If you’re like most people, the idea of getting involved in real estate investment doesn’t excite you all that much. You might have even been discouraged by the big numbers involved or scared off by some of the stories you’ve heard about investors losing money on their ventures. But if you keep an open mind and start looking into your options, you might discover that shopping mall investments are exactly what you’ve been looking for all along, especially when they come with shopping benefits! Here are some things to think about as you consider investing in shopping malls.
Step 1 – Check your budget
With any kind of investment, it’s essential to set a budget. How much can you afford to spend? Don’t forget that maintenance fees are likely to be a major cost, so make sure you factor those into your total expenditure. Your budget will dictate what properties you look at and how many years you expect each property to remain open before looking for another project. For example, if I only had $1 million dollars with which to invest, I might only focus on malls in smaller cities with lower rents (i.e., cheaper) than my primary city and that have been closed for several years (i.e., longer leases). This would give me plenty of time until my next round of funding was available without putting all my eggs in one basket.
Step 2 – Research the market
As with any kind of business investment, you should look at shopping mall investment opportunities as a risk-vs.-reward decision. And just like any other opportunity, it’s important to take your time and do your research before taking on a shopping mall investment. Consider whether there are enough profitable stores, considering their leases are up. For example, if Macy’s is looking for additional space when its lease is up with JCPenney – that’s probably not a good sign!
Step 3 – Assess your own skills and strengths
For any business you start, you will need a particular set of skills and strengths to succeed. This is why it’s important that before starting a business, you really understand what makes you uniquely qualified for it. Some people like an active lifestyle, so they decide on something like opening up a restaurant or café (they’re constantly out meeting and greeting customers). Other people are better suited for something more stationary—like opening up a bookshop (they’re able to sit down and focus on selling their wares).
Step 4 – Remember that it is an investment, not an expense
In most cases, you are going to be putting up your own money. That means you should think of it as an investment and not as an expense. The difference between these two words is huge. If you have a business that is profitable, a shopping mall will only increase your profits. But if you treat it like an expense and use debt financing for an acquisition, there is no guarantee that it will ever turn into a profit-generating asset for your portfolio!
Step 5 – Choosing a location
Before you jump on your first shopping mall investment, it’s a good idea to get acquainted with some of the main factors that influence its success. The best way to find out if a specific location is right for you is by talking directly with an investor who has invested there before. But if you can’t get direct access, these are a few questions worth asking