Strip malls are not the most glamorous of investment, but they are reliable and this is what you want from any investment. However, before you rush to look at buying a strip mall, there are a number of considerations to take into account. These considerations will ensure that you invest in the right strip mall and that you make a good return on your purchase.
Having A Grocery Store Anchor
Regardless of the shape of the economy, people need to eat and to eat they need to visit a grocery store. This is why a strip mall that is anchored by a grocery store may be the better investment when compared to one without a grocery store. When your strip mall has a grocery store, you are guaranteed a minimum number of people visiting each week, month and year.
Of course, you do need to consider some points regarding the grocery store. A grocery store that has just moved into the mall will not have a track record in the area yet and could make the investment unstable. It is better to find a real estate or strip mall to buy that has an establisheed grocery store.
The Diversification Of The Strip Mall
Before you buy a strip mall, you need to review who the tenants are. When you do this, you have to determine if they are sufficiently diversified. You do not want to have a strip mall that is full of stores that are selling something similar because if the appeal of these products wanes, your mall will be in trouble. Having a diverse strip mall will help you weather the tougher economic times.
When you are looking at the tenants, you should also consider when their lease is coming up for renewal. It may not be the best idea to buy a strip mall where a lot of the leases are coming up for renewal. If the business owners do not sign a new lease, you will have a mall which is half empty and it could stay this way for a long period of time.
Look At The Performance Of The Mall
When you find a strip mall that you might want to buy, you need to take a look at the performance. Getting hard data about the number of people who visit the mall, the revenue the mall makes and the performance of the stores is very important. You do not want to go into this investment blind and not knowing the history of the property is a bad idea.
A strip mall may appear to be doing well, but the stores could only just be making enough to cover the rent. This could result in them leaving when their lease ends or you having to lower the rental costs to make them stay. These are both situations that you want to avoid as they will negatively impact your bottom line.
Strip malls have a bad rap, but they are a solid investment. If you take the time to find this site or the right strip mall, you will be getting a minimum return for very little risk.