Warehouses, factories and industrial units are commercial security, so lenders look at the zoning, access, environmental history and how easily the property could be leased again.
Lenders check the zoning and permitted use, any contamination risk, how specialised the building is, and either the lease or your own business’s financials.
They lend a smaller share of the value than on a home, and less again on specialised buildings and large sites, while a long lease to a solid tenant helps.
Part of the investment property loans guide.
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For upgraders and investors, how much of your home could work as a deposit.
That usable equity could work as a deposit on an investment property or renovation, structured so your properties aren’t tied together unnecessarily.
Usable equity assumes lending to 80% of your home’s value against your current loan. Lender policy and serviceability decide the real figure.
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Usually a smaller share of the value than for a home, and less again for specialised buildings, large sites or contamination concerns. A long lease to a solid tenant can improve the terms on an investment purchase.
Equity in your home or another property can provide additional security, though that puts the other property at risk if the loan is not repaid.
Industrial property is often sold with GST payable, or as a going concern where a lease continues, and the difference changes the cash you need at settlement. Ask your accountant and conveyancer to review the contract and any existing lease before you exchange.
The lender will want a copy of the lease as well.
Usually more than for a home loan, because lenders lend a smaller share of commercial property’s value. The property, any lease and your finances set the figure, and equity in other property can reduce the cash needed.
Yes. Strata warehouse and workshop units are common purchases for trades and small businesses. Lenders assess the business, the unit and the strata scheme together.
Possibly, but contamination from past uses can reduce the value, narrow the lender options and lead to a requirement for an environmental report or remediation. Check the history before you exchange.
On the lease as much as the buyer: who the tenant is, the rent, how long the lease runs and any options. Many lenders test whether the rent covers the interest with a margin, called interest cover.
Not much: lenders treat both as industrial property. A building fitted out for one particular process is harder to lend against than a general warehouse, because fewer buyers or tenants could use it.
Buying an office or shopfront instead? See office property loans and commercial property loans.
Charles can check how lenders would treat the property and any lease, the deposit it needs, and whether equity elsewhere could reduce the cash required.
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General information only, not credit, tax, planning or legal advice. Commercial lending policies, lending ratios and valuation approaches for industrial property vary between lenders and change over time. Zoning and permitted uses depend on the site.
