How to Invest in Commercial Property: Beginner’s Guide

Updated: 21 August 2025

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Commercial property is often seen as the golden ticket – offering 6 to 9 per cent yields and strong potential for capital growth in Australia. But investing in commercial property isn’t as simple as putting money down and waiting for returns. Even experienced investors agree the journey is complex and requires research, planning and the right team.

But there’s a lot more to it than simply throwing in your money. Even long-term investors will agree, the investment journey is never straight forward.

To shed some light on the process, here’s a very straight forward (and by no means complete) run down on how to invest in commercial property.

9 steps on how to invest in commercial property

1. Understand why you want to invest
2. Ensure you can secure finance
3. Have the right network and team
4. Research where to invest
5. Research which type of commercial property to invest in
6. Understand the market and check your numbers
7. Negotiate with the vendor
8. Do your due diligence
9. Proceed to settlement

Investing in commercial property is a lot different to buying residential real estate. The required research for a big commercial asset seriously outweighs the legwork of purchasing any house.

The national, state and local markets need constant watching, it’s integral to understand lease negotiations and what rent to charge, knowing how to find value is a must, and you need to know how to complete an in-depth due diligence investigation.

Having a high-quality network and team in place is one piece of the puzzle to help your investment in commercial property be a successful one (and to avoid a number of headaches).

Here’s what you can expect on the journey to investing in commercial property:

1.      Understand why you want to invest

Like any good goal setting strategy, you should understand why you are investing in commercial property in the first place.

Clarify your investment goals from the start. Many investors look to commercial property for reliable cash flow, particularly in retirement when income-earning capacity is lower. Others focus on long-term capital growth. Unlike residential property, commercial real estate is rarely a “get rich quick” scheme – it rewards patience, strong leases and time in the market.

However, rarely is commercial property a get rich quick scheme.

It’s less about timing the market, and more about time IN the market. So, you should be prepared for your funds to be tied up for a while.

2.      Ensure you can secure finance

Most commercial property purchases require bank finance, and lenders typically expect around a 40 per cent deposit. On top of this, you’ll need capital for stamp duty, taxes, professional fees and a contingency reserve. Building strong relationships with credit managers and commercial lending teams can give you a clearer picture of your borrowing power before you start the hunt.

You won’t get the green light from the bank at this stage. But you should have a fair idea if you will by looking at the rough numbers. There’s no point starting substantial property hunt, coupled with intensive due diligence, if you don’t have the deposit to invest (typically 40 per cent of the total property value), plus additional capital for taxes, property associated costs and a reserve fund.

This is where your networks will come into play. The better links you have at the bank, with relationship and credit managers, the better you’ll understand if you can secure finance.

3.      Have the right network and team

Your professional network is a major factor in commercial property success. Sales and leasing agents, valuers, property managers, and legal advisers can provide insights that reduce risk and uncover hidden opportunities.

If you don’t yet have these connections, consider partnering with a syndicator or experienced investment group that already has an in-house team of experts.

Get in touch with us if you’d like to learn more about investing alongside us.

4.      Research where to invest

We invest with a top-down approach. Have a look how we invest in commercial property HERE.

Adopt a top-down approach: first assess state-level economies, then drill into precincts and suburbs. Prime precincts usually hold premium assets, while secondary locations may offer lower entry costs and higher growth potential.

Market performance across Australia can vary significantly – so research historical trends, current conditions and forward-looking indicators before choosing your target area.

5.      Research which type of commercial property to invest in

The major three commercial property types or sectors are:

• Retail property
• Office property
• Industrial property

Each comes with pros and cons. For example, industrial warehouses often involve lower maintenance and simpler structures, while office and retail assets may offer higher rent but require greater upkeep and capital expenditure. Matching the property type to your goals is critical.

6.      Understand the market and check your numbers

Research what each sector is doing in your chosen state and precinct.

Always check tenant demand in your chosen sector and location. High vacancy rates may present risk, but they can also signal opportunity for counter-cyclical investors who buy at the right stage of the cycle. Forecast potential rental income and test it against bank requirements and your own return goals before progressing.

7.      Negotiate with the vendor

Once you’ve found the property and understood the high-level challenges you may face (like upcoming lease expiries or vacancies), it’s time to negotiate with the vendor.

When negotiating, know three numbers: what you can afford, what the property is worth today, and what it could be worth in the future. Understanding the vendor’s motivation for selling can give you leverage. Whether it’s lease expiry, cash flow pressure or portfolio reshaping, the seller’s situation can shape your bargaining power.

8.      Do your due diligence

With the contract signed, your due diligence period begins.

The due diligence phase is absolutely the most crucial when learning how to invest in commercial property.

The due diligence (DD) phase is critical, typically lasting around 30 days. There is a long list of items to follow, but loosely they include:

1. Talking to existing tenants
2. Researching market threats or opportunities
3. Auditing the lease documents
4. Understanding zoning restrictions
5. Check the correct property title
6. Understand what you own and what the tenant’s own

A thorough DD process can prevent costly surprises later. Don’t overlook it.

9.      Proceed to settlement

If due diligence uncovers too many risks, be prepared to walk away. Otherwise, settlement marks the point where ownership transfers and income begins. From here, focus on managing the property effectively to maximise yield and long-term capital growth.

You’ll notice by now that commercial property investment is a far cry from buying residential property. It can be a very complex journey – but it’s not impossible.

For more information on how to invest in commercial property, get in touch with Properties & Pathways today.

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