The area’s most aggressive real estate bargain hunter is continuing to look to the Central Valley for hot deals.

In June, Ethan Conrad scooped up a former Lowe’s building in the Merced County town of Los Banos, breaking from a long pattern of concentrating acquisitions in the Sacramento area.

Now, he’s bought an 86,000-square-foot Kmart-occupied building in the town of Dinuba, 30 miles southeast of Fresno, and is in negotiations on three other Central Valley deals, two in Fresno and one in Atwater.

The reason: Prices are still cheap in the Valley while killer deals are proving tougher to get closer to home.

Take the Kmart deal: He paid $1.9 million for a property with a tenant whose current rent would cover his acquisition costs in four years. That translates into an otherworldly 25 percent cap rate – the ratio of net income to cost.

The deal is not quite that good. Kmart only has 14 months left on its lease and is unlikely to renew, Conrad said. But he said the double-digit cap rate is still “mind-boggling” when deals closer to home typically go at rates of 5 to 8 percent.

The discounted price is because the property owner, a New Jersey investor, knows Kmart is probably leaving and doesn’t want to be stuck with an empty building in a third-tier market.

“That risk is real,” said Conrad, who now owns almost 5 million square feet of commercial property, mostly in Sacramento. “There are plenty of boxes that have gone vacant and stayed that way a long time.”

But the owner of Ethan Conrad Properties said he already has plans to divide the space and has a likely tenant – Fitness Evolution – lined up to take half the building.

Fitness Evolution’s CEO, Sanjiv Chopra, also is a likely investor in one of the Fresno investments, Conrad said.