Food Truck Hub, Eight Spaces, Houston

At $2,200,000 for an eight space food truck property, this is the most unusual thing on our books, and the first thing to be clear about is what it is not. It is not a food business.

• The tenants own the trucks. You own the pad, the utilities and the traffic.
• A buyer takes on a rent roll and a parking lot, not a kitchen, a health permit or a payroll.
• It is one of very few ways to own a food and beverage asset in Houston without operating one.

That separation is the attraction and it is also where the risk lives, because a tenant who can drive away is a different tenant from one with a build-out and a ten year lease.

Three things I would check before writing an offer

• How long the trucks actually stay. This is the entire deal. A food truck operator can leave in an afternoon, which means your rent roll is only as good as the reasons they have to stay. Ask for the tenure of each of the eight tenants, the turnover over the last three years, and what the agreements look like. Month to month across all eight is a very different asset from a mix of multi year commitments with escalations.
• The infrastructure under the pads. What makes a truck hub work is power, water, grease handling and waste. Those systems get used harder than any landlord expects and they are expensive to replace. Walk the electrical capacity per pad, the water and sewer connections, the grease disposal arrangement and who pays for it. A hub where tenants run generators because the power is inadequate is a hub with a tenancy problem waiting.
• The permits, which are the barrier to entry and therefore the moat. Harris County and the City of Houston both have a say in mobile food unit commissaries and in how a site like this operates. Find out what permits the site holds, whether they transfer, and how hard it would be for somebody to build a competing hub two streets away. If it is easy, the yield is telling you so.

Who it fits

• A landlord, not an operator. Someone who wants multi tenant income in Houston without a tenant improvement budget.
• A buyer who already owns small commercial property and understands that eight small tenants is more management than one large one.

Who it does not fit

• A hospitality operator looking to run food. There is nothing to run here.
• A buyer who assumes the rent roll is stable without having seen three years of it.

Financing

• A multi tenant income property is financed as commercial real estate rather than as a business, which usually means a conventional commercial mortgage rather than SBA.
• SBA 504 applies where the buyer occupies a majority of the property themselves, which does not fit a fully tenanted hub.
• A conventional lender will underwrite the rent roll and the lease terms, which is another reason to understand them before you offer.

Not a commitment to lend. Subject to lender underwriting. Terms vary by borrower.

Next step

The rent roll, lease terms, tenure history, the operating statement and the permit position are released after a signed NDA is verified.