Most of the time, we focus on the benefits of buying residential or recreational land. Southwest Land Deals has gained a great reputation for knowing our way around larger, more remote properties. But every now and again we come across a commercial property with incredible potential either for a business or for an investor to buy and hold leaving the parcel to increase in value. If you’re considering buying commercial property, but don’t know how to get started, we can help! In this post we look at the 5 Basic Steps of Buying Commercial Property in Arizona.
Step 1. Why Commercial Property
Before buying commercial properties in Arizona, ask yourself: what is my goal with the property? Will I be renovating and reselling the property? Will I hold the property long term and collect commercial rental income? These answers will guide you in finding your ideal purchase. When you have a solid, “why” in place before buying commercial property, you’ll have a much easier time finding land that best suits your needs.
Step 2. Locate the Commercial Property
There are a handful of ways to find commercial properties to buy. First of all, you can call us at 480-442-7787 and we can help you find what you are looking for in Arizona. You can work with a Realtor who has access to the Multiple Listing Service, or MLS. You can also find properties for sale by owner on public posting boards online. There are also public auctions held by cities and counties in Arizona that may offer commercial properties for sale, mostly due to unpaid taxes. Working with a real estate professional might be ideal if you are new to buying commercial properties, they know the tips and tricks of the trade. Or, you can always fill up your gas tank and drive around commercial areas you like to see what may be available. Commercial properties clustered in other commercial areas are typically in greater demand and can yield a higher commercial rental rate, if that is your plan.
Step 3. Evaluate the Investment
Real estate professionals have easy access to most sources of information for research on commercial properties. It does not hurt to do your own research, just to double-check. Search the county records for the deed and ownership history. There should be a nice, clean chain of owners from one to the next. If not, there will have to be legal paperwork done that takes time and costs extra money. Also, make sure to look up the property taxes and if there are any open certificates on the land. Review the physical characteristics of the property and ask yourself the following: Will it be large enough for your plans? Does it have direct access to the utility system? Are there plans for utility expansion? Does the land have good road access? What is the ROI of this investment and does it meet my goals? Finally, check into the plat maps and any surveys available to make sure there are not any surprise easements of which you are unaware.
Step 4. Finance Your Commercial Property
After you’ve done your due diligence and found the commercial property you want to buy, you now need to figure out how you’re planning to close the deal. Do you plan to pay cash, or do you need a loan? If you need a loan, there are a handful of banks willing to finance a commercial investment property. Another option would be to form a partnership with other investors and pool your funds to buy a larger portfolio of property with potentially larger returns. Finally, if you’re going through a professional land company like Southwest Land Deals, ask about owner financing. We often work with clients to set up an affordable payment plan.
Step 5. Put Your Plan Into Action
Now that you’ve purchased your commercial property, you’re ready to develop the land, flip it, or hold it for a few years while the value increases. Keep in mind, the faster you make a profit by reselling, the larger tax you may have to pay. The longer you hold it, the less capital gain tax you will have to pay when it’s sold.