As a real estate principal, you already understand the value of your rent roll. It provides steady, predictable income and acts as a significant asset within your business.  

Yet, as a business owner, you’re also likely familiar with the ongoing operational costs, especially the monthly rent for your office or commercial premises. While renting has allowed you to run your business comfortably until now, it’s worth asking whether continuing to lease is the right option for your long-term financial future.  

What if, instead of continually paying rent, you could use the equity in your rent roll to purchase the commercial property you currently occupy – potentially without the need for any cash upfront? 

How do you access equity in your rent roll? 

Lenders typically calculate the equity in your rent roll based on its market value. This is determined by applying a multiplier to the annual management income your rent roll generates.  

Several key factors influence the multiplier your lender will use, including: 

• Location of the properties 

• Distribution and types of properties in the portfolio 

• Quality and size of the rent roll, including the number of properties, average rental amounts and landlord retention rates 

• Length of time your business has been operating 

• Economic conditions and market trends  

Once your rent roll’s value is established, lenders will apply a loan-to-value ratio (LVR) to determine how much you can borrow against the asset. If the purchase price of your commercial premises falls within this borrowing capacity, you could potentially buy the property without any cash deposit. 

Whether you purchase the property with or without a cash deposit, here are three potential benefits of ownership compared to continuing your lease arrangement: 

1. Cash flow impact 

When making decisions about your commercial space, one of the most important considerations is understanding the cash flow impact of buying versus renting. Renting offers short-term flexibility, but it also comes with costs that typically rise over time.  

In fact, recent research from CBRE highlights how rapidly commercial rental costs have risen compared to inflation. For instance, in 2024, average office rents across Australia increased by around 10% year-on-year, while industrial and logistics rents rose by 9%. Comparatively, annual inflation was only 3.2% in the December 2024 quarter, according to the Australian Bureau of Statistics.  

On the other hand, buying your premises gives you more predictable expenses, as mortgage repayments – although potentially fluctuating due to interest rate changes – are typically more stable over the long term.   

Moreover, unlike rental costs, mortgage repayments don’t automatically increase every year. They could even decrease, particularly if the Reserve Bank of Australia continues to reduce interest rates, following its first rate cut in February.  

Owning your commercial property might free up funds previously allocated to rent, providing additional resources you could reinvest in your business or other investment opportunities.  

2. Capital growth potential  

Historically, the commercial property market – like the residential market – is cyclical, generally showing a long-term trend of growth, particularly if properties are held for extended periods. While it’s important to acknowledge that past performance doesn’t guarantee future results, historical trends can offer insight into potential outcomes.  

Currently, the outlook for commercial property growth in Australia remains positive. According to Cushman & Wakefield, the value of commercial real estate is projected to rise by around 20% between 2025 and 2030. 

This forecast suggests the commercial premises you purchase today could significantly increase in value over the next 10 to 20 years. Such growth would create equity, providing valuable opportunities for future business expansion, investments or even bolstering your retirement strategy. 

3. Greater control and security

While financial gains are an important part of your decision-making, owning your property provides other benefits. For instance, owning your premises removes the uncertainty associated with leasing, such as worrying about whether your landlord will renew your lease or impose substantial rent increases. 

As the property owner, you’ll have more control over the space itself. This flexibility allows you to renovate, modify, or extend the property to suit the evolving needs of your business – without seeking approval from a landlord. 

Buying commercial property with your rent roll 

Ultimately, this strategy could transform your rent roll from purely an income-generating asset into a tool for building greater long-term financial security. However, as with any significant financial decision, it’s critical to seek independent financial advice and conduct thorough due diligence.  

Speaking with your financial adviser or finance broker can help you evaluate whether leveraging your rent roll to purchase your business premises is the right move for your circumstances. 

If you’re interested in exploring how you can use the equity in your rent roll to buy your commercial property, Finance Advisory Co is here to help you secure the right finance solution. Contact us by filling in this online form, calling 0426 236 007 or emailing ben@finad.com.au  

Credit Representative 541104 is authorised under Australian Credit Licence 389328.  Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.