5 Steps to Take if You’ve Inherited Commercial Real Estate Property
Inheriting commercial real estate property can be pretty overwhelming. There are a lot of factors to consider like how much it’s worth, 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.
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. An appraiser can evaluate the current value of the real estate 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.
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.
Decide whether you’re going to keep it or sell
When deciding whether you’re going to keep or sell the property, all of the previously mentioned factors are important to consider. While on the one hand, commercial property could be a great source of income, it could also be a money pit if the opportunity is not there.
If you’ve inherited the property along with others, you’ll also need to get their input since you won’t be able to call the shots on your own. Sometimes it can be difficult to decide to let go of something a loved one has passed on. Get your family members’ opinions and make sure everyone’s voice is heard that has a stake in the investment.
List the property
If you’ve made the decision to sell commercial property, you’ll need to get it on the market. Fortunately, it can be a lot easier than it sounds with online real estate listing.
It’s important to be aware that this process 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, 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.
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.
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.