Buying a Warehouse or Industrial Unit: Deposit and Cash at Settlement
What an industrial purchase actually needs in cash on the day, from the deposit through duty, GST and the timing of getting the GST back.
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Warehouse · Industrial Unit · Settlement Cash
Buying a Warehouse or Industrial Unit: Deposit and Cash at Settlement
The deposit is not the number that stops most industrial purchases. It is everything else that lands on settlement day, from duty and GST on the price through to the adjustments, and the gap between paying the GST and getting it back through your BAS.
Quick Answer
Buying an industrial property takes more cash than the deposit alone. Duty, GST on the price, legal costs, lender fees and settlement adjustments all fall due on the same day, and the GST comes back later through your BAS rather than at completion. Work backwards from the settlement statement, not from the headline loan to value ratio, and check the numbers against a commercial property loan structure before you exchange.
Also called: industrial unit, strata industrial unit. In plain language, a warehouse, a factory or a freestanding shed.
How much deposit do you need to buy a warehouse or industrial unit?
An industrial purchase typically needs a deposit in the range lenders describe as a quarter to a third of value, indicative and varies by lender and by property type. That is a wide band because the deposit is not really a single policy number. It is the output of three separate reads: what the property is, who is going to occupy it, and how the income behind the loan is evidenced.
An owner occupier moving their own business into the shed usually supports a higher loan to value ratio than an investor buying the same building to lease out, because the lender can see the trading business that services the debt. A tenanted investment sits on the lease instead, and the strength of that lease then does the work. A vacant building with no tenant and no occupier does neither, and the contribution rises accordingly.
The reason the deposit gets so much attention and so little of the trouble is that it is the one number quoted early, in a phone call, before anyone has read a contract. It is also the one number that is usually available. Our guide to commercial property loan deposits covers the deposit-size question across property types; this post is about the rest of the money.
| Item | What it is | When it is paid | Can it be financed |
|---|---|---|---|
| Deposit | Your equity contribution, part of it paid as the sales deposit at exchange and the balance at completion. | Split between exchange and settlement. | No, this is the part the lender is not funding. |
| Stamp duty | Transfer duty on the purchase price, assessed by the state or territory revenue office. | At or shortly after settlement, depending on the state. | Rarely, and typically only where a lender allows the loan to be sized above the deposit-adjusted purchase price. |
| GST on the price | Where the sale is a taxable supply, 10 per cent on top of the price, recoverable later as an input tax credit if you are registered. | At settlement, unless the sale is a going concern or the parties agree a withholding arrangement. | Sometimes, through a short-term facility, but the standard position is that you fund it. |
| Legal and searches | Conveyancing, contract review, title and planning searches, and any environmental enquiry on an industrial site. | Progressively, from contract review to completion. | No. |
| Lender and valuation fees | Application, valuation and legal fees charged by the lender, plus any risk fee on a specialist facility. | Valuation upfront, the balance deducted at settlement. | Often deducted from the advance rather than paid separately, which reduces net funds. |
| Adjustments | Council rates, water, land tax and outgoings apportioned between vendor and purchaser to the settlement date. | At settlement, on the adjustment statement. | No. |
What cash do you actually need at settlement, beyond the deposit?
Beyond the deposit, the cash at settlement is duty, GST where the sale is taxable, legal and search costs, lender and valuation fees, and the adjustments. Add them together and the total contribution on an industrial purchase is materially more than the deposit figure that got quoted at the start, and the difference is not marginal. Duty alone is typically several per cent of the price and varies by state, so check the current rate with the state revenue office at the time of purchase.
The pattern is consistent enough to plan around. Where this commonly lands is that the buyer has the deposit ready, has treated duty as an afterthought, and has not budgeted for the GST at all, because the contract said "plus GST" and that read as someone else's problem. Then the settlement statement arrives, the numbers are firm rather than indicative, and there are two weeks to find the gap.
The fix is mechanical. Before you exchange, ask your conveyancer for a draft settlement statement built off the contract terms, and ask your broker what the lender will actually advance net of its own fees. Those two documents together give you the real number. Everything else is an estimate, and estimates are what leave people short.
- 10 per cent GST applies to most commercial property sales, unless the sale qualifies as the supply of a going concern. Australian Taxation Office, GST and commercial property, as at August 2026
- 24.7 per cent fall in the value of non-residential building approved, to $8.26 billion in June 2026. Australian Bureau of Statistics, Building Approvals, Australia, June 2026
Does GST apply when you buy an industrial property, and when do you get it back?
GST of 10 per cent applies to most commercial property sales unless the sale qualifies as a going concern, and the timing of any input tax credit depends on your BAS cycle. That second half of the sentence is the part that costs people money. The GST is usually recoverable, so it is not a permanent cost, but it is a real cash cost for the period between settlement and the lodgement that claims it back.
Three treatments cover most industrial contracts. A taxable supply means GST is added to the price and you claim it as an input tax credit if you are registered and buying for a creditable purpose. A going concern sale, where a tenanted building transfers with the lease and the arrangements to keep it operating, can be GST free if both parties are registered and agree in writing before completion. The margin scheme applies in narrower circumstances and changes how the amount is calculated rather than whether it applies. The Australian Taxation Office guidance on GST and commercial property sets out each treatment, and your accountant confirms which one your contract falls under.
What matters for the finance is simple. If the contract is a taxable supply and you are funding the GST yourself, that money has to be sitting somewhere on settlement day, and it may be one or two BAS periods before it returns. If the sale is structured as a going concern, that cash requirement disappears entirely, which is why the wording of the contract is a financing question and not only a tax question. Worth raising before you sign, not after. If you want the cash position mapped before you commit to a contract, check your eligibility and we will work the settlement figure back with you.
Why is a strata industrial unit treated differently to a freestanding shed?
A strata industrial unit is treated more conservatively than a freestanding shed because the lender is taking security over part of a building rather than over land and improvements it can control outright. Lot entitlements, an owners corporation, shared driveways and hardstand, and a sinking fund that may or may not be adequate all sit between the lender and a clean sale in a default scenario.
Small floor area compounds it. A compact strata unit in a multi-unit complex has a shallower buyer pool than a standalone site on its own title, and a lender pricing for a slow sale will hold a lower ratio against it. Some funders also apply a minimum floor area below which the unit is treated as a specialised security rather than standard industrial stock.
None of that makes a strata industrial unit hard to finance. It makes the contribution higher and the strata documents load bearing. The owners corporation records, the sinking fund balance, any special levies and any unresolved building defect all get read, and a weak set of strata records will slow an approval more reliably than a weak set of financials will. Our post on financing an industrial or warehouse property purchase covers how the security type shapes the structure.
Can you use equity in another property instead of cash?
Equity in another property can stand in for cash on an industrial purchase, and it is how a good share of these deals get funded. The mechanism is that a second property is offered as additional security, so the lender is measuring its exposure across two assets rather than requiring the difference in cash on the day.
It is not free. Bringing a second property in means one loan sitting across two titles, which is what cross collateralisation means, and it constrains what you can do with either property later. Selling one asset generally requires the lender to reassess the position on the other. Releasing a property from the arrangement is a policy decision, not a right.
The other constraint is that equity solves the deposit, not the servicing. The loan still has to be serviced from somewhere, and serviceability is assessed on the same evidence whether the contribution came from savings or from an existing asset. Where the income evidence is the harder part of the file, a lease doc structure may be the better fit than stretching the security position.
What makes an industrial or warehouse property harder to finance?
An industrial property gets harder to finance when the thing that makes it valuable to you is the thing that makes it harder to sell to anyone else. Specialised fit out, cool rooms, heavy power, in-ground pits, purpose-built racking and single-tenant configurations all narrow the pool of future occupiers, and the lender is pricing the exit, not your operation.
The other recurring flags are environmental and physical. Historical contamination on a former manufacturing site, limited truck access, insufficient hardstand, low clearance, an unresolved building compliance issue, or a site whose zoning does not match its actual use will each slow an approval or move the ratio. Where the property is tenanted, a short remaining lease term does the same thing, because the income the loan sits on has a visible end date.
What lenders read first is whether the asset stands on its own without you in it. The rest of the file matters, but that question orders everything else, and it is the one a broker should be able to answer before an application goes anywhere. The guide to how commercial property loans work sets out the wider assessment framework, and the property lending hub maps the lanes around it.
Can you buy a vacant industrial property with finance?
You can buy a vacant industrial property with finance, but vacant possession changes what the loan is sitting on. With no lease in place there is no property income, so the servicing has to come from your trading business, from other property income, or from a combination of the two, and the assessment moves accordingly.
For an owner occupier this is usually straightforward, because vacant possession is the point. You are buying the shed to move into it, the business is the income, and the file is assessed on trading performance rather than on rent. For an investor buying vacant stock with a plan to lease it, the position is harder, since the lender is being asked to fund an asset that produces nothing until a tenant is signed.
Where a purchase is genuinely time-critical and the standard path cannot move fast enough, a short-term facility through private lending can hold the position while the longer-term structure is arranged. That is a timing tool with a cost attached, and it only makes sense where the exit is clear and evidenced.
Do industrial and warehouse properties get valued differently?
Industrial and warehouse properties are valued on the same professional methods as other commercial assets, but the inputs behave differently, and on this post the valuation matters for one operational reason: if it lands low, your deposit gets bigger on the day. Lenders typically lend against the lower of the contract price and the valuation, which is a policy position and varies by lender, so a shortfall converts directly into cash you have to find before completion.
On an industrial asset the figure leans on lettable floor area, clearance height, hardstand and access, and on the quality and remaining term of any lease. A fit out that suits your operation often contributes nothing, because the valuer is testing what the next occupier would pay, not what it is worth to you. Where this commonly lands is a valuation that reads perfectly reasonable to the market and several per cent under what the buyer paid for a building configured around their own use.
If that gap appears, it is a cash problem with a short fuse rather than a deal-ending one, and there are more paths through it than most buyers expect. Our post on a commercial valuation coming in under contract covers the options, and the commercial property loan rates guide explains how the structure around it is priced.
On an industrial purchase, the deposit is the number everyone plans for and the smallest source of trouble. Duty, GST on a taxable supply, legal and search costs, lender fees and the settlement adjustments all fall due on the same day, and the GST does not come back until your BAS cycle brings it back. A strata industrial unit needs a bigger contribution than a freestanding shed, a vacant building shifts the servicing onto your business, and a valuation under contract turns straight into cash you have to find.
Key takeaway: Build your cash plan from the draft settlement statement and the lender's net advance, not from the deposit percentage you were quoted first.Frequently Asked Questions
The deposit you need to buy a warehouse typically sits in the range lenders describe as a quarter to a third of value, indicative and varies by lender and by property type. An owner occupier moving their own business into the shed usually supports a higher loan to value ratio than an investor buying the same building to lease out. The wide range is a policy range, not a negotiation, and the property type moves it as much as your file does.
The deposit on a commercial property is held in a trust or statutory account by the selling agent or the vendor's solicitor between exchange and settlement, and it is released to the vendor at completion. That sales deposit is a different thing from the equity contribution your lender expects you to bring, and confusing the two is the most common reason a buyer arrives at settlement short. The sales deposit forms part of your total contribution, but it is paid at exchange, weeks before the rest of the cash is due. The commercial property loan glossary entry sets out how the contribution is counted.
The deposit is not the only cash you need at settlement on an industrial purchase. Stamp duty, GST on the price where the sale is taxable, legal and search costs, lender and valuation fees, and the adjustments for rates, land tax and any outgoings all land in the same settlement statement. Most of those items cannot be added to the loan, which is why the shortfall shows up at completion rather than at approval. The guide to how commercial property loans work covers what the lender will and will not fund.
GST of 10 per cent applies to most commercial property sales, unless the sale qualifies as the supply of a going concern or is sold under the margin scheme. If you are registered for GST and buying for a creditable purpose, you can generally claim the amount back as an input tax credit, but the timing depends on your BAS cycle, so the money leaves your account well before it comes back. Our post on going concern valuation explains what has to be true for that treatment to apply, and your accountant confirms it against your contract.
Industrial and warehouse properties are valued on the same professional methods as any other commercial asset, but the inputs behave differently, because a shed's value leans heavily on lettable floor area, clearance height, hardstand, access and the quality of the income if it is tenanted. A specialised fit out that suits your business often adds nothing to the assessed value, since the valuer is testing what the next occupier would pay. If the assessed figure lands under the contract price, the gap becomes cash you have to find on the day, and our post on a valuation coming in under contract covers what to do next.
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