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What your SMSF must confirm before buying industrial property in Melbourne's west

A plain English guide for SMSF trustees looking at warehouses, factories and storage assets across the western corridor and Geelong

What your SMSF must confirm before buying industrial property in Melbourne's west

You are sitting on an SMSF with capital ready to deploy, and a warehouse or small factory in Melbourne's west has caught your eye. The numbers look solid, the location seems sensible, and your fund could use an asset that pays rent instead of dividends that swing with the market. Before you go further, there is a list of things your fund needs to check, and most trustees only find out about half of them after settlement.

This guide is general information only. It is not financial, tax or legal advice, and Fairmont Property Group is a property agency, not a licensed financial adviser. Every point below is something to raise with your own accountant, financial adviser or SMSF specialist before you commit your fund's money.

Why industrial property appeals to SMSF trustees

Industrial assets across the western suburbs and the Geelong corridor have held trustee attention for a reason. Tenants tend to sign longer leases than in retail or office, land content is often a bigger share of the purchase price, and the sector has been supported by population growth and freight movement through the west.

Industrial property can suit an SMSF's long term income focus, but the fund still has to meet every compliance requirement that applies to any other asset.

What to check before your fund signs anything

1
Sole purpose testConfirm with your adviser that the property will be held purely to provide retirement benefits to members, not to benefit you or a related party in the present.
2
Related party rulesIf you or a connected business might lease the property, get clear advice on the strict rules that govern related party tenancies inside an SMSF.
3
Borrowing structureIf the purchase involves a limited recourse borrowing arrangement, have your lender and adviser confirm the structure meets the specific requirements for that type of loan.
4
Fund liquidityCheck that buying an illiquid industrial asset still leaves your fund able to meet pension payments and other obligations as members age.
5
Zoning and permitted useConfirm the property's zoning allows the tenant's current or intended use, since industrial zoning across the west varies suburb to suburb.
6
Environmental and title checksAsk for any contamination reports, easements or title restrictions to be reviewed, particularly on older industrial land.
7
Trust deed authorityHave your SMSF trust deed reviewed to confirm it actually permits this type of direct property investment.

Mistakes SMSF trustees make with industrial property

Buying because a friend did wellEvery fund has a different strategy and risk profile, and someone else's result does not confirm the deal suits yours.
Skipping a proper valuationRelying on an agent's appraisal alone instead of an independent valuation can leave the fund exposed if the ATO ever reviews the purchase.
Ignoring the sole purpose testLeasing the property to a related business without the right advice is one of the fastest ways to put a fund offside with compliance rules.
Underestimating vacancy riskAssuming an industrial asset will always be tenanted without stress testing what happens during a vacancy period.
Forgetting fund costsOverlooking ongoing costs like land tax, insurance and property management that the fund itself must cover.

Getting the structure and paperwork right

This is where your accountant, SMSF adviser and solicitor earn their fee. The purchase contract, the loan structure if there is one, and the lease itself all need to line up with your fund's compliance obligations. is worth reviewing with your adviser before you go firm on any related party arrangement.

A good industrial asset can suit an SMSF for decades, but only if the fund's paperwork is as solid as the building itself.

Where Fairmont fits in

We are not financial advisers and we will never tell your fund what to do with its money. What we do know is industrial property across Melbourne's west and the Geelong corridor, block by block. If your SMSF is looking at a warehouse, factory or storage asset in this region and you want a straight assessment of the property itself, including current demand from tenants and how the asset might perform against comparable stock, that is a conversation we can have while your own advisers work through the compliance side.

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Manny Singh
Manny Singh
Director (OIEC), Fairmont Property Group

Fairmont only sells and leases industrial property across Melbourne's western corridor and Geelong. That focus is deliberate. It means we know the buyers who are active right now and what they are prepared to pay.

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