Commercial property finance
Buying your medical practice's rooms: lenders read the practice and the property together.
Investors paid a 4.82% yield for the Surrey Hills medical centre, reported in July 2026, with 207 registered groups and 9 formal bids, and a Mentone medical centre cleared at 5.49% at CBRE Auction 184 in May. When a practice owner buys its own rooms the practice is both tenant and borrower, so a lender reads the practice's earnings and the property together. That changes what the lender asks for, and the loan it will write.
Investors want medical property because the income looks durable.
Medical premises have drawn strong investor demand in 2026. Mont Albert Medical Centre at 201 Union Road, Surrey Hills, sold for $3.125 million at a 4.82% yield after 71 years in the same hands, with 207 registered investor groups and 9 formal bids. National operator ForHealth, which has more than 90 locations, had recently renewed its lease for five years with options to 2041. JLL's Mark Stafford estimated about 30% of the enquiry came from offshore investors or local groups using offshore capital.
At CBRE Auction 184 in May, MyHealth Medical in Mentone cleared at 5.49% on $181,654 of income. In Geelong, ten medical, health and wellness assets changed hands in 2026 for close to $35 million combined.
| Medical premises sold in 2026 | Price | Yield or income | Lease |
|---|---|---|---|
| Mont Albert Medical Centre, Surrey Hills (July) | $3,125,000 | 4.82% yield | ForHealth, renewed 5 years with options to 2041 |
| MyHealth Medical, Mentone (CBRE Auction 184, May) | $3,310,000 | 5.49% yield, $181,654 income | 10 year net lease to 2030 plus options, 3.5% increases |
| Belmont Medical Centre, Geelong (February) | $10,600,000 | $700,910 net income (about 6.6%, our arithmetic) | 100% leased to Bupa, urgent care clinic |
| Torquay Healthcare Complex | $9,250,000 | Not disclosed | Kieser, Surf Coast Hearing and ProFeet, 9+ year WALE |
When the practice buys its own rooms, the practice is the tenant and the borrower.
Everything above is an investor buying a building let to somebody else. A practice owner buying its own rooms is in a different position, because no outside tenant is paying rent. The lender reads the practice's earnings and the property together, and the repayments come out of what the practice makes.
The loan is serviced by rent from a third-party tenant. The lender reads the lease term, the tenant, the increases and the yield the market is paying for that income.
The loan is serviced by the practice's own earnings in place of rent. The lender reads the practice accounts, the principals and the premises as one proposal.
The first thing worth working out is what the repayments and ownership outgoings on the rooms come to against the rent the practice pays today. A lender runs the same comparison, and a practice that can show its earnings cover the new repayments with room to spare makes the simplest file. Purchase costs belong in that picture too, and our stamp duty calculator covers duty and government fees in every state.
There's also a difference in what the lender is protecting. With an investor loan the building can be re-let to another tenant if the first one leaves. In a practice-owned set of rooms, a fall in the practice's earnings reduces the repayment source and the lender then depends on what the premises would sell or let for.
A lender assesses the practice, the premises and the people behind both.
On the practice side, the lender wants earnings history from accountant-prepared financials and a view on whether the practice covers the new repayments after the rent it pays today falls away. On the property side, the lender wants a valuation of the rooms, how purpose-built they are and what they would be worth to another occupier. On the people side, the lender wants to know who the principals are and how long they intend to practise. Lenders generally view established medical practices favourably as owner-occupiers, and as a broad guide owner-occupied rooms often sit around 60% to 70% LVR, depending on the lender, the fit-out and the practice.
The people question matters most in a practice built around one practitioner, where earnings follow the individual. Lenders usually want to see how the practice would keep earning if that person stepped back, such as associate practitioners, a patient base that isn't tied to one name, or a succession plan, and some will ask about key person insurance.
A trust or SMSF can own the property while the practice rents it.
Many practice owners hold the premises in a separate entity from the practice, so the practice pays rent to a trust or a self-managed super fund. Where that happens a lender looks at both entities, and the practice and its principals are commonly asked to stand behind the loan through guarantees. Commercial premises used by a related business sit outside the August 2026 ban on new residential SMSF borrowing, and our piece on SMSF borrowing for commercial property covers how that structure works. Confirm the structure with your accountant and solicitor before you sign a contract.
What to prepare before you make an offer on the rooms.
Have the practice's recent financial statements, the rent you pay now and the lease it sits under, the entity structure for the buyer and the tenant, and the contract and valuation details for the premises. Those are the documents a lender will ask for, and our guide to commercial property finance in Melbourne explains how lenders read the city's suburbs and corridors. The owner-occupier versus investor comparison covers the assessment difference in more detail.
If you're weighing up buying the rooms, send us the practice accounts and the rent you pay now before you make an offer, and we'll work out with you whether the earnings carry the loan and which lenders are open to it. The wider commercial property finance page lists the loan types we arrange.