Andrew Nicol is a high-profile investor and managing director of property investment firm Opes. He is also a classic Kiwi success story – from a working class background his passion, drive, and love of property has taken him from blue collar to blue chip.

As a young man in working class Waltham, Nicol wasn’t brought up surrounded by property investors. “My family had one house and a big mortgage,” he says.

“But although my financial literacy was very low, I always understood numbers.” Nicol attended integrated school Middleton Grange, and his understanding of numbers led him to naturally assume that a degree in commerce was calling. But fate would lead him in a different direction.

“I entered a competition when I was at school where people had to assume the role of the Reserve Bank,” he says. He obviously did a good job, because the bank who ran it said he would be perfect for a job with them.

“But I didn’t really like that bank because I didn’t think their level of service was great. So, I sent my CV to two other banks, and was invited to meet the BNZ recruitment team.” Starting off as a teller (“I was well over my head at the start,” he laughs), he says the system enabled him to learn a lot about sales. “They were really good at needsbased selling, at matching people to products,” he says.

The Power Of VHS

His sales education was reinforced by nightly viewing of US sales svengali Marty Cohen’s education videos.

“My partner doesn’t even know what VHS is,” laughs Nicol.

“But the video was so great at helping identify leads.”

By the age of 19, Nicol had worked his way up to branch manager in Lyttelton. And he was finding his niche, courtesy of the “godfather of mortgages”, Tony Mounce.

“I realised that mobile mortgage management was something that I really enjoyed; you’d spend a few minutes with the clients and then go back to the office and make the numbers work.”

Nicol had found his niche ... property. And at just 19 he decided to dip his toe in the water himself, purchasing a four-bedroom property, in appalling condition, in a rough neighbourhood. He saved a $10,000 deposit by “doing the stuff people say you should do to save a deposit. I hardly went out. I limited the amount I spent on alcohol. I lived at home. When I did finally move out of the main house I lived in a granny flat in my parent’s backyard. Nothing fancy. And I saved hard.”

He worked at the bank during the day and renovated in the evenings.

“It cost me $220,000 and I spent $15,000 on the renovation. I was intending to buy and hold (and was looking at a yield of about 10%), but when I was talking to a property manager, they told me it would be better to sell, because I’d done a nice job and because of the area I’d probably get bad tenants.

“I didn’t take his advice, and I did get bad tenants! But it was a good lesson.”

Twists And Turns

This was the start of an investment journey that would take several twists and turns.

And he hasn’t been risk adverse when it comes to his investment decisions, able to find opportunities where others would see obstacles.

The Christchurch earthquakes, for example, offered the savvy investor a unique challenge.

“A lot of structurally compromised properties were selling under value at that stage,” he says.

“Insurance companies were paying out, say $400,000 for a house that was worth $500,000. So, we would offer say, $200,000 and they would have made an extra $100,000 and feel like they were doing really well.”

Then, Nicol explains, all he needed to do was bring the house up to building code. He gives an example of one property he managed to add significant value to over a short time.

“I purchased one property for $465,000 and the repairs in this case were $78,000. It wasn’t market value, but I paid them a decent amount of money, and then the lawyers cost me about $3,000, and some holding costs, about $6,300. And there’s the interest while I was having the repairs done. So the total cost came to $552,300.

“We recarpeted, painted, all those kinds of things, it looked much nicer, the valuation came in at $800,000. So I’d created $247,700 worth of equity in that project over four months.”

He admits this was a high risk strategy, and not for everyone. “There could have been another earthquake, and I could have been left with uninsured and majorly damaged homes that I couldn’t fix.

“But within the group I was investing in, we made over 100 transactions over this period.”

Humble Beginnings

It was the start of a property investing journey that would take him far from his humble beginnings. And alongside his investing, a new company was born – Opes – that would go on to offer everything from property coaching to mortgage advice, with Nicol at the helm.

He would work alongside investors, educating them on the rules of the property game, helping them to find new investment properties, at the same time as building up his own portfolio.

Nicol did the hard yards with his buy-renovate-hold strategy, alongside growing Opes. But in 2022 he admits that he’s now “a lazy investor”.

“Around five years ago I decided to change my focus to brand-new properties,” he says. “It really just makes life simpler.”

He admits this “isn’t for everyone”, but says the days of buying old properties and renting them out with only minor renovations are long passed.

Opes works with clients to find new builds that represent real opportunities, but says a lot of developers have grown greedy and are charging exorbitant prices for properties that may lose their value.

Nicol says the next few years are likely to be a “scary time” in the market; but this is just part of the natural property cycle.

He believes the phasing out of interest deductibility won’t bite hard for around two full years, and that investors will really be reassessing their portfolios after this time has elapsed.

“All the government’s changes are really a two-edged sword,” he says. “They say that they are trying to help out the people who are suffering, but the regulations and requirements put in place will just lead to people selling their investment properties. This will lead to higher rents and less stock, which will hit those already suffering the hardest.”