How good of an investment are strip malls?

Asked by Anonymous, San Francisco, CA Tue Aug 28, 2007

I am a licenced CA general contractor who is thinking about buying or building some investment property down the line. I have always been interested in the commercial retail space, but would like to know more about how to calculate the return on one of these sorts of investments. (ie.. tax savings, income, debt service).

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Kaye Thomas, Agent, Manhattan Beach, CA
Wed Aug 29, 2007
Kathleen said it.. due dillgence.. will be the key. Not only do you need to know tax ramifications but you really need to know the area where you are thinking of building. Crossing the street can make a hug difference as to whether the buildings are rented quickly at top market value or turn into an eyesore as so many do.
Traffic patterns can have a big impact on wher eou build.. and what you build. It's not a badidea to see if you can find a good long term anchor tenant before you start.. A good mix of tenants is also important. There area lot of factors involved so be sure that you get as much information as possible befor you buy the land and certainly before you build.
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Kathleen Kel…, , Nashville, TN
Tue Aug 28, 2007
Two words come to mind immediately: due diligence. Vacancy rates are still rising, retailers are opening fewer stores, but rents are also increasing. In general, strip malls are considered iffy right now, but as with anything real estate related, it’s all about location, location, location. There are a lot of factors that go into determining ROI and the following website is a great place to start to help you understand it.

This is such a large financial decision, you are going to want to do your homework, take a class, hire a professional, whatever it takes to make sure you are making a sound investment.…

Good luck to you! ~Kathleen
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