Inheriting commercial real estate property in Phoenix, Scottsdale, Mesa, or throughout Arizona can be pretty overwhelming. There are a lot of factors to consider like how much it will sell for in an open/off market, what types of costs you might incur, and what to do with the property. However, getting a game-plan established can help reduce your stress and ensure you are able to move through the process smoothly.
First let’s start by answering a few questions…
- What type of commercial property did you actually inherit?
- Mixed use
- Special purpose
- Was the commercial property being used for what it was actually zoned? (This can increase or decrease its value, so it’s important to figure this out asap.). Zoning is one of the driving factors when establishing property price.
- Should you sell the commercial property to cash out, or do you keep and lease it?
- Would it cause less problems to just to sell the commercial property, especially with multiple heirs involved? Always make sure you have clear title. You do not want any unknown names showing up on title at close of escrow. That can hold up the sale and worse the deal falls through and or a lawsuit fallows.
- If you think you want to lease it, should you hire a leasing and management company or manage it yourself? Managing a commercial property by yourself or with the multiple owners with various opinions who inherited it can be a complicated endeavor and headache. (Typically, at least one of those who inherited the property wants to immediately sell for the money.)
- Is there a mortgage or private financing on the property that must be paid in full upon change of ownership?
- Will you and any other heirs owe more than what the commercial property is worth and can be sold for?
- Who should you hire to sell the commercial property, and for its highest price? Choosing the right commercial real estate agent and brokerage: There is no lack for commercial real estate agents, brokers, companies to choose from in the Phoenix, Arizona area. You have all sorts of choices for agents to brokers and companies (boutique, franchise, attorneys, etc.). Are you looking for a more personal approach or style, do you prefer a more business-like style approach?
- Is there a business that is a part of or attached to the commercial real estate that will add to its value, or is any associated business a separate entity? Who owns the business entity and how long will its lease stay in effect? Must the lease stay in effect and business in place with the sale of the commercial property? Dealing with business, its always best to hire a business appraiser.
- How do you accurately find out the value of the commercial property, including or excluding any business? Hire a commercial and business appraiser.
- What are the legal and tax ramifications to selling the commercial property, and any business? Always consult with an accountant.
- Are there back taxes or liens in addition to the mortgage pay-off that are owed upon being sold? What will you and your heirs owe?
- And many more questions, which is why you need the best qualified commercial real estate professional to help you as soon as possible.
Second FIND OUT EVERYTHING ABOUT THE PROPERTY
Hopefully you’ve been given some information, like the financial statements, on the property you’ve inherited. But even still, you’ll need the help of some professionals to decode what it all means. You’ll want to get in touch with an accountant who can get ahold of or review the financial documents for the property, as well as break down the costs associated with ownership.
Additionally, you’ll want to get an appraisal done for the property (if a business is tied to the property also hire a business appraiser). An appraiser can evaluate the current value of the real estate (and business) as well as make recommendations for the use of the property, if a more lucrative option might exist.
This insight can be invaluable in your final decision of whether to keep or sell the property.
Third SPEAK WITH AN ATTORNEY
It’s important to remember that there are legal aspects to inheriting commercial property. Speaking with an attorney is one of the first things you should do. An attorney, especially one who specializes in commercial real estate, can help you determine:
- What the lease terms are
- If there are zoning and local ordinances the property is violating
- Permit requirements
- How to resolve debts
It’s important to note that many states also have requirements for inheritance taxes. If you’ve inherited commercial property, you may owe state and federal taxes that must be paid on-time or else you will be subject to penalties.
Fourth LIST THE PROPERTY
If you’ve made the decision to sell your Phoenix-Scottsdale-Mesa, Arizona commercial or industrial property, you’ll need to get it on the market.
It’s important to be aware that the process of selling commercial, industrial, or land can take a while because commercial real estate is typically more complex than residential real estate. You need to find someone who needs the space, whether it be retail, office space, or industrial real estate, development, etc which is usually a much more specific market then those looking for a new home. It really comes down to opportunity, and usually having a good commercial real estate agent says Juan Pesqueira with Attorneys Realty.
Last… PLAN FOR THE FUTURE
Now that you have your commercial property listed, you’ll want to plan for the future. What will you do with the money from the sale? If you’re the only one involved in the transaction, you’ll likely be getting a large amount of money. You need to think about:
- How much you’ll owe in capital gains taxes
- How to (wisely) spend the money from the sale
- If you’ll invest the money to make the most off of your inheritance
On the other hand, if you’ve decided to keep the property, then you’ll have a whole other set of exciting challenges ahead. As the property owner, you’ll be the one who’s responsible for making sure you remain in compliance with all necessary maintenance, safety requirements, and other regulations. There are many tasks that will need to be handled by you, or whoever you delegate them to. If you’ve never owned real estate before, you might consider hiring a commercial property management company who can handle the majority of these responsibilities on your behalf.
Our take… Inheriting a commercial real estate property might just end up being a great way to honor your loved one who has passed or a way for you to secure your financial future. Either way, make sure you don’t jump into any decisions. Instead, make sure you’re prepared with these five simple steps.
Your next step is to decide if (a. you want to sell your property. (b. curious as to what your property will sell for in an open market. (c. What options do you have. (d. not sure… We invite you to do one of two things:
- FREE property price analysis and consultation. Have a confidential meeting (or phone call) with me to find out the price of your property in today’s market and the market in general. There is NO CHARGE for this service, you are NOT OBLIGATED in any way to use our service, and WE ENCOURAGE it… even if you’re not looking to sell but simply curious about price & the market. However, understand that my opinion is just that and to determine TRUE MARKET VALUE you need to hire an certified general appraiser. Appraisers deal with value, realtor’s deal with price.
- You can reach Juan Pesqueira – Attorneys Realty at 480.458.8007 (This cell does not have a voice message so if I dont pick up leave a detailed message), call my office 480.767.6900, or shoot me an email: Pesqueira2@cox.net.
We do not sell your information and will not bombard you with calls or endless email. If you reach out by email, we will respond by email. If you reach out by phone, we will respond by phone. Or just let us know in the email/call how you would like your pricing/market analysis report.Juan Pesqueira