What Commercial Laundry Owners Should Know About Commercial Property Finance
Buying the premises your commercial laundry already operates from is a significant step for any operator. The site holds your boilers, three-phase power, trench drains and trade waste approvals, so owning it protects the layout you have built. At Ardent Capital Group we speak with laundry operators about this kind of commercial property purchase.
Ardent Capital Group is a specialist in commercial mortgages for commercial laundry operators across Australia. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.
- Access finance from $100,000 to $10,000,000+, structured for owner-occupiers and investors.
- Over $500,000,000 facilitated across a decade for 1,000+ borrowers, with deep experience in asset-heavy businesses.
- National coverage across Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Hobart and surrounding regional towns.
- Direct access to major banks, second-tier lenders and specialist funders with appetite for industrial and processing property.
The case for owning your commercial laundry premises
Your operation is tied to heavy services, water flow, waste treatment and floor loading. Fit-out can run from $300,000 to $2,000,000+ including boilers, steam lines, heat recovery, water recycling tanks, lint arrestors, trench drainage, waterproofing and ventilation. Location anchors your customer base, close to hotel clusters, hospitals, aged care and logistics routes, with access for rigid trucks and secure loading.
Owning converts rent into repayments that build equity in a core operating asset. It protects your layout and utilities, supports expansion planning and strengthens your standing with institutional clients who value site stability. Sector demand is resilient, driven by recurring linen and garment contracts in hospitality, healthcare and accommodation.
Key drivers:
- Control of equipment and services: Secure gas supply, three-phase power, hot water capacity, drainage and trade waste approvals without renegotiating with a landlord at each upgrade.
- Lower disruption risk: Avoid forced moves that would halt production, disconnect boilers, re-pipe steam, refit drainage and re-commission equipment.
- Asset build: Repayments build an owned property, with potential for depreciation on qualifying works and a balance-sheet anchor that supports future funding.
- Operational efficiency: Design the floor for flow, install water and energy recovery, and plan docks and storage for peak throughput.
Buying may not suit every operator. If you expect to relocate for growth within a short horizon, if capital is better deployed into new equipment or contracts, or if the current site has council or services constraints that are hard to fix, staying a tenant can be the right call for now. The decision sits with you, and we are glad to talk it through either way.
The structure matters, and our laundry property loan specialists build it around your situation.
Financing a commercial laundry: how it works
Deposit and LVR. Typical loan to value ratios sit between 65 and 80 per cent, which means a 20 to 35 per cent deposit. In some scenarios 100 per cent LVR is achievable by using additional property as security or blending facilities, and our broker team can explain how. Modern industrial units and well-located freestanding sites in strong condition tend to reach the upper end of the range.
Loan term and structure. Terms commonly run from 10 to 15 years with the banks and up to 25 to 30 years with non-bank lenders. Structures include principal and interest for steady amortisation, or interest only for a defined period to preserve cash flow while you bed in upgrades or new contracts.
Security and serviceability. The property is the primary security. Lenders assess business financials, recurring contract revenue, EBITDA, and cash flow with an addback for current rent when comparing to the proposed mortgage repayments. They consider equipment capex plans and maintenance budgets, given the cost of boilers, tunnel washers and presses.
Owner-occupier treatment. Lenders generally favour owner-occupied purchases due to lower vacancy risk and clear alignment between the business and the property. Clean environmental and trade waste compliance supports credit appetite.
How the deal is put together
Many commercial laundry operators hold the freehold in a separate entity, such as a company or discretionary unit trust, and lease it to the trading business at a commercial rent. A lender then reads that inter-entity rent as the serviceability line, sees a clear separation between the property and the operating risk, and prices the loan against the lease. This is a common arrangement, and the finance is arranged to sit around it.
Where a self-managed super fund is involved, commercial premises usually qualify as business real property, so an SMSF can buy and hold the building and lease it to your trading company at market rent under a compliant lease. A fund that borrows to do this uses a limited recourse borrowing arrangement with a bare (custodian) trust holding the asset, which shapes how the security and serviceability are assessed. The appeal is a concessional tax environment inside the fund and an owned home for your equipment, weighed against contribution caps, borrowing rules and documentation. We structure the finance around the entities you already hold, and leave the tax and superannuation detail with your accountant and SMSF specialist to sign off.
What credit teams weigh up
- Business financials: Historical and year-to-date performance, contract quality with hotels, hospitals, aged care and facility managers, debtor spread and seasonality.
- Serviceability: EBITDA, addbacks for current rent versus proposed repayments, sensitivity to gas and electricity inputs, allowance for equipment maintenance and water charges.
- The property and its valuation: Location, access, zoning that permits laundry operations, power and gas capacity, floor loading, trench drains, ventilation and loading options.
- Deposit and equity position: Cash, retained earnings, or equity in other property that can support a higher LVR or reduce pricing.
- Lease and occupancy: Owner-occupier plan, or a related-party lease with market terms, length and options that match the loan tenor.
- Compliance: Council trade waste approvals, environmental reports if required, and any fire or noise conditions attached to use.
A specialist broker who understands equipment-intensive operations, trade waste and industrial property makes the process faster and cleaner for a commercial laundry purchase.
A situation we could help with
This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.
- Situation: A Melbourne operator processing hotel and healthcare linen, renting a 1,200 m2 facility. The landlord offers a $3,200,000 purchase. Existing fit-out includes a tunnel washer, gas boiler, presses, heat recovery and a 50 m3 water recycling system.
- Objectives: Lock in the site, add a second press within 12 months, and smooth cash flow through the upgrade period.
- Options weighed: Buy in the trading company, hold in a property trust with a related-party lease, or remain a tenant and negotiate capex support.
- Funding paths discussed:
- 75 per cent LVR senior mortgage, with the 25 per cent deposit from cash and by leveraging your equity in a residential investment.
- 70 per cent LVR on principal and interest plus a working capital line for stamp duty, professional fees and minor equipment repositioning.
- Structure levers: Interest only for 24 months during the equipment upgrade, or principal and interest from month one for faster amortisation. Related-party lease at market rent to align serviceability.
- How we would approach it: We would map the ranges, structures and repayments against lender appetite, then present the options so the choice stays with the operator. The figures above are illustrative, not confirmed outcomes.
Other finance we arrange for commercial laundry operators
- Equipment finance for laundry gear: Fund industrial washers, tunnel washers, ironers, presses, gas or electric boilers, heat exchangers and water recycling systems through laundry equipment finance matched to useful life.
- Fit-out and refurbishment finance: Cover trench drains, waterproofing, lint arrestors, steam lines, ventilation upgrades and electrical upgrades without draining working capital.
- Working capital: Use cashflow finance for a laundry to smooth linen contract seasonality, utility spikes and consumables purchases with revolving or term facilities.
- Business overdraft: Manage cash timing around debtor collections from hotels and hospitals, aligned to contract billing cycles.
- Refinancing and debt consolidation: Reset facilities, improve pricing, and consolidate equipment rentals into a clearer structure.
- Construction and renovation: Fund a build or expansion, including slab thickening, extra three-phase capacity, docks and equipment mezzanines.
- Business or premises acquisition finance: Buy the freehold, acquire a competitor's book with equipment, or complete a partner buyout with a blended structure.
Owning the premises stabilises occupancy and, over time, frees equity that can support equipment upgrades or a refinance that consolidates multiple facilities.
Why commercial laundry owners work with Ardent
Commercial laundry is asset-intensive and site-specific. ACG arranges and structures the finance around how you intend to hold and occupy the property, then aligns loan terms to your contracts and capex plan.
We are a specialist commercial mortgage broker servicing Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra, Hobart and regional areas. Over a decade we have helped facilitate over $500,000,000 in funding for more than 1,000 borrowers. Talk to us about a direct, practical path to optimal financial outcomes.
Commercial laundry finance FAQs
How much deposit do I need to buy my commercial laundry premises as an owner-occupier? Most lenders require a 20 to 35 per cent deposit, with LVRs typically 65 to 80 per cent depending on the asset quality, your financials and location.
Will lenders recognise that mortgage repayments replace my rent? Yes, lenders usually add back current rent when sizing serviceability, then assess affordability against the new repayments and your cash flow profile.
Can my SMSF buy the building and lease it to my laundry business? Generally yes if the property qualifies as business real property and the lease is at market rate on compliant terms, noting SMSF borrowing and contribution rules.
What property features improve lender appetite for a laundry site? Industrial zoning permitting laundry use, three-phase power, gas capacity, floor loading, trench drains, trade waste approvals, ventilation, truck access and proximity to client corridors.
Should I buy a strata industrial unit or a freestanding site? Freestanding offers greater control of services and expansion options, while strata can suit smaller throughputs with a lower entry price, and lenders support both when the fundamentals stack up.
Is interest only sensible for a laundry purchase? It is often considered during a defined upgrade or contract onboarding period to preserve cash flow, then switched to principal and interest to build equity faster.
Written by
Nick Chong
Managing Director, M.AppFin, Dip. Mortgage Mgmt
Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.
