… How to Finance Owner-Occupied Commercial Real Estate
If you’re running a business and you’re tired of paying someone else’s mortgage through your lease payments, you’ve probably wondered, “Could I just own the building myself?” The short answer? Absolutely. The longer answer? It’s going to take some strategy to get there — and that’s where this conversation begins.
Financing owner-occupied commercial real estate is a different flavour of lending compared to buying an income-generating property like an apartment building or plaza. In this case, lenders are evaluating both the property and your business because your business is the tenant — and the landlord — all rolled into one. If you understand what lenders want to see and how to structure the deal properly, you’ll be in a much better position to buy that warehouse, office, or retail space your business calls home.
Let’s dive into how it works, what lenders expect, and how to tee yourself up for success.
What I’m Covering:
What Is Owner-Occupied Commercial Real Estate?
What Lenders Are Looking For in These Deals
How Your Business’s Financial Health Impacts Your Approval
How to Structure Your Financing for the Best Outcome
How You Can Use This Knowledge to Your Advantage
What Is Owner-Occupied Commercial Real Estate?
Simply put, owner-occupied commercial real estate is when you buy a property for your business to operate out of — whether that’s a warehouse, an office, a medical clinic, or even a manufacturing facility.
Unlike investment properties where the building’s income comes from tenants, here your business is the main tenant. You’re buying the building to run your operations, not to rent it out for profit (although some lenders allow for a little rental income on the side).
The lender’s focus shifts from just the bricks and mortar to your business’s ability to make the mortgage payments.
What Lenders Are Looking For in These Deals
Lenders are still lenders — they want to sleep well at night knowing you’re good for the money. Here’s what they’ll be looking at closely:
Your Business Financials:
- 2-3 years of financial statements
- Profitability trends
- Stability of cash flow
Your Personal Financial Strength:
- Net worth
- Liquidity (cash reserves matter)
- Credit history
The Property:
- Appraised value
- Suitability for your business
- Marketability (Can they sell it easily if things go sideways?)
Loan-to-Value (LTV):
- Typically lenders will fund 65%-75% of the property’s value.
- You’ll need 25%-35% down in most cases.
How Your Business’s Financial Health Impacts Your Approval
Unlike income-producing real estate, where NOI and DSCR drive the approval, here the focus is your business’s debt service ability. Lenders will review your:
- Debt Service Coverage Ratio (DSCR): They’ll want to see your business earning 20%-25% more than its annual debt obligations.
- Profit Margins: Healthy, stable profits go a long way.
- Cash Flow: Lenders love predictable, recurring revenue.
If your business has strong financials and a track record of success, you’re in a great position to secure financing. If your business is newer or has had rocky years, you may need to beef up your down payment or look at alternative lenders.
How to Structure Your Financing for the Best Outcome
Getting this type of financing approved isn’t just about qualifying — it’s about structuring the deal in a way that protects your business and cash flow.
Be Clear on Ownership Structure
Are you buying in your company’s name or personally and leasing it to your business? Both have pros and cons for tax and liability — talk to your accountant.
Prepare a Solid Package
Lenders want clean, organized financials. Sloppy books raise red flags fast.
Consider Amortization Options
Longer amortizations reduce annual payments, helping cash flow.
Leverage Flexibility
Some lenders offer blended solutions — part mortgage, part line of credit — which can give you flexibility for renovations or cash flow management.
Think About the Future
If you plan to expand, relocate, or sell in a few years, make sure your financing terms allow for flexibility without painful penalties.
How You Can Use This Knowledge to Your Advantage
Let’s say you’re running a manufacturing business and your lease is up. Instead of moving again, you decide to buy a small industrial building. You would:
- Prepare 2-3 years of strong financials to show stable revenue.
- Demonstrate how ownership improves your bottom line (cost certainty, stability, potential appreciation).
- Have your down payment ready (likely 25%-30%).
- Work with me to approach lenders who specialize in owner-occupied financing.
Or you’re a medical professional looking to buy your own clinic space. Same playbook:
- Solid financials
- Clean business history
- Enough liquidity to make lenders comfortable
The better prepared you are, the smoother the process and the better the terms you’ll secure.
Allen’s Final Thoughts
Buying commercial real estate for your business isn’t just about owning a building — it’s about investing in your stability, building equity, and controlling your future. Lenders look at these deals differently than investment properties, but the fundamentals are the same: they want to see strong financials, a solid business case, and a borrower who’s got their act together.
The more prepared you are, the more leverage you have — and the easier it is to turn “maybe” into “approved.”
And this is exactly where I come in.
How I Can Help
As your mortgage agent, I help you navigate the ins and outs of owner-occupied commercial financing so you don’t waste time chasing the wrong lenders or scrambling with paperwork last minute.
Here’s how I help you succeed:
- Analyze your business’s financial position upfront
- Package your deal properly for lenders
- Identify lenders who specialize in your industry and property type
- Negotiate terms that protect your business’s cash flow
- Guide you through the entire process, from application to closing
Whether you’re looking to buy your first commercial space or expand into your next, I’m here to help you structure it strategically, not accidentally.
Let’s talk about how to make your business’s next home a reality — and how to get it done right.
