Finance to buy a warehouse, factory or industrial unit

Good industrial property rarely sits on the market. A warehouse with the right clearance, a decent hardstand and truck access near a motorway can attract several buyers within days, and the vendor will usually take the one who can settle without fuss. For an owner-occupier, missing out can mean another five years of rent increases. For an investor, it means watching a well-leased shed go to someone else.

This page covers how businesses and investors use a short-term private first mortgage to buy warehouses, factories and industrial units on the vendor’s timetable, the tax points that change the funding figure, and when a bank is the better choice.

Why is buying industrial property so time-sensitive?

Three things combine.

• Scarce stock. Well-located industrial land is limited in most capital cities, and vendors know it.
• Vendor preferences. Sellers favour buyers who can exchange quickly, pay a full deposit and settle without a finance clause.
• Bank timelines. A bank lending on industrial property will usually want leases, accounts, environmental information and its own credit process, which can take weeks.

A private first mortgage over the property being bought closes the gap. The lender relies on the property, the equity and the exit, so the loan can be ready for the contract date. The bank then refinances on its own schedule.

How does warehouse purchase funding work?

1. Share the deal early. Price, deposit, settlement date, leases (if any), GST position and the state the property is in.
2. Tell us what else you own. If the purchase alone won’t support the amount needed, a second property can be added.
3. Receive terms and a Letter of Offer. The amount, structure, term, interest arrangements and fees are set out.
4. Pay the deposit at exchange. From cash, or a short caveat loan over another property.
5. Settle. The private first mortgage pays the balance, duty, GST if payable, and costs.
6. Move in or collect rent, then refinance. A bank, a non-bank or a sale repays the private loan.

Interest can be prepaid or capitalised, so there may be no monthly repayments while you relocate or lease up. See prepaid or capitalised interest.

Owner-occupier or investor: what changes?

Point	Owner-occupier	Investor buying a tenanted shed
What the refinance relies on	The business’s accounts and cash flow	The lease, the tenant and the rent
GST at settlement	Usually a taxable sale; GST added to price	Can be a GST-free going concern if conditions are met
Main risk	Business slows during the move	Tenant leaves or lease is short
Typical exit	Bank refinance once relocated	Bank or non-bank refinance on the lease
Useful extra security	Current premises or a home	Another investment property

If you’re buying a building that will sit empty for a while, read vacant commercial property loans, because banks often treat vacancy harshly.

What tax points change the funding figure?

GST. The ATO says a sale of commercial premises is GST-free as a going concern only if payment is made, the buyer is registered or required to be registered for GST, both parties agree in writing that it is a going concern, the seller supplies everything needed for the business to continue, and the seller carries on the business until the day of supply. For a partly tenanted building, the vacant part must be actively marketed for lease or under repair, and all leases must be included. If those conditions aren’t met, the seller is generally liable for GST on the price, which usually means it is added to what you pay. Our page on funding GST on a commercial purchase explains how to bridge it until the credit comes back.

Duty. Transfer duty is a large settlement cost. In New South Wales, Revenue NSW says duty is due by the earlier of settlement or three months after the contract is signed. See funding stamp duty for other states.

Victoria’s commercial and industrial property tax. The State Revenue Office explains that from 1 July 2024, qualifying commercial and industrial property enters a new regime on an “entry transaction”. Duty is still payable on that purchase. Later transactions are generally exempt from duty while the property stays in qualifying use, and about ten years after entry an annual tax on the land’s site value applies, separate from land tax. Unpaid CIPT is a first charge on the land. Eligible buyers can borrow the entry duty through an optional Treasury Corporation of Victoria transition loan with repayments over ten years, which carries a first-ranking statutory charge. If you take one, tell us, because it affects how a private lender’s security ranks.

Which structure fits an industrial purchase?

Situation	Structure	Notes
Purchase supports the loan on its own	Private first mortgage over the purchase	Simplest; 1 to 24 months
Deposit and costs need extra security	First mortgage over the purchase plus a second over another property	Adds equity without selling anything
Deposit only, bank funding the balance	Caveat loan over property you own	Quick; repaid at settlement or soon after
Already own the current factory outright	First mortgage over both buildings	Can fund the new site in full

Our product page on industrial property loans covers borrowing against industrial property you already own.

How does private funding compare with other ways to buy?

Option	Can it meet a 30-day settlement?	What to weigh
Private first mortgage	Yes, possible once documents are in	Short term; pricing above a bank
Bank commercial loan	Sometimes, often not	Cheaper; slower; may lend less on vacant or specialised sheds
Non-bank commercial lender	Sometimes	Between bank and private on cost and speed
Sale and leaseback partner	Rarely quick	You don’t own the building
Vendor finance	Only if the vendor offers it	Vendor sets the terms; see vendor finance vs a private loan

Who does this suit?

It suits:

• manufacturers, transport operators and wholesalers buying the building they work from;
• investors buying a leased warehouse where the vendor wants a quick, firm buyer;
• owners of one factory buying a second site using the equity in the first;
• buyers whose bank is supportive but slow.

It doesn’t suit:

• buyers relying on the business to service a loan it cannot afford;
• purchases where the lease is about to end with no plan to re-let;
• self-managed super fund purchases, which need a compliant borrowing arrangement outside what we lend for.

When is a private loan the wrong choice for a warehouse?

• The vendor will wait. If your bank can approve inside the settlement period, it will usually be cheaper.
• The site has unknown contamination. Until your advisers have looked at past uses and searches, you can’t price the risk, and neither can a refinancing bank.
• The exit depends on a lease that isn’t signed. Get heads of agreement with a tenant before you rely on them.
• The move will disrupt the business for months. If revenue will dip during relocation, size the interest allowance and term for that dip.

What it costs (without the guesswork)

We don’t publish a price list. Each loan is priced on its security, LVR, term and exit, aiming for the sharpest price that purchase can support. Budget for:

• interest for the term, prepaid, capitalised or paid monthly;
• an assessment fee, varying by deal and stated in the Letter of Offer;
• legal and registration costs and, later, discharge costs.

A first mortgage over the purchase is generally priced below a second mortgage or caveat, because the lender ranks first. The assessment is made on the property itself, with no formal valuation required.

Illustrative example: an owner-occupier buys the shed it leases

Illustrative: a Geelong food packaging business is offered its leased warehouse for $2.1m, settling in 30 days. The sale is a taxable supply, so GST of $210k is added. The business owns a smaller unit nearby worth about $700k with no loan. Across both titles (about $2.8m), an illustrative 65% LVR band supports total secured debt of about $1.82m. The business contributes $730k from savings and a released term deposit.

Item	Amount
Private first mortgage over the warehouse and the unit	$1,800,000
Business’s own funds	$730,000
Purchase price	$(2,100,000)
GST payable at settlement	$(210,000)
Duty, legal and registration costs	$(130,000)
Illustrative allowance for 6 months’ capitalised interest and fees	$(90,000)

The exit: the GST is recovered on the next BAS and applied to the loan, then a bank refinances the warehouse once it has reviewed the accounts, and the unit is released or sold. The figures are round and illustrative only.

Key terms for industrial buyers

• Going concern: a sale of an enterprise, such as a leasing business, that can be GST-free when the ATO’s conditions are all met.
• Taxable supply: a sale on which GST is payable, usually added to the price for commercial property.
• Entry transaction (Victoria): the qualifying purchase that brings commercial or industrial land into the CIPT regime.
• Owner-occupier: a business that buys the building it operates from.
• Lease-up: the period between buying a vacant building and signing a tenant.
• Hardstand: sealed outdoor area for trucks, containers or storage, which affects how useful an industrial site is.

Documents you’ll need

• The contract and special conditions, and the GST clause
• Leases, rent roll and outgoings, if tenanted
• Recent business accounts if you’ll occupy the building
• Photo ID for every borrower, director and security owner
• Company or trust details for the buyer
• Title details and loan statements for any other property offered
• Evidence of the exit, such as a bank’s indication

How fast can an industrial purchase settle?

Once the file is complete, loans up to $5m can be possible within 24–48 hours. What usually takes longest is gathering leases and agreeing the GST clause, so start those on day one. If the vendor wants settlement in late December, see settling before the Christmas shutdown. Victorian buyers can read about private lending in Geelong, and manufacturers can see how others use their factory’s equity on our manufacturing and industrial page.

Got a warehouse in your sights? Send us the contract terms and the security and we’ll tell you what can settle by the date.

Buying a warehouse or factory? See if you qualify

There’s no credit check when you enquire, and your deal is seen by one direct lender only, not circulated to others. A specialist who knows industrial property reviews it. fundU, the direct lender behind this site, makes the decision on the property and the exit.

Be exact about the price, the GST position, the settlement date and anything already owing on the properties involved. Accurate details are what let us come back with an answer that holds. Begin your enquiry.