Navigating private purchases: A product for savvy Real Estate Investors

Private property sales, often conducted between family members, close friends, or via word of mouth, present unique opportunities for Real Estate Investors. These transactions allow buyers to bypass hefty realtor fees and negotiate directly, often leading to significant savings. For seasoned investors with in-depth market knowledge, these deals can be especially lucrative.

Take, for example, a recent client—a self-employed RE Investor with extensive experience in construction and property flipping. He identified a private sale opportunity in Halifax, Nova Scotia, with a purchase price of $360,000. However, the appraisal revealed the property’s current value at $400,000, highlighting immediate equity potential. The seller wanted to unload the property quickly, and was willing to sale at a slight discount to make that happen.

While many traditional lenders would base their financing on the lower purchase price, we recognized the client’s strong track record and considered the higher appraisal value. We provided a loan of $300,000, which represented 75% of the appraised value, or 80% of the average of both values. Additionally, the client secured the loan by offering another property as collateral, which further improved the loan-to-value ratio and expedited the approval process.

With plans to renovate using his own funds, the client’s exit strategy involves selling the upgraded property—a classic fix-and-flip approach. This case demonstrates how private purchases can be a strategic move for savvy investors, offering flexibility and opportunities for substantial returns.

For more information on how we can help, send us a note at contact@keycap.ca!