May 10, 2026 Hospitality & Accommodation

Commercial Mortgages for a Serviced Apartment, Explained

Buying the serviced or short-stay apartment stock you operate, or the management rights to the complex you run, is a considered step for any accommodation operator. At Ardent Capital Group we speak with short-stay operators about this kind of commercial property purchase, and this guide walks through how a lender reads the asset and what moves the numbers.

Ardent Capital Group is a specialist in commercial mortgages for serviced and short-stay apartment operators across Australia. Our team can help you move from tenant to owner, buy the apartments you let, or fund the management rights to a complex, with clear advice on structure and serviceability.

Access finance of $100,000 to $10,000,000+, with bank and non-bank options suited to the sector.
Over $500,000,000 in funding facilitated across the last decade for more than 1,000 borrowers.
We service Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Hobart and surrounding regional towns.
Structuring across owner-occupiers, strata apartment stock, management rights and whole-complex going concern.

Owning vs leasing your serviced apartment

Control of the property supports your operating model. Location dictates who books with you, which channels convert, and what rate you can sustain. Fit-out and compliance are real, non-trivial costs. You invest in guest rooms, soft furnishings and furniture packages, common-area refurbishments, PMS and channel manager integrations, keyless entry, lifts, HVAC, fire safety systems and commercial laundries. Owning the premises secures that sunk cost and avoids negotiating approvals for every upgrade.

Sector durability is tied to mixed demand. Extended-stay corporate, project crews, hospital and university visitors, drive-market leisure and returning international travellers create a diversified booking base in many postcodes. Repayments replace rent and build equity in an asset that reflects both property values and the strength of your trading business.

Main drivers we see:

Capital certainty for brand and guest experience, with refurbishment cycles you control rather than landlord constraints.
Location strength where proximity to CBD cores, airports, hospitals, industrial precincts or tourism hubs anchors occupancy.
Fit-out retention where your FFE, compliance upgrades and systems are invested in an owned building.
Cash flow visibility through fixed repayments in place of open-ended rent reviews linked to CPI or market.
Long-term asset building while the business trades from the address that generates the bookings.

Buying may not suit every operator. Where your remaining lease horizon is short and relocation is on the table, where a body corporate is reviewing by-laws for short-term letting in a strata scheme, or where capital is better directed to channel mix, housekeeping efficiency, rate strategy or a mid-cycle refurbishment, leasing may still fit. The decision sits with you, and we can map the numbers either way.

If buying is on the horizon, our team can structure a serviced apartment property loan around how you hold and let the stock.

What a serviced apartment commercial mortgage looks like

Deposit and LVR. An individual serviced apartment in a strata complex is typically funded to 50 to 70 per cent of value, so a deposit of 30 to 50 per cent is common, and the figure is sensitive to apartment size and the letting arrangement. Management rights to a complex sit around 50 to 65 per cent, assessed on the caretaking and letting agreement. A whole complex bought as a going concern generally lands in the 55 to 65 per cent range. Where you hold other property, additional residential or commercial security can lift the funded amount, in some cases to the full purchase price, and our broker team can explain the pathways.

Loan term and structure. Terms commonly run to about 15 years with a bank, and non-bank lenders can extend to 25 years. Facilities can be principal and interest for steady amortisation, or interest only for an agreed period, usually up to about five years, to prioritise cash flow during a refurbishment or a shoulder season.

Security and serviceability. The property is the primary security. Lenders assess serviceability using business financials, typically two to three years' performance plus year-to-date trading, occupancy, ADR, RevPAR, seasonality, OTA commission impacts, staffing and laundry costs, body corporate levies and forward bookings on hand. Expect to provide BAS, tax returns, management accounts and a detailed valuation of the real property, with separate consideration for management rights where relevant.

Apartment size and letting arrangement. Many lenders set a minimum internal area, often around 40 to 50 square metres, and treat an apartment committed to a hotel letting pool as specialised security rather than residential, which changes both the LVR and the lender.

Owner-occupier treatment. Lenders generally favour an owner-occupied going concern over a passive investment, due to alignment of incentives and greater visibility of cash flow drivers.

Common ways to hold the property

Many serviced and short-stay apartment operators hold the real property in a separate entity, often a special purpose company or a trust, and lease the premises to the trading business at a market rent. A lender then reads the inter-entity rent as part of the serviceability line, and the arrangement keeps operating risk separate from the asset. Where the stock sits in a strata complex, the finance is assessed around the by-laws on short-term letting, the letting-pool agreement, body corporate consents and sinking-fund health. Where management rights are involved, a lender treats the caretaking and letting agreement as a distinct asset with its own security and loan term, and a short remaining term on that agreement reduces the value it supports.

SMSF purchases are common in this sector. Commercial premises generally qualify as business real property, which allows a self-managed super fund to acquire the building and lease it to your operating company at market rent under a limited recourse borrowing arrangement. Expect lower LVRs, tighter documentation, liquidity requirements and limits on improvements inside the fund. Ardent arranges the lending around your entities, and the tax, super and ownership detail sits with your accountant and SMSF specialist to confirm before you proceed.

How your application is assessed

Business financials and trading quality, including two to three years' accounts, YTD management figures, BAS and ATO position.
Serviceability metrics, such as occupancy, ADR, RevPAR, channel mix, OTA commission impact, seasonality smoothing and forward bookings.
Property and valuation, covering zoning for short-term accommodation, fire and building compliance, lifts and plant, condition of rooms and common areas, and cap rate evidence.
Strata and management rights, where applicable, including by-laws, letting agreements, assignment rights, the caretaking agreement's remaining term and sinking fund adequacy.
Deposit and equity position, including available cash, the ability to leverage your equity across residential or other commercial property, and any required guarantees.
Lease and occupancy, including proposed related-party lease terms where the asset is held in a separate entity.

A specialist broker that works daily in the serviced and short-stay apartment sector can present the right structure and data set to credit to reflect how your asset performs.

How this might look in practice

This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.

Profile: a 48-key serviced apartment building near a major hospital precinct in NSW, currently operated on a lease with five years remaining and two five-year options.
Objective: purchase the freehold going concern for $9,200,000 while refreshing rooms and the lobby over the next 18 months.
Options we would map:
- Freehold held in a family trust special purpose vehicle, leased to the trading company at market rent, targeting a 65 per cent LVR with principal and interest over 15 years.
- Freehold at 60 per cent LVR with a three-year interest-only period to align with a $750,000 staged refurbishment.
- Where the building is strata titled, aggregating multiple lots plus common property interests, and financing any management rights separately.
Likely lending on settlement: a first mortgage over the property, a general security agreement over the trading company, directors' guarantees, with covenants tied to interest cover and minimum occupancy.
How we would approach it: we would map the ranges, structures and repayments under each path, including sensitivity to occupancy swings and OTA commission changes, then talk through the option that matches the operator's risk appetite and refurbishment timeline. The figures above are illustrative, not confirmed outcomes, and remain subject to valuation, credit approval and trading performance.

Finance types for serviced apartment owners

Asset finance for housekeeping, laundry and plant. Fund commercial washers and dryers, linen systems, chillers, boilers, lifts, keyless entry and CCTV without draining working capital.
Fit-out and refurbishment finance. Stage room refreshes, bathrooms, soft furnishings, lobby works and FFE packages to protect rate and review scores, arranged as serviced apartment equipment finance.
Working capital loans. Smooth seasonality, cover OTA payment lags and prepay bulk linen or amenity orders ahead of peak periods, with working capital for a short-stay operator.
Business overdraft. Manage weekly housekeeping rosters, utilities and merchant settlement timing with a flexible limit.
Refinancing and debt consolidation. Reset covenants, align terms across the property, fit-out and equipment, and reduce blended cost.
Construction and renovation. Fund additional keys, conversion of floors, fire upgrades, lift modernisation and energy efficiency works.
Business or premises acquisition finance. Acquire the going concern, buy out a partner, or add adjoining strata lots to control access and common areas.

Owning the premises can free equity for refurbishments, while a structured refinance can consolidate facilities to stabilise cash flow.

A broker who knows serviced apartment property

Ardent Capital Group arranges commercial mortgages for serviced and short-stay apartment operators and structures the finance around how you intend to hold and let the property. We build lender-ready submissions that reflect occupancy dynamics, ADR, RevPAR, letting arrangements and refurbishment cycles.

We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas.

Ardent Capital Group is a specialist in commercial mortgages and our team can help you today. We have helped facilitate over $500,000,000 in funding over a decade for more than 1,000 borrowers. Talk to us about a structure that aims for optimal financial outcomes without pressure.

Your questions answered

What deposit do I need to buy a serviced or short-stay apartment?

Most serviced and short-stay apartments in a strata complex are funded to 50 to 70 per cent of value, so a deposit of 30 to 50 per cent is common, and the figure moves with apartment size and the letting arrangement. Management rights sit around 50 to 65 per cent, and a whole complex bought as a going concern generally lands in the 55 to 65 per cent range.

Do lenders fund a whole complex differently to strata apartments plus management rights?

Yes. A whole complex going concern is assessed as one asset with trading metrics, while strata lot aggregations and management rights are split into real property and rights, each with separate terms, covenants and valuations.

Can my SMSF buy the premises and lease it back to my operating company?

Generally yes, where the asset qualifies as business real property and the lease is at market rent under an LRBA. Expect lower LVRs, tighter documentation and limits on improvements inside the fund.

How is serviceability assessed for short-stay accommodation?

Lenders look at multi-year occupancy, ADR and RevPAR, seasonality, OTA commission impact, forward bookings, staffing and laundry costs, body corporate levies, and how refurbishments will affect revenue and expense timing.

Will a strata by-law against short-term letting affect finance?

It can. Lenders review by-laws, letting pool rules, assignment rights and body corporate consents. A restrictive by-law or uncertain council approval path can reduce the LVR or lead to conditional approval.

What security will a lender typically require?

A first mortgage over the property, a general security agreement over the operating company, directors' guarantees and, where needed, secondary security over other property to support the deposit.

What other costs should I plan for beyond the purchase price?

Allow for stamp duty, legal fees, valuation, building and fire compliance reports, lender establishment costs, and working capital to cover any room or lobby refresh planned soon after settlement.

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.