Never Buy A Property Off The Plans Without Checking This

Last time I walked through open homes. But what about when you’re buying something that doesn’t exist yet ... just dirt, a fence, and a sign with a picture on it? So I visited three developments at three different stages to find out what you’re actually looking at. In this In The Field episode, Ed shows you how to inspect a new build before it’s built. You’ll learn: Never buy a property off the plans without checking this Come with me as I go in the field looking at a development site The crucial features that property developers always missThe takeaway? Buying off the plans doesn’t mean buying blind. You just have to know what to look at. Let us know your thoughts by leaving us a voice message on the Property Academy Hotline⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.speakpipe.com/PropertyAcademy For more from Opes Partners: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.opespartners.co.nz/newsletter-sign-up⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Stay ahead of the NZ property market⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.opespartners.co.nz/private-property-sign-up?utm_source=podcast&utm_medium=promo&utm_campaign=pp_signup ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.instagram.com/opes_partners/ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠ https://www.tiktok.com/@opespartners

• 0:08Speaker 00

  Hello and welcome along to the Property Academy Podcast by Opes Partners. I'm your host, Seb Ignite.

• 0:12Speaker 01

  And I'm Andrew Nicoll.

• 0:13Speaker 00

  And this was the show that helps Kiwis go from zero to five investment properties. So you can be financially free and stick around for the next 15 minutes because you're going to learn, never buy a property off the plans without checking this. You're going to come with me as I go in the field, looking at a development site and the crucial features that property developers always miss. Now, remember in the field Friday is where I get out of the studio and sometimes Andrew gets out of the studio and we go and just try and show you the practical side of property. Now, one of the more recent ones I did was about going to open homes. But then I mentioned at the end that I often buy properties off market, especially off the plans.

• 0:53Speaker 00

  And so if you're buying a property off the plans, you can't see it before it's built. And so what do you do? Well, that's where you might go on to a site visit instead of doing an open home. But what happens there? I went to a couple and we're going to break it down for you. Now, if you are buying off plans, there are a couple more things to look out for because there's stuff that you, you might look at a floor plan and think, yeah, that looks all right. But actually, there's some stuff that you can really easily miss.

• 1:24Speaker 01

  Yeah, it's quite hard for just a normal person to digest the plans and think, oh yeah, that looks practical. Scott, who works in our property team, hell often point out things and I'm like, oh, I never would have thought of that. I'm glad, I'm glad you pointed that out.

• 1:37Speaker 00

  Well, there's going to be a couple of things that we talk about today. So for the first one, I tuned up to a development that is partially built. It's in Mount Rosskill and it's got about 30 units that are going in there. Now, one of the things that people often worry about with a larger development is that what happens if all the properties hit the market at the same time, all looking for tenants? And so I asked the developer this and this is what they said.

• 2:05Speaker 02

  These guys have done really well as this is the largest project, right? And I've got each block has a different typology. So you've got your two bedrooms here, you've got your three bedrooms for car park there, three bedrooms for the garage here, and then your three bedrooms garage, extra car park and a couple of four bedrooms. So there's a massive diversification outside as well. You want some brick, you've got some weatherboard, it's all slightly different, but it all goes all at the same colour scheme.

• 2:29Speaker 03

  So eight typologies, seven or 30 homes.

• 2:32Speaker 01

  So to make sure that there's a bit of differentiation between the different units, people might like one type, some people might like another type, someone might want to pay for a garage, someone might not, someone might want an extra bedroom. They've made sure that there's a different makeup of units within a 30 unit development.

• 2:50Speaker 00

  Because otherwise, sometimes people worry that, oh, if it's all 30 two bedroom units, they're all the same.

• 2:57Speaker 01

  Now, to be honest, often when there is 32 bedroom units, depending on where it is, it might not be the end of the world, but this would give someone a bit more comfort.

• 3:05Speaker 00

  So one thing you might do when you are buying off the plans, especially in a, in a development where there are multiple units, you might check, what do the other properties look like? Not just what am I buying, but what else is in the development? Are they built of different materials? Do they all look the same or are they different? Are there some different, the fancy word the developers use, typologies or types of houses? Another thing that people sometimes get concerned about is, but what happens when they all get rented? And this one was quite interesting when I asked about this.

• 3:41Speaker 02

  The rental team know that when they go to put them onto market, there's not going to be a sea of the same typologies there. The other thing that these guys have done is that they've staged the completion so that when the rentals come online, you don't have 30 homes that are getting rented. You're going to have a block of eight and then another block. And then you've got your first time buyers in there as well. So we've done everything we can, I think, to derisk the project because it is larger.

• 4:04Speaker 04

  And we also took a lot of advice from the team before we even started the building consent, so little changes in the design to make it suitable for investors.

• 4:13Speaker 00

  So that would give people some comfort as well. And something you can look out for is, okay, how many of these properties are being purchased by investors as opposed to people who are going to live in them? Because that would tell you something about how much competition you might face when you are looking for a tenant. And then the other thing you could ask about is the completion timelines. If there are five blocks and they all complete at the same time, that could mean slightly more competition. If they are all completing at different times, that could mean slightly less competition because there's only so much supply coming on. And that's the kind of thing most people probably wouldn't have thought to ask about, and I probably wouldn't have thought to ask about until we went into the field.

• 4:53Speaker 01

  And it's really interesting because when you think about, you know, what's going to cause you to have, you know, high vacancy or a lower sale price, often it is that competition. But, you know, when we look at a development site and it might have 20 or 30 in it, people think, oh God, that's, you know, that's a huge number. It's actually more common that you have this kind of issue when you're talking about major apartment complexes, but we take that rule of the apartment complex and apply it to something else because how do we quantify what's big or small?

• 5:23Speaker 00

  Well, one of the things I'd say as well is it does depend which suburb you're in.

• 5:27Speaker 01

  Yeah.

• 5:27Speaker 00

  So in Mount Rosskill, 50% of people rent. So you've got shed tons of tenants who are, who are out there looking all of the time, specifically in the suburb as well. So it is a little, little suburb specific now.

• 5:38Speaker 01

  But then if you take like, if you take that same rationale and say, well, okay, you can just buy a townhouse anywhere. There's a client I was talking to just the other day and they were having trouble renting a townhouse in Lincoln. And that's because everyone in Lincoln, yet there's reasonable people that rent fewer than Mount Rosskill, but most of them want to rent a house because that's where you live out there. So you've got to be really considered about what it is and where it is, not just say, oh, well, this rule works here, so it has to work everywhere.

• 6:05Speaker 00

  Yeah. And just for, for people who don't live in Canterbury, Lincoln's like a little satellite town, not too far away from Christchurch at all, but it is more where people would typically live in a house. Now, what are some of the things that people might miss when they're just looking at a floor plan that is actually really quite important?

• 6:22Speaker 01

  So some of the things that the property team will pick up when they're working with a developer before the launch of a project might be things like just to make the property more livable from a practical standpoint. So things like shelving in your hot water cylinder cabinet or pantry size is another big one. Like if you've got a four bedroom townhouse or a three bedroom townhouse, you probably want more pantry size than a one bedroom unit and you need to build accordingly. Other things like-

• 6:48Speaker 00

  Just on that, because it's real fascinating. I was going around some two bedroom townhouses and the only space for your food was above and below the bench. Whereas if you're in a normal house that most of us would have been in before, typically you would have an entire pantry that goes, you know, from top to bottom and you've got space to put all your stuff.

• 7:08Speaker 01

  Yeah.

• 7:08Speaker 00

  Now, this development that I was looking at had built that in because I was like, yeah, developers often do miss that.

• 7:14Speaker 01

  Yeah, it's really interesting when you've got compact areas like often townhouses do, where they will just kind of squeeze things in rather than think about what's practical. The other one is like weird places for the microwave. The number of times that I've seen the microwave positioned in such an awkward area where it's too high or too low to be practical is amazing.

• 7:36Speaker 00

  Just on pantry size as well, sometimes people say, okay, where are the, where are the tenants or the people who are going to live here going to put their food? They say, oh, above the bench space. But then you open some of these cupboards, oh, there's the range hood because you've got to have a big vent for the range hood and that takes out two of your best cupboards. So believe it or not, pantry size is something you could look out for, but you probably wouldn't see it on the floor plan unless you're looking for it. And the other, in the field Friday, where I was talking about the townhouse that had been standing up for about five years, but now the back garden's messed up because they'd used cheap topsoil. You might not see astroturf out the back.

• 8:11Speaker 01

  Yeah, so depending on whether or not you can get this signed off by the council, because they, they do actually prefer lawns. But if you can get astroturf signed off or, or just a low maintenance garden, that's not going to require the tenant or the owner to take care of that upkeep, that will make the property a lot more pristine in a few years' time.

• 8:29Speaker 00

  Well, interestingly enough though, I wanted to understand the differences between, you know, quality of developers. So I asked about this. There's obviously differences in quality between developers. What are some things you guys do that some other people don't do?

• 8:45Speaker 04

  Within the house itself, there are fully tiled bathrooms. Better storage solution, so not just your basic standard wardrobes. We actually go and put more wardrobes in there. So for every house that we have balconies, we've now added an outdoor blind.

• 8:59Speaker 01

  What's an outdoor blind?

• 9:00Speaker 05

  Let's just pretend this is our balcony here, right?

• 9:02Speaker 04

  Yeah.

• 9:02Speaker 05

  Usually with a balcony, it's great to have for three months of the year. Right, you use it for summer, awesome. Then you're just not going to use it because rain's going to come in. You can't fit furniture outside, it's just a nightmare. What we've actually done, we've got a really sturdy, it's like a weatherproof covering that comes down. It clips down to the balcony and that now protects you from all of the weather. And they've also put a heater in outside.

• 9:23Speaker 01

  Outdoor heater as well.

• 9:24Speaker 05

  Furniture outside, you can use it year round and it's actually every time.

• 9:27Speaker 01

  That's quite a good idea. So basically what you're saying is that will enclose the balcony area. So now I've got another, let's say, I don't know, what a balcony would be, 15 square metres? Another 15 square metres of livable space all year round.

• 9:41Speaker 00

  Because you know what's really annoying when you've got outdoor furniture? This happens to my outdoor furniture.

• 9:47Speaker 01

  Oh, I know what you're saying.

• 9:48Speaker 00

  And then you can't use it. It's really annoying. So these are just some things you can look out for if you are looking at buying off the plans. What happens though, if there isn't anything even partially built? Because a few years ago, I went to look at a development site and there was nothing built, right? It was all just a field. But then what I noticed was there was a tavern that was right next door. And so I'm like, okay, I didn't necessarily see that as I was looking on Google Maps. And when I say a tavern, I'm not talking about a gastropub. Who is just a little bit on the cheapest side, dare I say it? That's not necessarily going to stop me from purchasing, right? But going and doing a site visit, even if nothing has been built, can just give you a better feel

• 10:32Speaker 00

  for the area and what actually is there. Because what might not be that obvious on Google Maps can be quite obvious when you actually do that drive by.

• 10:41Speaker 01

  Yeah, and I also think, like, thinking back to some of the times that I have actually gone to see properties before I've invested. Getting a feel for what the neighbouring suburbs are like is quite useful as well. Like if you, again in another podcast, we were talking about, you know, some of those gentrifying areas. You often can't see it by looking at the area itself, you've got to go next door.

• 11:03Speaker 00

  So then what I did was I headed down the road to another development. This one is a completely finished property. And often if you are buying a property off the plans, you might go and look at the, stand in the field and look around and be like, okay, this is cool. You stare at it for two minutes and then you think, righty, I want to see something finished. So you might go and look at the developers' finished properties as well. And so I headed down there to go and look at another property. And I asked this developer, you know, what might somebody miss here on the floor plan? So it's 2550, yeah.

• 11:36Speaker 01

  Yeah, 2550.

• 11:38Speaker 06

  2.4 is normal.

• 11:39Speaker 01

  2.4.

• 11:40Speaker 06

  Makes a hell of a difference. And what it does do, it lifts the windows higher, which means more lighting.

• 11:44Speaker 01

  Yeah, I noticed that these windows are quite large, aren't they? And what did he say at the start, I missed that?

• 11:49Speaker 00

  So what are you saying is that in this specific property, the height of the walls, the stud, the roof,

• 11:56Speaker 01

  Yeah.

• 11:57Speaker 00

  was 2.55 metres as opposed to 2.4 metres, which would be standard. And so because you wouldn't necessarily see on the floor plan, okay, there's a bit more space when you walk in, that means the windows can be bigger, that means you can get more light in. That means it can feel just that little bit more premium, I want to say.

• 12:17Speaker 01

  Yeah.

• 12:17Speaker 00

  And I was like, oh yeah, that probably is something that you might miss on the floor plans. You might look at the floor plan, but not how high

• 12:24Speaker 01

  Yes.

• 12:24Speaker 00

  the property is necessarily going to be and see that, okay, that could let more light in. The other thing that I really wanted to understand about is, you know how a few years ago, you don't see it quite as much as you do today. But a few years ago, there were quite a few articles about townhouses overheating because they are so well insulated now. And often there might be a heat pump downstairs, but not upstairs. And so these guys had built something and that was quite interesting.

• 12:49Speaker 01

  Come talk to me about this.

• 12:50Speaker 06

  A heat pump. The problem we have with these things is that because of all the double glazing and all the extra insulation, these things, they're hot in the summer. So this cassette is like a heat pump that heats the whole top area. It mainly cools.

• 13:05Speaker 05

  But a lot of other homes will have a heat pump just in one of the bedrooms. Yeah. And that obviously means that that bedroom is catered for, but it doesn't cater for anything else upstairs. So this mitigates it by having four-way flow action.

• 13:18Speaker 00

  So it was kind of in the ceiling and it, and it kind of directed cold air in four directions. Whereas if I think about a property, this one was being sold to an owner occupier in the previous development I'd looked at, there was a heat pump upstairs, but it was only in one of the bedrooms. So, so if you're trying to cool down the, the whole top level of the property, it might not be that effective.

• 13:42Speaker 01

  You've got to keep the doors open to be able to make that work.

• 13:44Speaker 00

  Well, even if you've got a cassette, which is what, I've never heard of this phrase before anyway. Anyway, it was in the, it was in the ceiling. This was in the hallway.

• 13:51Speaker 01

  Yeah.

• 13:52Speaker 00

  You've still got to have your doors open if it's going to cool the whole thing, the whole top floor. But it was more likely to be effective in doing that because it was in the hallway as opposed to being only in one bedroom, yeah? I was like, okay, that's something you might miss on the floor plan that we're going to have these, this extra thing in. Now, the other thing I wanted to ask about was what they call settling. Do you know about the settling?

• 14:15Speaker 01

  Uh, is this about when you buy a house and when, when it's going to settle into the land and there'll be movement?

• 14:20Speaker 00

  And so you get small cracks in the paint, especially around the staircases, where the weight of people walking up and down the stairs starts to crack some of the paint. Have you heard about this?

• 14:30Speaker 01

  Yeah, that's why you have a defect period.

• 14:32Speaker 00

  Well, I've always been sceptical about people saying anything settling. Do you ever watch the TV show called White Gold?

• 14:40Speaker 01

  No.

• 14:40Speaker 00

  Well, hang on.

• 14:41Speaker 01

  Oh, sorry, sorry. How about with Vinnie selling the blinds?

• 14:45Speaker 00

  Because we've talked about this, right?

• 14:47Speaker 01

  Great show.

• 14:48Speaker 00

  So what?

• 14:48Speaker 01

  Great show.

• 14:49Speaker 00

  So what happens in this, in White Gold? It's these, these dodgy salespeople who sell conservatories over in the UK, right? And these are terrible, made out of like PVC. And one old lady gets the salesperson back and says, oh, it's, it's leaking like a sieve, like it's just so leaky. She says, that's just, it's settling, it's just settling in. And so anytime somebody tells me that something's settling, I roll my eyes. But then I said, well, what is it that, that happens? And they said, well, you've got to remember the first time that a property's built, it's got to go through all four seasons. It's going to be hot, it's going to be cold. So the property will expand and contract and that's where you can get some.

• 15:29Speaker 00

  We're talking about small hairline cracks within paint, especially around the stairs if people are going up and down. And so that's why you do have the defect period, so that the developer comes back and paints that all back up to make sure that it is all brand new. Because that's just some of the reality of building a new house. So I asked these guys about that.

• 15:47Speaker 01

  When I was going through some older rental properties the other day, when I say older, I'm talking about like maybe three or four years older. One of the things the property managers were talking to me about is when the house, what they called settles and you might get cracks.

• 15:58Speaker 05

  We have a client portal and any defect that comes up in the one-year process, they get logged on there and after a year, we come through and tidy up all the cracks, settling, like you called it. And we do that right at the end so that all the trades come in at one time. So it's not being disturbed throughout a tenancy.

• 16:20Speaker 01

  Yeah, that's quite a reasonable way of doing it. I know that sometimes when a purchaser of a new build comes to hand over the keys from the developer, often they get quite panicked about like some of those minor defects. And so you are better to actually get them all dealt with at one time to make sure that you don't disrupt the tenant. Now, obviously that means that it still has to be livable in the meantime, but there are going to be natural things that happen because property settling.

• 16:47Speaker 00

  And, and when we say settling, we're talking about needing to go through all four seasons, right? Because all building materials will naturally expand when they're hotter and then contract when they're colder. And so you want to go through some of those seasons. So you know that all of the, the hairline cracks that might happen, and we're just talking about minor ones here, right? But you want them to happen so that you can then fix them rather than having to come back and do it again.

• 17:10Speaker 01

  I actually think there's also something to do with, like wood will have moisture in it. It's like to such a minor standard that it's completely appropriate, but as time goes on, that water will dissipate.

• 17:22Speaker 00

  And I suppose the reason we're talking about these things is the thing about paint is everybody can see it, right? And so even though it might be some small cracking, you still want to be aware that it could happen. So you're not disappointed when it does and you know that, okay, this is the sort of thing that the developer is liable to come back and fix. We just need to make sure that it is documented before that 12-month defect period is up. And over the last 15 minutes, you've learnt never buy a property off the plans without checking this. You've come with me as I go into the field to look at a development site and the crucial features that property developers always miss. Right, let's wrap it up there, but please don't forget to write a review and subscribe to the podcast. Really does help us get the message out to more people.

• 18:09Speaker 00

  Thanks for listening to the Property Academy Podcast. I'm your host, Stephen Knight.

• 18:13Speaker 01

  And I'm Andrew Nicoll.

• 18:13Speaker 00

  We're going to be back here tomorrow with even more daily strategies, tactics and insights to help you get the most out of your new property market. Until next time.