Flipping Strip Malls...GFous, You Out There?
I'm investing with a proven partner on a new venture.
(New to me, he is a commercial player.)
He is building a strip mall, leasing it out and then selling the whole package to another investor.
(He has a succesful record in commercial deals.)
His potential tenants are solid and include a national drugstore chain.
I've seen a few others here that do this.
Is there any template formula to determine the sales price for something like this? Obviously, there is value in the land, building, parkinglot, etc....But how do you value the leases on top of that?
Thanks...-
WG
The sales price will be determined by the cap rate, which is net operating income divided by the sales price. Looking at listings on TCI, I see strip mall cap rates running between 9 & 10 percent. Using 10%, if the leased up mall generates NOI of $200,000, the selling price will be $2,000,000.
Look at lt and see what cap rate you think will apply.
-Don M