Expert: Brian Bocchieri - 11/11/2008

Question
I live in Houston,Tx and would like to invest in a small shopping strip to lease out to three on four businesses.
What would be the basic steps I should take to accomplish this? What are some of my financing options if I do not have much capital?

Answer
Katrina;  I am sorry for the delay I have been away for a funeral.  

To answer your question.  One way would be to buy an existing center with long term leases in place.  By doing this you do reduce the risk because you will be buying an already performing asset.  You will pay more for such a property but financing should be a bit easier.  The key to commercial real estate is the strength of the leases this is what determines the financing available for your project.   

The second way would be to purchase a distressed strip center that has vacancies and can but re-tenanted with much more profitable tenants.  This is not for the faint of heart and requires risk and experience to pull off profitably.  

The safest way( if ones exists in this market) would be to purchase A+ rated triple net properties.  These are properties in which the tenant is a well established company and pays all the expenses of the property.  ie; taxes, maintence, repairs ...

As far as limited capital lenders have tightened up on their lending policies so bank financing may be difficult especially with no experience in commercial real estate.  One option would be to put together a group of investors to create a syndication in order to purchase a property or many properties.

These are just a few ideas to get you started I hope this has helped.

Wishing you all the best

Brian Bocchieri