Industrial Warehouse: Acquiring a 15,000 SF Distribution Facility in the GTA

Kwame had been running a third-party logistics (3PL) company from a leased warehouse in Brampton for six years. The business was profitable, but industrial rents in the GTA had increased 40% over three years, and his landlord was pushing for another 15% increase at renewal. At $16/SF, his annual rent was $240,000—and rising.

He'd calculated that mortgage payments on a comparable owned facility would be less than his current rent. But he faced two challenges: coming up with the 25-30% down payment required for commercial industrial purchases, and structuring financing as a business owner with variable income.

The warehouse he identified—a 15,000 SF single-tenant industrial building in Brampton's Airport Road corridor—was listed at $2.85 million. It had dock-level loading, 22-foot clear height, and 3-phase power. It was exactly what his business needed, and what he'd been paying premium rent for elsewhere.

LendCity secured an owner-occupied commercial mortgage, which offered better terms than a pure investment property loan. Because Kwame's logistics business would occupy the entire building, the lender could consider both the property's market rent potential and the business's ability to service the debt.

The lender approved a $2,137,500 mortgage at 75% LTV, with a 6.1% interest rate and 25-year amortization on a 5-year term. Monthly payments came to $14,200—$5,800 less than his current monthly rent of $20,000. Kwame contributed $712,500 as the down payment, funded partly from business retained earnings and partly from a HELOC on his personal residence.

The key qualification insight: by presenting his business's three-year financial statements showing consistent revenue growth (from $1.2M to $1.8M) and stable margins, the lender treated the business income as reliable. The imputed market rent of $16/SF also provided a secondary income stream for underwriting—if Kwame ever moved his business, the property would generate strong rental income for a new tenant.

Owner-occupied commercial mortgages benefit from a dual underwriting approach: lenders evaluate both the borrower's business income and the property's market rental value. This typically results in better terms than pure investment property financing—sometimes 5-10% higher LTV and 25-50 basis points lower rates.

For business owners like Kwame, the key is demonstrating that the business can sustainably service the mortgage. Lenders want to see 2-3 years of financial statements, evidence of revenue stability or growth, and a clear operational need for the property.

The effective return calculation is compelling: Kwame saves $5,800/month versus his previous rent ($69,600/year), builds $48,000/year in mortgage equity, and benefits from any property appreciation. On his $712,500 down payment, the combined savings and equity buildup represent an 11.4% cash-on-cash return—plus he controls the property and eliminates landlord risk.

Kwame's business now operates from a property he owns, with monthly costs $5,800 lower than his previous rent. That's $69,600 per year flowing to the bottom line instead of a landlord's pocket. Combined with $48,000 in annual equity buildup, the first-year economic benefit on his $712,500 down payment is significant. *(Results specific to this transaction; individual outcomes will vary.)*

Beyond the financial returns, Kwame gained operational stability. No more worrying about lease renewals, rent increases, or being displaced by a landlord who wants to redevelop. He controls the facility, can make improvements as needed, and has the option to lease excess space if his business needs change.

GTA industrial values have continued appreciating, with Brampton warehouse properties trending upward driven by e-commerce demand and limited new supply. Kwame's building has already appreciated approximately 8% since purchase, adding another $228,000 in paper equity.