Hello everyone! My mom owns 3 commercial lots in Arizona free and clear and we are deciding what to do with them. Each is about .17 acre in size, they sit adjacent to each other. They have been in our family for over 20 years but she will be needing some income soon so she wants to sell them and live off of the proceeds. I think that is a terrible idea and I'm trying to come up with more creative solutions that can provide a passive income for her. The trouble is nobody is buying commercial real estate in our area, businesses are shutting down left and right. There have been no comparable lot sales in the past few years so it's hard to put a value on them but she wants to get $80k for one, and $100k each for the other two since they do not have an easement on them, so a total of $280k. She had them listed with a realtor for 3 months but no decent offers came in. If she sells them it would most likely be to a wholesaler for half the price and I'd hate to see that happen. I thought of building small commercial offices on them and renting them but there is no demand in our area, people are working from home now due to the economy. I thought of building self-storage units but the lots are too small and not feasible. They cannot be re-zoned to residential. What the heck can we do with these? Any ideas?
Do they have frontage on a busy road? What about leasing the land for signage?
They are in Prescott Valley. No, not on the frontage road. Not a very busy area in general although there are small businesses in operation on both sides of the lots.
Yeah that's a tough one, maybe list for sale or lease. A small business like a dental office may prefer to lease the land rather than finance the extra $280k in a new office. The long term lease would keep passive income in the family for years. May be a tough sell in the moment but Prescott Valley is growing, you may be 5-10 years away from that property becoming very valuable.
Sell them on terms (ie take payments for the lot via a land contract or similar mechanism) @Mindi B.
First, check the zoning on what is allowable. I have no problem on building since offices will come back and you can't do this overnight, but make sure you're building something that will add value.
A potential buyer of just the lots will do the same thing.
Right now buyers in commercial can purchase lots of properties to reposition for upside in the next 12 to 24 months including land parcels.
.17 is not a lot of land even combining the other 2 lots if same size. Construction costs for materials and labor is higher right now so repurposing older buildings at less per sq ft to build new makes sense in many cases.
Find a land broker in your area to potentially give you a highest and best use opinion. 280k is steep right now for raw land of that size. I can spend that and get a nice lot at the road frontage cleared with a larger retail back anchor to develop on.
Maybe cell tower or billboard if allowed by the city or county. What is around it? Maybe neighbors nearby will see more value in the land being adjacent to their property. You could try a ground lease and see if any takers.