10 Tips for Buying Arizona Commercial Real Estate

If you intend to use your Arizona mortgage loan to purchase any property other than a single-family home, the transaction qualifies as a commercial real estate purchase. Although commercial and residential real estate purchases are similar in many ways, commercial real estate tends to present more complex issues for both the buyer and the lender. Especially if you’re new to commercial real estate purchases, you may need some guidance in order to make the transaction as successful as possible. In what follows, we’ll provide ten helpful tips on how to buy commercial real estate in Arizona to make the process smoother and less daunting.

  1. Understand what you’re buying. Commercial real estate typically includes apartment complexes, warehouses, office buildings, hotels and motels, gas stations, restaurants, and more. Some Arizona commercial properties are just unused space, such as a vacant lot.
  2. Clearly define your goals. Before you buy, you should know exactly what your goals are in investing in a Phoenix area commercial property. For example, you might want to run a business on the property, earn rental income, or build equity with the real estate.
  3. Know what you can afford. You should not begin looking for Arizona commercial mortgage loans until you’ve computed exactly what you can afford to pay. The revenue you earn from the commercial property will need to pay for all of your loan’s costs, including taxes, monthly payments, and insurance.
  4. Find a mentor. If you’re a commercial real estate novice, you can save yourself the cost and trouble of making massive mistakes by finding a good mentor. Ask your friends and colleagues for a name of someone who has experience investing in commercial real estate in Flagstaff, Phoenix, Scottsdale, Tucson, or other major Arizona cities.
  5. Select the right property. When choosing your Arizona commercial real estate, it’s important to consider your skills and how much time you want to devote to the effort. For instance, you might be able to afford a ten-unit apartment complex in Phoenix, but perhaps you don’t have the time to deal with ten tenants. Instead, you might consider purchasing a duplex.
  6. Talk to an accountant. You need to consult with an Arizona accountant or other tax advisor before you buy to determine whether the property you’ve selected will meet your investment and tax goals.
  7. Take long-term costs into account. All properties, whether commercial or residential, have a limited lifespan. Once a property reaches a certain age, it will require repairs and maintenance that you must factor into your long-term investment plan. In calculating your expenses, make sure you take into account that the property will eventually need a new roof, remodeling, etc.
  8. Choose an Arizona-based lender. Although any nationally certified lender can finance an Arizona commercial real estate purchase, you will probably find an Arizona-based lender more helpful. An Arizona lender can help you negotiate the state’s unique laws and provide valuable advice on the purchase. You can choose a lender based in the Phoenix metro area or the specific area of Arizona in which you are buying, such as Flagstaff or Tucson.
  9. Concentrate on one type of investment at a time. At first, you should pick one type of commercial real estate and focus your investment efforts solely on that. For instance, you might start out exclusively with apartments or office buildings.
  10. Purchase commercial real estate to invest, not acquire. The goal of buying Arizona commercial real estate is to make lucrative investments, not accumulate property. Buying a commercial property that yields no profit or income is simply an acquisition rather than an investment.
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