What to Consider When Deciding to Buy a Strip Mall Property

Retail property is a special market segment when it comes to property performance. Investors and Real Estate Agents alike should respect and gain the knowledge about this property type before they embark on entering this retail property market. Retail property is complex as an investment type.

Rents are generally higher in retail property given the way the property operates, however the operating costs are also higher. The property needs to perform more intensely for tenants, customers, retailers, and the community. This intense level of property performance pushes operating tnr grand long khánh đồng nai costs up in things like energy, cleaning, janitorial, lighting, and amenities.

Any retail property owner that is seeking to save money on operating costs and hence tries to reduce levels of maintenance and presentation is on the fast track to failure. Tenants and customers to a retail property soon see the shortcuts that a property owner may be taking to save money. They feel that the property is just not up to scratch, and then will move their focus and trade to the other properties in the area.

This then says that the property owner in any retail property must respect and support not just the tenants in the property, but also the customers and the local community. Without this care and balance, the property will decline locally. Lower rents will be the outcome and the vacancy factor will rise.

The key to hitting a home run in Real Estate investing is to buy a property with strong income potential for less than the market value of that income. This, actually very simple process, is usually the determining factor in a successful property investment strategy. In order to buy a property below the value of its current or potential revenue it is essential to make an accurate analysis of the both the property and its future earnings. This should be done at the very beginning as a way of screening potential investments. To do this accurately however, there are a few key indicators to keep an eye on.

Cash Flow
A strong and stable cash flow is the backbone of any good investment property, and can very easily be compared to other similar properties as an indicator of the properties’ relative performance. To calculate monthly cashflow simply subtract the properties’ mortgage from its total rents, it should go almost without saying that if this number is negative its best to walk away, at least for a novice investor.

Cash On Cash Return
Not a very important measurement technically speaking, the cash on cash return simply indicates how long it will take the property to pay of the down payment. The strength of the cash on cash return analysis is that it essentially compares properties’ prices to income levels as a ratio. To determine the cash on cash return for a property multiply the monthly cashflow by 12 which gives the properties’ annual cashflow, then divide your down payment by the annual cashflow.

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