An office purchase is commercial lending: lenders look at the building, the strata scheme, any lease in place and how long the space could sit empty between tenants.
Lenders look at the location and building quality, the lease and the tenant behind it, and vacancy; for an office your business will occupy, they read the business’s financial statements and tax returns instead.
A well-located strata suite with a solid tenant, or with your own business in it, still finances well.
Part of the investment property loans guide.
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Move the sliders to match the property. The yearly costs are everything you pay to own it, before the loan.
Compare the net yield with the interest rate on the loan: below it, the property costs you money each year, which is negative gearing.
Estimates only, before loan repayments and tax. Vacancy, rent changes and costs change the real return. Not financial or tax advice.
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Charles and the team recently assisted me with the refinance of my investment property.
As a first home buyer, I was pretty overwhelmed at the start, but Charles made everything much easier. He explained the process step by step and helped me understand my borrowing options. His professionalism and responsiveness were excellent.
A huge thank you to Charlie for his exceptional support and expertise throughout the process of securing finance for my first home.
Charles Touma, Mortgage Broker.
When your business will occupy the office, the lender assesses the business’s financial statements and tax returns, and the repayments replace the rent you pay now.
Some owners buy through a trust, a company or a self-managed super fund and lease the space to the business, which needs advice from your accountant and a licensed financial adviser first.
Many suburban offices sit above shops or in buildings with apartments. Lenders treat the office suite as commercial security even when the rest of the building is residential, and the mix of uses in the strata scheme can affect the valuation.
Usually more than for a home loan, because lenders lend a smaller share of the value against commercial property. The amount depends on the location, the building, any lease and your finances.
Often, because suites are smaller and appeal to more buyers and tenants. A whole building can still be financed well, but the loan is larger and the lender looks more closely at leasing and vacancy.
Yes. For an investment purchase the rent is central to the assessment. Lenders look at the lease terms and the tenant, and often test whether the rent covers the interest with a margin.
Generally yes: a self-managed super fund can buy business real property such as an office and lease it to a related business at market rent, using a limited recourse borrowing arrangement. The rules are strict, so get advice from your accountant and a licensed financial adviser first.
Often, unless the sale is a going concern with a lease continuing or the vendor is not registered for GST. The contract should say how GST is treated, and your accountant can confirm before you sign.
Looking at industrial space instead? See warehouse and industrial property loans.
Charles can check how lenders would treat the building and any lease, the deposit the purchase needs, and how the repayments compare with the rent you pay now.
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General information only, not credit, tax or legal advice. Commercial lending policies, lending ratios and lease requirements for office property vary between lenders and change over time.
