How to Buy Your First Strip Center

Commercial Real Estate

A quick overview. 
Your backyard or city is the best place to start. If your city is too expensive, then study a city that has the great potential. 

Know your goal and budget. Start small.  Maybe $2M.  Gather the fund. Typical down payment is 30% or $600K.  Ask friends and investors to join. Lower your risk. Wait for the good deal. 

1. Pick a location or city
2. Study the market 
   • rents in each center
   • compile a list of all the strip centers 
   • Centers for sale and sold in the last 12 months
   • Use LoopNet and CoStar to review the data
3. Analyze the data 
   • Good or bad deal? What are the risk? 
   • Market rent vs actual rent 
     • this determines if you buy at actual value or inflated value because of inflated market rent. Hence, it affects the outlook and decision-making based on NOI, CAP rate and purchase price. 
4. Brokers are your friend
   • They can help you research
   • They find deals and track new listings
5. Move fast when the time comes
   • Don’t try to save $20k when seller expects full price
6. Due diligence 
   • DD is important. Here are some crucial parts
     • Check the rent
     • Order inspections
     • Get the tenant estoppels
     • Review all the expenses
     • Review all the leases 
     • Environmental report 
7. Take care the property 
   • attract great tenants
   • hire a property manager
8. Repeat

Buy property that you can make value go up.  Not because you think the value is going to go up.