Oklahoma commerical real estate

[Mark Formby]

I bought my first strip mall 6 months ago.  I am looking to buy another one in Oklahoma.

What is an acceptable cap rate?  I feel I need an 8% to  8.5% rate or better but the properties I am interested in are all in the 7% range.  I like for the property to be new and fully rented.  The property also needs 3+ renters.  I favor Stillwater and all points north.  Am I asking for too much or do I need to stick to my expectations?

[Mark Lucido]

Hi Mark -

I'm in the North Dallas area and caps are in the 6% - 8% range right now regardless of retail or office. The cap rate is really a function of the property's profit and the risk involved. If a property is fully leased and there is sufficient NOI then you can expect a lower cap rate. On the other hand if the property is only 25% leased and is in need of repairs or in a questionable area of town than you can expect a higher cap rate to appeal to the investor's sense of risk.