For many investors with around $500,000 to deploy, the practical question is not whether they can buy a commercial property, but what quality of asset they can realistically access once leverage, competition and execution risk are considered.
In practical terms, this level of capital often places investors in the $1–2 million commercial property segment. This part of the market attracts a broad buyer pool, including private investors, SMSFs and owner-occupiers, and is typically characterised by strong demand and limited supply.
As a result, competition is often intense. Buyers are often required to make trade-offs on lease length, tenant covenant strength, asset quality or pricing discipline in order to secure a purchase.
At the same time, investors deploying around $500,000 have a wide range of options available, including listed vehicles, pooled funds and diversified market exposures. However, for those comparing direct commercial property ownership with alternatives that closely resemble it in structure and economic outcome, the comparison is more specific. The choice is not between property and markets, but between owning a smaller commercial asset outright, or accessing a larger, higher-quality asset through co-ownership.
What $500,000 typically buys through direct ownership
With $500,000 of equity, most direct commercial property purchases fall into a relatively narrow part of the market. These assets are commonly smaller in scale, frequently single-tenant, and often have shorter remaining lease terms.
Such properties can perform well, particularly for hands-on investors comfortable managing leasing, maintenance and tenant negotiations. However, they also concentrate a significant amount of capital into a single asset outcome, where income and value are closely tied to one lease and one tenant.
This concentration becomes more pronounced if vacancy, capital expenditure or tenant change occurs. For investors prioritising income stability and predictability, these characteristics can materially influence risk and return.
Competition and compromise in the $1–2 million segment
When leverage is applied, many $500,000 investors find themselves competing in the $1–2 million commercial property segment.
This segment attracts a wide range of buyers, including private investors, SMSFs and owner-occupiers. Competition is often strong and, in recent years, has contributed to yield compression for assets perceived as defensive or easily financeable.
For some investors, the combination of compressed yields, shorter lease profiles and asset-level concentration can challenge the risk–return balance of a direct purchase.
What changes when capital is pooled
Co-ownership structures allow investors to combine capital to access commercial properties that would typically require several million dollars to acquire outright.
Rather than concentrating $500,000 into a single smaller asset, investors gain exposure to a larger commercial property with attributes that are difficult to replicate individually. These commonly include stronger tenant covenants, longer lease profiles, higher-quality buildings and more resilient income characteristics.
Crucially, co-ownership does not alter the fundamental nature of the underlying asset. Larger commercial properties may comprise multiple tenants, which can change how income risk is distributed. However, where the underlying property is single-tenant, income and value outcomes remain linked to that tenant and lease. In those cases, co-ownership does not change the asset-level risk itself, but rather the quality, scale and execution context in which that risk is taken.
How execution and management differ
Another key distinction between direct ownership and co-ownership lies in how the investment is executed and managed.
In a co-ownership structure, asset sourcing, commercial due diligence, funding arrangements and ongoing management are handled centrally by a professional, appropriately licensed manager. These are the same workstreams a direct buyer would ordinarily need to coordinate themselves, including identifying and securing the property, managing legal, financial and technical due diligence, arranging senior debt, and overseeing asset and property management.
For investors, this removes the need to coordinate multiple advisers or manage competing execution tasks, while maintaining exposure to a specific, identifiable commercial property rather than a diversified fund portfolio. The investment outcome remains asset-led, but the execution burden is materially reduced.
From being a landlord to being an investor
Direct ownership often requires investors to be actively involved in leasing decisions, maintenance, capital works and tenant negotiations.
Co-ownership structures are designed to reduce the level of operational involvement required from individual investors, allowing them to focus on income, asset quality and long-term performance rather than day-to-day property management.
For many, this represents a deliberate shift from being a landlord to being an investor, where responsibility for asset performance remains, but operational workload and execution risk are significantly lower.
Why this structure resonates with SMSF investors
For SMSF trustees, these considerations are often amplified.
A $500,000 allocation can represent a significant portion of a superannuation portfolio. Deploying that capital into a single directly owned commercial property can introduce high levels of asset and tenant concentration, along with governance and liquidity considerations within the fund.
Financing is another practical consideration. In a co-ownership structure, senior debt is typically arranged at the trust level by the trustee, rather than by individual investors. This means the SMSF does not need to source, negotiate or administer a standalone commercial property loan itself.
For SMSF trustees, this can materially reduce complexity. There is no requirement to structure or manage a limited-recourse borrowing arrangement, engage directly with lenders, or oversee ongoing loan compliance within the fund. Instead, the SMSF participates in a commercial property investment where funding and governance have already been established.
Co-ownership as a capital allocation decision
Choosing co-ownership is not about avoiding responsibility or complexity. It is about using capital deliberately.
Rather than asking only, “What can I buy?”, many investors at this level are asking, “What quality of commercial property can I access, and how much execution risk am I willing to carry personally?”
In that context, co-ownership can be a rational way to participate in higher-quality segments of the commercial property market, while retaining the economic characteristics of direct ownership and avoiding many of the compromises often required at the lower end of the market.
A different way to deploy $500,000
At the $500,000 level, the decision is no longer binary. Some investors will continue to favour direct ownership. Others will prefer listed exposure. Increasingly, many are choosing co-ownership structures that sit between these approaches, offering direct exposure to a specific commercial property while reducing execution complexity.
The common objective is not ownership for its own sake, but participation in a higher-quality segment of the commercial property market, with risk and responsibility structured differently. For many investors, the appeal lies in accessing a better class of commercial asset while avoiding much of the execution burden that would otherwise accompany a direct purchase.
About Inside Capital
Inside Capital is a Western Australia–based commercial property investment manager focused on essential-service, income-oriented and value-add assets. The firm works exclusively with wholesale investors and structures opportunities with an emphasis on transparency, asset quality, long-term income resilience and disciplined value creation.
This article is general information only and does not constitute financial product advice. Investors should seek independent professional advice before making any investment decision.
