How to Buy Commercial Property Without Proving Your Income

Getting a loan can be frustrating, especially when you have money to invest but can't prove your income on paper. Maybe you're self-employed, retired, or your financial situation looks complicated to banks. The good news? There's a way around this problem when buying commercial property.

What's a Lease Doc Loan?

Think of it like this: instead of the bank looking at YOUR payslip, they look at the property's "payslip" - which is the rent coming in from tenants.

A lease doc loan uses the rental income from the commercial property to prove the loan can be repaid, rather than your personal income. No payslips, tax returns, or personal financial statements required.

Why Does This Work?

Commercial properties are different from houses. When banks value a house, they often consider emotions - like how nice the kitchen looks or whether it's in a trendy suburb.

But commercial properties are all about the numbers: How much rent does it make? How reliable is that rent? If the property earns enough money to cover the loan payments (plus a safety buffer), the bank is happy - even if you personally show no income.

What You Need to Qualify

While you don't need to prove personal income, you still need to meet certain requirements:

A Good Tenant with a Lease

• The property must already have a tenant paying rent

• Preferably a reliable, established business

• A longer lease is better (shows stability)

Strong Rental Income

• The property needs to earn enough to easily cover loan payments

• Banks typically want the rent to be 1.25 to 1.5 times higher than the loan repayments

• This buffer protects everyone if expenses increase

A Large Deposit

• You'll need 35-40% deposit (compared to 20% for many residential loans)

• This reduces the bank's risk

Property Documentation

• Copy of the lease agreement

• Rental payment history

• Property expenses breakdown

Who Is This Perfect For?

This loan structure works brilliantly for:

• Self-employed people who have money but messy-looking finances on paper

• Retirees with savings but no regular income

• Business owners wanting to buy their own premises through a company or trust

• Superannuation funds purchasing commercial property

• Overseas buyers or migrants without local income history

• Experienced investors who want to keep expanding their portfolio

The Downsides to Consider

Like any specialized loan, there are trade-offs:

• Higher interest rates than standard commercial loans (but still usually lower than residential investment loans)

• Bigger deposit required upfront

• Pickier lenders about location, building condition, and tenant quality

• Risk if tenant leaves - the bank might reassess your loan if rental income stops

The Key: Choose the Right Property

Since everything depends on the rental income, picking the right property is crucial. You want:

• A prime location

• A quality building in good condition

• A reliable tenant with a solid business

• A lease with decent time remaining

Is This Right for You?

If you have capital to invest but struggle to prove income the traditional way, lease doc loans could be your solution. They're perfect for people who are "asset rich but income poor" on paper.

The key is working with the right team - a commercial property specialist, finance broker, and possibly a buyer's agent who understands this market.

Remember: this isn't about getting around responsible lending. It's about using a different, perfectly legitimate way to prove you can service a loan - one that makes sense for commercial property investment.

This information has been prepared by PHA Financial Services and does not take into account your objectives, financial situation or needs. Before acting on this information you should consider whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. The information provided was accurate at the time of publication and changes in circumstances after a document is published may impact on the accuracy of information. Some information may have been collated from various third parties and we make no assertion that the information was originally ours.