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Commercial property
Turn the rent your business is paying into an asset.
Buying the warehouse, workshop or shop your business already occupies is the most achievable commercial purchase most owners will make — and the one they put off longest, usually because nobody has shown them the numbers.
Commercial property
Years of rent, and nothing to show for it.
Most business owners in Western Sydney have been in the same premises for years. They know the roller door sticks, they know what the power bill runs to, and they have paid for that building several times over without ever owning a brick of it. Buying it is often the single biggest change a business can make to its own balance sheet.
I have spent twenty-one years in lending, with more than twenty-five lenders on one panel, and I work with the self-employed and business owners across Western Sydney every week. You deal with me from the first phone call to settlement — the same person who reads your financials is the one who argues your case to the lender.
Commercial lending works differently from a home loan, and the differences are the part nobody explains. The deposit is larger, the term is shorter, and the valuation is far more a matter of judgement. None of that makes it harder than it should be. It just means the numbers need to be in front of you before you make an offer, not after.
Start to finish
How it works
The same five steps every time, and the same person at every one of them.
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A conversation, not an application
Thirty minutes. Nothing touches your credit file. What the business does, what it earns, what premises you're looking at, and whether you'll occupy it or lease it out — which changes almost everything that follows.
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The numbers, in writing
What you can borrow, the deposit actually required, and the repayment over a commercial term rather than a thirty-year one. Compared, where it's useful, against what you're currently paying in rent.
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A shortlist, and the reasoning
Commercial lenders vary far more than residential ones — on how much they'll lend against the property, how long a term they'll offer, and what they make of your industry. Usually two or three, with the reasoning attached.
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Valuation and lodgement
The valuation carries more weight here than on a house, and it is the step most likely to move the deal. I present the business the way a credit assessor needs to read it, and manage the valuation rather than waiting to hear about it.
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Settlement, and every year after
I stay on the file to settlement. Commercial loans also get reviewed and repriced by lenders periodically, which is a moment most owners miss — so it goes in the diary rather than arriving as a surprise.
Five ways this starts
The situations I see most often
| Situation | Who it suits | What I'd tell you |
|---|---|---|
| Buying the premises you rent | An established business, settled where it is | The most straightforward commercial purchase there is. You know the building, and lenders generally take a more favourable view of an owner-occupier than of a speculative buy. |
| Your first commercial investment | An investor moving across from residential | Yields are usually higher than residential and so is the risk. The lease is effectively part of the security, so a weak tenant or a short term changes what you can borrow. |
| Buying through your SMSF | A fund with the right structure already in place | A popular route for business owners buying their own premises, with its own lender panel and its own rules. |
| Refinancing a commercial loan | A loan that has simply rolled over for years | Commercial loans get repriced at review, and the review is rarely in your favour unless somebody pushes. The same loyalty problem as a home loan, with larger numbers attached. |
| A second site | A business outgrowing where it is | Whether to use equity in the first property or keep the two separate is the decision that matters, and it is much easier to get right before you buy than after. |
Financing the equipment inside the building rather than the building itself? That's on the truck and equipment finance page.
Straight about it
What it costs you
Commercial finance works differently from a residential loan, and this page should say so rather than leave you to find out. On a home loan the lender pays the commission and you pay nothing. On commercial lending a brokerage fee is common across the market.
And the purchase has its own costs
- Transfer dutyPayable on commercial property as it is on residential, calculated on the purchase price.
- ValuationCommercial valuations are more involved than residential ones and are generally paid for by you, often up front.
- Legal and due diligenceContract review, and for an investment purchase, a proper look at the lease before you commit to it.
- Lender feesApplication, establishment and sometimes annual line fees, which are more common in commercial lending than residential.
- GST, possiblyCommercial property can attract GST, and whether it does depends on the transaction. It is a question for your accountant, and it is much better asked before you sign than after.
Later, not now
What to have ready
Nothing is needed for the first conversation. This is what we'll want by lodgement.
- The businessTwo years of financials and tax returns, recent BAS, and business bank statements.
- YouPersonal tax returns and notices of assessment, photo ID, and a list of personal debts and limits — directors are assessed personally as well as through the company.
- The propertyThe contract or listing, recent rates notices, and — if there's a tenant — the lease and the rental history.
- If you're buying what you rentYour current lease. It shows the lender exactly what you have been paying and for how long, which is a useful thing for them to see.
No dead ends
Where it gets hard, and what I do about it
Commercial deals stall for different reasons than home loans do, and almost all of them are visible before you make an offer.
Tell me where you're stuck-
The deposit is larger than you expected
Lenders advance a smaller proportion against commercial property than residential, so the cash required is meaningfully higher than people assume coming from a home loan. It is the single most common reason an owner decides it is out of reach, usually without having checked.
What I do about itEquity in a home or another property can cover the gap, and often does. The important part is how it is arranged: wherever possible the properties stay separately secured, so a sale or a refinance later doesn't mean unwinding everything at once.
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The term is shorter, so the repayment is higher
A commercial loan is rarely written over thirty years. Over a much shorter term the repayment is higher even at the same interest rate, and that is what the business has to carry every month — not the headline rate.
What I do about itWe model the real repayment against what you're paying in rent now, so the comparison is honest rather than flattering. Terms vary between lenders more than people expect, and for an owner-occupier some will go considerably longer than others.
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The valuation is a matter of judgement
Residential valuations have comparable sales down the street. Commercial ones lean on the lease, the tenant, the yield and the valuer's view of the area — which makes the number less predictable and a short valuation more likely.
What I do about itDifferent lenders use different valuers and take different views of the same building. If a number comes back short, it is often worth another opinion before the deal is abandoned, and that is a conversation I'd rather have before the contract is signed than after.
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Your financials are the application
There is no payslip here. The lender is assessing the business, and your accountant has spent the year legitimately keeping its taxable profit down. A business doing perfectly well can present as a thin file.
What I do about itThis is most of what I do. Add-backs for depreciation, one-off costs, director's wages and retained profit, each one evidenced and each one defensible if the assessor asks — the same work set out on the home loans page, applied to a larger number.
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The question of who should own it
In your name, in the company, in a trust, or in the self-managed super fund? The answer affects tax, asset protection and what happens when you eventually sell, and it is close to impossible to change afterwards without cost.
What I do about itThat decision belongs to your accountant, not to me, and I won't pretend otherwise. What I will do is tell you which structures the lenders on my panel will actually lend to, and what each one costs in rate and in deposit — because an elegant structure no lender will fund isn't much use.
I'm happy to have that conversation with your accountant directly.
Find out what buying it would actually cost.
One call, no credit enquiry, no obligation. Bring your current rent and I'll show you the comparison properly.
Asked on the phone
Questions people are too polite to ask
If yours isn't here, call and ask it. Ten minutes on the phone beats a year of wondering.
Ask Alen directlyHow much deposit do I need?
More than for a house. Lenders advance a smaller proportion against commercial property, and how much smaller depends on the property type, the location and whether you'll occupy it or lease it out. A standard industrial unit in an established area is treated quite differently from something specialised.
Equity in another property can make up the difference, which is how a good many of these purchases actually get done.
Is the interest rate higher than a home loan?
Generally yes. Commercial lending is priced for more risk, and it is also priced individually — two businesses buying similar buildings can be quoted quite differently depending on the lender's view of the industry, the tenant and the borrower.
Because it is negotiated rather than advertised, having more than twenty-five lenders to put it in front of matters more here than it does on a mortgage.
How long are commercial loan terms?
Shorter than a residential mortgage, which is the thing that surprises people most. Over a shorter term the repayment is higher even at the same rate, so the term matters as much as the rate when you work out what the business can carry.
Lenders differ on this, and for an owner-occupier some will go considerably longer than others.
Can I buy my business premises through my super fund?
It is a well-established strategy for business owners — the fund owns the building and the business pays rent to the fund rather than to a landlord. It has to be set up correctly, the rent has to be at market rate, and the lending works differently from an ordinary commercial loan.
The structure itself is a question for your accountant and the fund's adviser.
Do I need a tenant lined up?
If you're occupying it yourself, you are the tenant and that generally helps your application. If you're buying it as an investment, the lease is effectively part of the lender's security — a strong tenant on a long lease supports the valuation and the borrowing, and a vacant building or a short remaining term does the opposite.
Have the lease reviewed before you make an offer, not after it's accepted.
Is GST payable?
It can be, and whether it is depends on the circumstances of the sale. There are arrangements under which a commercial property sale is treated differently for GST, and whether yours qualifies is a question for your accountant.
What matters from my side is simply that it gets asked early. It is a large number to discover late, and it affects how much you need to borrow.
Also on the site
One broker for all your financing needs
Commercial
Truck & equipment finance
The plant and vehicles that go inside the building — and why the way that debt is structured decides what you can borrow next.
Let's talk
Request a call back
Bring your current rent and the address you've got your eye on. No calendar to wrestle with — I'll call you.
Stop paying off someone else's building.
Twenty-one years in lending, more than twenty-five lenders, and one person handling the premises, the equipment and the house.