.svg){kind=logo}
The Transition from Residential to Commercial Property: Why Finance Can Make or Break Your Next Move
Many investors build strong residential portfolios — but eventually, they hit a wall. Serviceability dries up, cash flow tightens, and they’re left wondering: What’s next?
In this episode, Arjun and Chris sit down with Jack Fouracre to unpack why finance is the make-or-break factor when transitioning from residential to commercial property. From lease-doc loans to SMSFs, they reveal how the right broker can unlock growth while the wrong one can hold you back.
“Most portfolios will end up in commercial at some point. If your broker doesn’t understand that space, they’re the one holding you back.” — Jack Fouracre
When You’ve Outgrown Your Broker
A common story in property investing: your portfolio expands, but your broker’s understanding doesn’t.Jack explains that many clients reach a stage where their broker starts talking them out of opportunities — often because they don’t understand commercial lending or trust structures.
Without a commercial-specialised broker, investors risk staying stuck in residential forever — missing out on the high-yield, cash-flow-positive opportunities commercial property can provide.
How Lease-Doc Lending Works
Once serviceability is tapped out, lease-doc loans offer an alternate path forward.These loans are assessed primarily against the property’s lease income, not your personal income — allowing you to scale without traditional borrowing limits.
Typical lease-doc features discussed in the episode:
- Loan-to-Value Ratios (LVRs) of up to 70%
- Interest cover ratios as low as 1.25×
- Rates in the low 6% range
- Risk caveats: if the tenant vacates, you must refinance, re-let, or sell
“It’s not for every asset — short leases or flimsy tenants can turn it into a high-risk play. But for the right property, it’s a powerful way to grow.” — Jack Fouracre
SMSFs and Commercial Property: A Natural Fit
For investors using their Self-Managed Super Fund (SMSF), commercial finance opens another door.Jack shares that SMSF commercial loans can reach up to 80% LVR, and serviceability is typically easier to demonstrate than in residential.
This flexibility makes commercial property an attractive option for SMSFs looking for:
- Strong, reliable rental income
- Long-term leases with reputable tenants
- A clear pathway to retirement income
Knowing When (and How) to Exit Residential
Arjun and Chris also highlight a key investor mindset shift:Selling doesn’t mean going backwards — it means reallocating for better outcomes.
For example:
- Selling part of a $7M residential portfolio
- Reinvesting into a $4M commercial asset with positive cash flow from day one
- Unlocking $180,000+ passive income per year
“You’re building wealth to generate cash flow to fund your lifestyle in retirement. Sometimes it’s staring you in the face — you just need to act.” — Arjun Paliwal
Why Collaboration Between Broker and Buyer’s Agent Matters
One standout takeaway from the episode is the importance of collaboration between commercial brokers and buyer’s agents.Together, they can:
- Structure deals to maximise borrowing power
- Identify the right trust or entity setup
- Secure blue-chip assets that perform from day one
Without that alignment, even well-positioned investors can face delays, poor terms, or missed opportunities.
Final Thoughts: Don’t Be Afraid of the Next Phase
Transitioning to commercial property is the natural evolution for many portfolio builders.It’s not just about owning “more properties” — it’s about achieving the outcome you started investing for: freedom through income.
If you’re ready to explore what that next phase looks like, it starts with a conversation.
🎯 Ready to Level Up?
If you’re serious about building a high-growth, income-focused property portfolio, don’t leave your next move to guesswork.
Book your free Discovery Call with InvestorKit today and learn how our research-driven strategy helps investors transition confidently into commercial property.