Strip mail investing question

[Doug McRae]

I am looking for tips or advice in buying property and building a 4 to 6 unit strip mall. What kind of capital should I look at having? How hard is it to get commercial loan for this type of property? Average time to complete? Rent prices as opposed to residential?

[Joel Owens]

Doug how much cash to put down?

I have clients all over the U.S. and my specialty is retail.

Price point usually dictates quality of area and tenants.

If you are buying 2 million and under then most of the time mom and pop tenants. If over 2 million you can generally get into purchasing retail centers with mix of some national and regional tenants. 3.5 million and up you can usually land a 3 top with national tenants and long term 10 year leases.

Cap rates vary from 6.4 to 8 depending on tenants and location.

Lenders minimum want 10% liquid after down payment of 25 to 35% down and net worth equal to or close to loan balance. Also your regeneration of capital can make a difference. If you are worth 2 million but only make 100k a year then not as strong as a doctor worth 1.7 million but bringing in 600k a year. Their trajectory of growth with net worth and liquid is at a higher pace etc.

Commercial investing is like taxes in that each situation is unique and requires a custom crafted plan. I generally talk to people one on one to see if their goals line up to reality.