I am planning to buy a strip mall in DFW area with maximum price of 1 million with cap rate of 8-10% in a good location. I couldn't find any in loopnet and other websites. Am I entering into the DFW market at wrong time?
Please provide any insights you have on this.
Welcome to BiggerPockets, Raja. I think you can find what you are looking for in the 8 cap range, but if you go much higher there may be lease, location, condition, or tenant problems.
Thoughts, @Joel Owens ?
It's not possible.
10 cap you are looking at areas that are rural and only a local bank will lend on it with a personal guarantee.
I know the areas in Texas very well. Quality areas tenants will pay a high cost per sq ft rent.
Take even a small strip center at 15,000 sq ft at low price of 14 sq ft base. You are talking 210,000 NOI triple net. At a 10 cap that would be 2,100,000 but these are selling for an 8 cap so mid 2's.
Issue is after down payment loan balance is less than 2 million which is most CMBS non-recourse retail lenders cut off points.
A lot of my clients in a similar situation are partnering up with family. I have a groups there where they might be worth 1 million but add in 2 other family members worth 2 million net worth each and now they can buy a 4 to 6 million strip center in an awesome location in Texas with 25% down.
Higher demographics for desirable areas dictate higher per sq ft rates. I think Texas market is good. Georgia and Texas are crushing it right now. Some are worried about dependency on gas but Texas has diversified into energy most recent years as well.
Thanks for the response. I have identified a property in my budget and let me send the details to you in the email. Let me know what do you think?
This market and segment is in my buddies wheelhouse. He owns a commercial brokerage in the DFW market - has leased up/sold quite a few shopping centers/restaurants, medical, retail strip, etc you name it. If you're familiar with Fuzzy's taco shop (cant wait until we get one in Wichita) he's one of the main guys they've used as far as I know for their locations.
He will take care of you. His name is Roger and feel free to let him know I sent you his way. His contact info is on the website. He maintains a Facebook page for the business as well as his personal LinkedIn profile if you'd like to check him out. Maybe you can convince him to join BiggerPockets...I've given him the nudge, however he has not joined yet...ha
If you're a serious buyer I'd be glad to reach out to him and ask him to contact you if you message me your contact info (cell/email address) I'm sure he'd be able to find you something or let you know if what you're looking for exists. He wont beat around the bush or waste your time.
Did you buy anything yet, Raja?
No, not yet. Still looking.
We have a Strip Mall in Katy, cap 5.69% for sale. for example.
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