From Tenant to Landlord: How One Business Owner Stopped Paying Someone Else's Mortgage
For eleven years, our client has run a successful business out of a leased factory in Noosaville. We've worked with them for most of that time, first on the business side with asset finance, an overdraft, and a term loan to fund stock and supplies as the business grew, and later on their personal lending, including refinancing their home loan and helping them purchase an investment property using equity from their home.
It's the kind of long relationship that lets you see a business clearly. And a few months ago, we saw a problem coming.
The rent reality
Our client's landlord had just renewed their lease for another year after their previous options ran out. The rent rise was steep. Add in the outgoings passed on to the tenant, which is standard practice in commercial leasing but adds up fast, and the numbers landed at $89,000 a year plus outgoings. Money paid out, every year, building equity in someone else's asset.
The frustrating part was that our client already understood the value of property. They'd just used the equity in their home to purchase an investment property. They knew how to build wealth through property. They just hadn't yet applied that thinking to the building their own business operated from.
Weighing up the options
We didn't jump straight to a solution. The first option on the table was buying a commercial factory outright using business cash flow. On paper it solved the rent problem, but in practice it would have left the business too tight operationally. A growing business needs working capital, not a balance sheet stretched thin by a property purchase.
The option that actually fit was a Self-Managed Super Fund commercial property purchase.
Here's the part most business owners don't realise: an SMSF can purchase a commercial property and lease it back to a related party, including the member's own business, provided the lease is on commercial terms and the rent reflects market value. It's one of the few places super rules allow a genuinely direct connection between the fund and the member's day-to-day business.
Before going any further, we insisted on getting the client's accountant into the conversation. SMSF lending is not something to structure on assumptions. Between us, the SMSF and the required bare trust were set up correctly from the start.
Where they've landed
The client has now secured their commercial property. Settlement is locked in, and the fit out starts next month, with the business set to move into its new premises shortly after.
The rent still gets paid. That part hasn't changed, and it shouldn't, because paying market rent is what keeps the arrangement compliant. What has changed is where that rent goes. It flows into their own SMSF, sitting alongside their regular wage super contributions, building their retirement balance instead of their landlord's.
They're still a tenant, technically. But now they're paying themselves.
The bigger picture
This client's situation isn't unique. Plenty of self-employed business owners hit a point where their rent has crept up year on year, their lease options are running out, and they're sending five figures a year to a landlord with nothing to show for it long-term. If that sounds familiar, it's worth a conversation about whether SMSF commercial lending could work for your situation. It won't suit every business, and it isn't a fast process, but for the right client it turns an ongoing cost into a long-term asset.
If you're self-employed and weighing up your options, whether that's commercial lending for a straightforward purchase, refinancing to free up equity, or exploring what your business finances can support, get in touch with the team. We'd rather have the accountant-and-broker conversation early than watch you sign another year of lease renewals.
