In this video Joel, Principal Broker explains what type of financial investment is needed to purchase a multi-tenant property.
He gives example purchase prices along with the estimated down payment required from lenders to purchase this type of property.
What location does Joel recommend for this type of property?
The ideal location to purchase your multi-tenant property should directly align with the goals that you want to achieve and your set budget. For example, if you have $300,000 to use as a down payment towards purchasing a property and your set budget is a strip center that costs approximately $1M, Joel advises that purchasing a strip center with this size down payment is not recommended though.
What are these types of properties typically valued at?
Multi-tenant properties which are valued at $1M or less tend to be in weak suburban or rural markets with mom and pop tenants occupying the spaces. This places your capital at a higher risk with minimal upside on your investment. In this situation, Joel advises that it might be better to invest in a retail value-add deal with a syndicate sponsor. There you can combine funds with family members, friends, or other passive partners so that a larger deal can be done with a greater down payment upfront. With a larger down payment and a set budget, the ideal area for a multi-tenant property is within a strong suburban to urban core location, which usually leads to the production of long term value upside. With this stronger core location purchase, higher quality tenants will tend to occupy the property in a much better location, to preserve capital and grow your wealth.