Buy Commercial Property - FAQs

In real estate terms, this is a ‘going concern’, meaning an occupant/tenancy is in place, under a lease agreement, trading within the premises, which meets the ‘no GST’ applicable clause. GST is payable on all sales unless otherwise indicated in the contract of sale or unless your accountant has suggested otherwise.

When a purchaser intends to purchase an investment property, a variety of factors must be considered to evaluate what rental returns are expected or what returns are being offered for the initial investment. More often than not, economic influences affect returns, as do the type of business trading in the premises and in what industry; what plant and equipment has been installed and/or investment has the trading business done in the premises to enable it to trade; is the business profitable and does it have a good trading history/reviews with their customers; is the business paying its occupancy costs on time; what is the age of the premises and are there any expected capital expenditure costs known. Once this information is collated, the return on your investment (ROI) will make more sense. ROI is a good reflection of risk, and at CPN, we provide fair and honest advice on present ROI expectations. We can also offer advice for those ‘too good to be true’ investments that promise above-market ROIs but may be hiding this, and that will affect your overall investment.

When buying commercial property, it’s essential to factor in occupancy costs, which are the ongoing expenses associated with owning and managing the property. These can include:

• Outgoings: Rates, insurance, water, body corporate fees, and other regular expenses.

• Land tax: Payable annually (unless exemptions apply), calculated based on the total taxable value of your land holdings in Victoria.

• Maintenance costs: Repairs, upkeep, and compliance with safety regulations — particularly relevant in older buildings.

Who pays for what will depend on the lease structure. In many cases, commercial tenants cover some or all of these costs, but it’s important to check the lease terms carefully. If the property is vacant, these costs become your direct responsibility until a tenant is secured.

These expenses affect your net returns, so it’s wise to understand them fully before purchasing. For more detail, especially on land tax, see our article:

https://www.cpn.com.au/understanding-land-tax-in-victoria-what-property-owners-need-to-know/

If you’re unsure how these costs could impact your investment, the team at CPN Commercial Group can walk you through a property’s cost profile and help assess its suitability based on your investment goals.

Buying commercial property in Australia typically involves these steps:

1. Define your investment goals (e.g. yield, capital growth, asset type).

2. Get finance pre-approval.

3. Engage a commercial real estate agent to identify suitable properties.

4. Conduct due diligence, including financial, legal, and physical checks.

5. Negotiate terms and contracts.

6. Finalise finance and settle the purchase.

Working with an experienced agent ensures you cover all legal and financial considerations specific to the Victorian market.

Returns vary by location, asset type and tenancy, but a net yield of 5–7% is considered healthy for commercial property in Melbourne. Higher yields may come with greater risk or vacancy potential. Reviewing lease terms, tenant profile, and outgoings will give you a clearer picture of the true return.

Commercial property often delivers higher rental yields, longer lease terms, and tenants that cover more outgoings. However, residential may offer more liquidity and consistent demand. Your decision should align with your investment strategy, risk profile, and long-term goals.

Yes, you can purchase commercial property through your Self-Managed Super Fund (SMSF), but strict rules apply. The property must be solely for investment (not personal use), and you’ll need to comply with SMSF borrowing and compliance regulations. Always seek financial and legal advice before proceeding.

It depends on your goals, but common options include:

• Retail shops (stable long-term tenants)

• Offices (flexible space, high demand in prime areas)

• Industrial warehouses (popular due to e-commerce growth)

• Medical or consulting suites (typically lower vacancy)

An experienced agent can help match property types to your budget and investment outlook.

Key factors to assess include:

• Lease structure and tenant profile

• Rental income and yield

• Outgoings and who pays them

• Property condition and maintenance

• Zoning and future development potential

• Location and surrounding amenities

Due diligence is critical — and having a trusted advisor like CPN Commercial Group by your side ensures nothing is overlooked.