Going with your gut may have gotten you through some tight business transactions in the past, but you should not take shots in the dark when it comes to retail properties for sale. Whether you are an investor or a retailer, there are many variables to consider beyond cap rates and price per square foot. If you need help determining whether the space is right and the price is appropriate, keep the following financial tips in mind on your search for the next best commercial investment.

Compare With Other Retail Properties for Sale

Before getting into the comparative analysis of certain properties, simply weigh them based on size, visibility, location, whether they sit at a traffic signal, and other basic features. For example, if you come across three relatively identical properties but notice that one is far costlier than the others, you can briefly check whether the additional value is fair by checking in and around the area. Are there any upcoming developments nearby? Does the property have high-profile features like great exposure, a neighboring Publix, and a hard corner with a traffic light? These types of questions will help you separate the unreasonable options from those that still need a bit more research.

Understand Your Local Real Estate Market

Retail properties for sale in the Orlando area have market characteristics unique to the properties for sale in other parts of the state. Therefore, when determining whether an investment is worth the asking price, you will need to weigh key features against local competition, including:

• lease rates
• sales prices
• lease terms
• credit worthiness of tenants
• accessibility
• visibility
• cap rates
• traffic counts
• demographics
• income

If a property’s asking price is largely skewed from the data in its surrounding market, you can quickly tell that it is not fairly valued. However, if a property’s asking price is only slightly higher from what these analyses estimate, you can use the difference as leverage when negotiating an offer.   

Know If the Property Is One You Can Afford

No matter how sweet of a deal you stumble upon, a retail property is not worth the asking price if you are not ready to make the investment or, more foundationally, you cannot afford the risk of the investment. Of course, you can still make a large difference to the diversification of your portfolio with small first steps. And over time, you will be able to easily tap into other product categories and more complex deals. But for your first few investments, you may want to consider if a property is within your price range before analyzing the validity of its asking price. To get a better picture of the financial risk involved, ask questions specific to you as an investor, such as:

• How much available cash do I have to invest?
• If the property performs poorly (a tenant goes bankrupt, for example), how much money do I have on reserve to cover expenses and additional leasing costs to carry the property until the problem is resolved?
• Does this property meet my risk tolerance given the caliber of tenancy?
• When is my exit strategy?
• Will the timing of my exit strategy work well with the lease expirations in the property?

Secure Professional Buyer Representation

Ultimately, it is not your job to negotiate a competitive rate or evaluate a property’s asking price against its market values. If you choose to hire a broker, it is your representative’s job. At Acquisition Consultants, we ­­­­­­­­­­­­represent buyers interested in any retail property for sale in Central Florida. Limiting your risk and exposure, our real estate professionals strive to secure a price that moves with the market and pair you with properties that best fit your long-term portfolio. For more information on our representative services, contact Acquisition Consultants today.