A commercial property loan can unlock stable cash flow & long-term growth. Whether purchased through an SMSF, company or directly. Each structure offers unique advantages and trade-offs.
Commercial real estate market of Australia continues to attract investors who are looking for predictable rental income, capital appreciation & portfolio diversification. Whether you are buying a warehouse or office or retail space. A well define commercial property loan can help you grow your capital and scale your investment strategy.
Why Invest in Commercial Property?
- Stable Cash Flow: Commercial leases also span 3 to 10 years. Providing consistent income
- Higher Yields: Compared to residential property, commercial assets offer stronger rental returns.
- Tenant Paid Outgoings: Tenants also cover expenses like council rates, insurance & maintenance
- Capital Growth Potential: Strategic locations & infrastructure upgrades can drive sustained value.
Ownership Structures: SMSF vs Company
Buying Through an SMSF
Pros:
- Tax Efficiency: Rental income taxed at 15% or 0% in pension phase
- Asset Protection: Property acquired within the fund is shielded from personal liabilities
- Lease to Your Own Business: You can rent the property to your business at market rates
Cons:
- Strict Lending Rules: Most lenders require a 20–30% deposit & may charge higher interest rates
- Limited Recourse Borrowing Arrangement (LRBA): Only maintenance allowed. No renovations with borrowed funds
- Liquidity Risk: Tying up super in one asset may affect retirement flexibility
Buying Through a Company
Pros:
- Lower Tax Rate: Rental income taxed at 30% corporate rate
- CGT Concessions: Small businesses may access capital gains tax discounts
- Asset Protection: Shareholder liability is limited to their investment
Cons:
- No CGT Discount: 50% general CGT discount not available to companies
- Complex Compliance: Companies face higher reporting and regulatory obligations
- Setup Costs: Incorporation and ongoing admin can be costly
Key Loan Features to Consider
- Loan-to-Value Ratio (LVR): Generally capped at 65 to 75% for commercial properties.
- Interest Only Options: May improve cash flow in early years.
- Fixed vs Variable Rates: Choose based on risk appetite & present market conditions.
- Lease Strength: Lenders assess tenant quality & lease duration when approving loans.
How ROVO Finance Can Help?
- Match you with lenders who specialise in commercial property loan structures.
- Help assess whether it is SMSF or company or direct ownership matches to your goals.
- Support with preapproval, compliance & long-term portfolio planning.
Disclaimer: This content is general in nature & does not contain financial, legal or tax advice. You should look for independent advice from a qualified professional before making any investment or borrowing decisions.
