There are 3 costs of investing in property. They are:

1. The property price
2. Set-up costs
3. Cashflow

Here is a summary of the costs you can expect to pay when purchasing a property

Let’s break these down in more detail.

#1 Property price – How much does a New Build cost?

When buying an investment property investors usually spend between $550,000 and up to $1.1 million.

But the property’s price will change based on:

• Where it is
• The type of property it is.

Here are the broad ranges of how much a New Build investment property costs in 2023:

What drives property prices up and down?

Often investors ask: “Why are some properties cheaper than others?” That’s especially the case when two properties seem similar.

Here are the main factors that drive the cost of your New Build, up and down:

1. Location

Auckland property prices are higher than in other parts of the country. The average Auckland property is about 50% higher than the average Christchurch property.

Similarly, properties in small towns will be cheaper than those in a main city.

It can be tempting to look for the cheapest property possible, but you don’t want to buy an investment in the roughest part of town. You want to attract a tenant who will look after your property so that it has the chance to go up in value over time.

2. Reputation and size of developer

As developers become larger and more well-known, they start charging more. For example, an established developer with a big team may sell a 2-bed townhouse for $650k, but a smaller developer with fewer staff might charge $550k.

You won’t automatically get more rent if you pay a higher price for a “brand-name” developer. And the value of your investment won’t necessarily go up in value faster.

That’s why we tend to prefer smaller developers with lower costs here at Opes. This means the investors we work with get a sharper price.

3. Different build contracts

Sometimes you’ll see a property on Trade Me and think, “Bargain!” It might be a 4-bed standalone in Rolleston.

But you might not realise that the builder is using a different type of contract. It’s called a “progressive payments” contract.

These have hidden costs. For instance, the property might not come with curtains or even a driveway! You’ll also likely need to pay extra interest to the bank.

These extras can total $50k or more.

The alternative is a “turnkey contract”. These types of contracts have a higher purchase price on the contract, but they come with fewer hidden costs and lower risks. This can mean they end up cheaper.

This is why all properties we recommend at Opes Partners are “turnkey” contracts. That means fewer hidden costs and less risk.

4. Specifications

Often you’ll see a property in a phenomenal location with a luxurious design. Extra luxury means more expense. That’s great for an owner-occupier buying their dream home. But from an investment perspective, you might not get more rent.

#2 Set-up costs – How much money do I need to buy a property?

It also costs money to buy a property and set it up. These are the hidden costs of buying a property.

You’ll need to pay for lawyers, a building inspection and maybe an accountant. Here are the main costs you’ll face:

You don’t need $4-$7k in your bank account to pay these costs. Often investors will:

• Use a cashback from the bank to pay these costs
• Borrow the money against their house to fund them
• Or use cash they have saved up

These costs can change based on a range of factors. Check out this video to see how set-up costs can vary.

“I thought Opes was $0. Why is there $6.5k for financial advice fees in your table?”

Some property investment companies don’t charge you money to work with them.

That’s us here at Opes and some others in the industry too.

You might think, “How do you manage that?” We get paid by the developer.

If you buy a house that a property investment company recommends, they get paid a fee.

But, on top of this, some companies also charge you a fee. That’s on top of the commission they get from the developer.

This is usually between $500 and $6,500 per property.

Of course, you don’t have to use a property investment company to invest in property. But if you do, the cost can range from $0 – $6.5k.

#3 Cashflow – How much income do I need to pay to hold my investment property?

Investment properties have lots of costs. There’s your mortgage, rates, insurance, maintenance, a property manager and more.

If you buy a property today, the rent won’t cover all these costs (most of the time). This means you'll have to “top up” the shortfall out of your own pocket.

If you borrow all the money to invest, your top-up will likely be between $350 and $500 per week.

But your top-up will go down as interest rates fall (and the rent increases).

For instance, your cashflow will be better if you put in a cash deposit. This means you won’t have to top up as much.

If you borrow all the money to invest, your cashflow won’t be as good, so you’ll have a larger top-up.

There are lots of factors that impact the cashflow of your property. That’s why we’ve created this cashflow calculator.

You can use it to get a sense of what the cashflow will be for your property.

How do I invest in property?

Even though working with Opes is free, investing in property still requires money.

Knowing these costs lets you decide whether to start (or grow) your investment portfolio.

If you choose to work with Opes, our team will help you build a financial plan. They’ll then help you find New Build investment properties that fit that plan. This doesn’t cost you anything.

Use the links below to book a free meeting with one of our team.

How else can Opes help me?

Opes doesn’t just build financial plans and find properties for investors: we also have mortgage brokers, property managers, property accountants and more.

Here are the other ways we can help you become a more successful property investor: