Off-market property finance for business and investment buyers

Some of the best property deals never appear on a listing site. A selling agent rings three buyers they trust. A neighbouring business owner mentions they want out. A developer offers the last two units in a block to someone who can settle without fuss. Off-market deals reward the buyer who can say yes quickly and mean it.

That is the whole bargain. The vendor gives up a public campaign, and possibly a higher price, in return for speed, privacy and certainty. If your answer is “yes, subject to finance”, you often lose the deal to someone who doesn’t need the condition. This page explains how business and investment buyers use property they already own to fund off-market purchases, and what to check when there is no public process to lean on.

Why do off-market vendors want unconditional offers?

A vendor selling quietly usually has a reason: a deadline of their own, a wish to avoid a long campaign, or a tenant they don’t want disturbed. What they want back is certainty. In practice that means:

• A short time to exchange, often days rather than weeks;
• No finance clause, or a very short one;
• A cooling-off waiver where cooling-off would otherwise apply;
• A firm settlement date, sometimes shorter than usual.

Cooling-off rules are mainly a residential protection and vary by state. The NSW Government says residential buyers have five business days after exchange, ending at 5pm on the fifth business day, and that the period can be waived by giving the vendor a section 66W certificate. A buyer who withdraws during that window pays the vendor $250 for every $100,000 of the price. Queensland’s standard home contract also has five business days, starting when the buyer receives the contract signed by both parties, and the buyer can waive or shorten it by written notice. Many commercial contracts have no cooling-off at all.

The practical point is the same everywhere: once you exchange without conditions, you are bound. The money has to be certain first.

How does off-market funding work?

1. Get the essentials from the vendor or agent. Price, deposit, settlement period, leases, GST position.
2. Enquire with us at once. The property you own, what is owing on it, the purchase details and your exit.
3. Do your due diligence in parallel. Your solicitor reviews the contract while funding is being arranged.
4. Receive terms and a Letter of Offer. You now know exactly what you can commit to.
5. Fund the deposit, if needed. A short loan over property you own settles before exchange so the deposit is in cash.
6. Exchange unconditionally.
7. Settle. A private first mortgage over the purchase, alone or with another title, funds the balance, and any deposit loan can be rolled into it.

Which structure fits an off-market purchase?

What you need	Usual structure	Security
Deposit only, bank funding the balance	Caveat loan or second mortgage	Property you already own
Balance at settlement, bank too slow	Private first mortgage	The purchase, sometimes plus another title
Deposit and balance together	Short deposit loan, then a first mortgage at settlement	Existing property, then the purchase
Gap between the bank’s loan and the price	Second mortgage or caveat	Property you already own

Because a caveat or second mortgage sits behind another lender, it is generally priced above a first mortgage over the purchase. If the bank takes longer than planned, a caveat loan can be converted into a registered second mortgage. The caveat loan vs bridging loan comparison explains where each fits.

How does private funding compare with the alternatives?

Option	Works off-market?	Trade-off
Property-secured private loan	Yes: can be confirmed before exchange	Short term; higher cost than a bank
Bank loan with a finance clause	Often loses to unconditional buyers	Vendor may refuse the condition
Bank loan without a finance clause	Risky if approval is not formal	You are bound even if the bank declines
Deposit bond	Can replace a cash deposit if the vendor accepts it	Does not fund the balance; issuer has its own criteria
Selling another property first	Only if the timing lines up	Rarely fast enough for an off-market deal

Many buyers combine two: private funding for certainty now, and the bank as the exit once its approval is formal. If you already hold the bank’s approval and only the deposit is the problem, our page on funding property deposits covers that narrower case, and the equity calculator shows roughly how much headroom your existing property has before you talk to us.

What due diligence matters more when a deal is off-market?

With no public campaign, there may be no competing buyers’ searches and no agent’s marketing pack. Your own checks carry more weight.

• The contract. Read the special conditions, the deposit terms and the settlement date. Ask your solicitor about any clause that lets the vendor rescind.
• Leases and tenants. For tenanted commercial property, get every lease, the rent roll and any arrears. These drive the exit.
• Zoning and approvals. Confirm the use you plan is permitted.
• Building and pest or condition reports. Off-market vendors often sell as-is.
• GST. The ATO treats a sale of tenanted commercial property as GST-free only if the going-concern conditions are met and both sides agree in writing; otherwise GST is usually added to the price.
• Duty. Revenue NSW says transfer duty is due by the earliest of settlement or three months after the contract is signed. Our page on funding stamp duty compares states.

Your private lender does not replace your solicitor’s checks, but having funding settled early leaves more time for them.

Who does off-market funding suit?

It usually suits:

• business owners buying premises they have been offered privately, perhaps by their landlord;
• investors buying commercial, industrial or residential investment property from a vendor who wants speed;
• developers picking up a site or completed stock without a public campaign;
• buyers whose bank is supportive but cannot meet the vendor’s timetable.

It usually does not suit:

• buyers who need a finance clause because they have no equity elsewhere;
• anyone buying a home to live in, which is outside what we fund;
• buyers without a believable way to repay within the term.

When is a private loan the wrong tool for an off-market deal?

• The vendor will wait for your bank. If the vendor accepts a finance clause long enough for formal bank approval, use the bank.
• The price only works because it’s quiet. A vendor who avoids marketing may be testing whether you will overpay. Get an independent view of what similar property sells for.
• The exit depends on a bank that has not seen the property. If the bank may lend less than you expect on this asset, keep a second exit ready.
• You haven’t had time for due diligence. Speed is not worth buying a problem. If the vendor won’t allow time for basic checks, walk away.

What it costs (without the guesswork)

There is no published price list. Each loan is priced on its security, LVR, term and exit, and we aim to offer the sharpest price that deal supports. The parts are:

• interest for the term, which can be prepaid or capitalised so there may be no monthly repayments, or paid monthly;
• a small assessment fee that varies per loan and is shown on the Letter of Offer;
• legal, registration and discharge costs.

No formal valuation required removes a third-party fee and a wait that off-market timetables can’t afford.

Illustrative example: an off-market strata office

Illustrative: a Gold Coast accounting practice is offered the strata office it leases by its landlord for $900k, provided it exchanges within five days and settles in 21. The practice’s bank has said yes in principle but needs six weeks. The principal owns an investment townhouse worth about $780k with $310k owing to a bank, and the practice has $120k in cash. Taking the office and the townhouse together (about $1.68m), an illustrative 70% LVR band supports total secured debt of about $1.18m; less the $310k already owing, that leaves room of about $866k.

Step	Amount
Before exchange: caveat loan over the townhouse	$100,000
Less assessment fee and legal costs	$(5,000)
Deposit paid at exchange	$(90,000)
Held towards settlement costs	$5,000
At settlement: private loan, first mortgage over the office plus second over the townhouse	$830,000
Practice’s own cash	$120,000
Balance of the price	$(810,000)
Duty and legal costs (with the $5,000 held)	$(41,000)
Pays out the caveat loan and its interest	$(104,000)

About $36k of the illustrative headroom is left for interest, which is capitalised until the bank’s approval is formal. The bank then refinances the office and the private loan is repaid in full.

The figures are round and for illustration only.

Documents you’ll need

• The draft contract and any special conditions
• Leases, rent roll and outgoings for tenanted property
• Photo ID for every borrower, director and security owner
• Company or trust details for the buyer
• Title details and loan statements for any property you are offering
• Evidence of the exit: a bank’s approval in principle, a sale plan or business accounts

How fast can it settle?

With a complete file, loans up to $5m can be possible within 24–48 hours, and deposit-sized amounts from $20k to $250k can be possible the same day. Off-market deals tend to stall on signatures and documents rather than the decision, so have IDs, leases and loan statements ready before the first call. If your settlement date is already close, read settling a purchase on time, and for commercial buyers see buying commercial property fast. Queensland buyers on the coast can read about private lending on the Gold Coast.

Offered a deal that won’t wait? Tell us the purchase and the property you own and a specialist will confirm what you can commit to.

Offered a property before it hits the market? See if you qualify

Enquiring involves no credit check, and we don’t forward your details to other lenders. A specialist reads your enquiry and comes back with a straight answer. Our lending partner fundU is the direct lender and assesses the property itself.

Be precise about the purchase price, the deposit, the settlement date and everything owing on the property you’re offering. Getting those right the first time is what makes a quick, firm answer possible. Make your enquiry.