As investors seek the next right opportunity to add to their portfolios, there are a number of businesses that can make a good fit. Sometimes, investors have focused solely on one type of business in the past, but may be looking to expand into a new industry. Other times, an investor might be looking to sell off one property and invest in another one. And yet other investors simply want to add to their portfolio in an industry that they know will not be going away any time soon.
Automotive parts are always in demand, because people need their vehicles to get them from one place to another. It can be considered a recession proof industry, because as opposed to car sales which may not be front of mind for consumers during a difficult economic environment, car parts are more easily accessible for an auto related emergency. This makes them a great investment for anyone looking for that next opportunity.
Automotive industry businesses can be found in just about every town, city or community, as no matter where you live, a vehicle is oftentimes a necessity of life—and with it comes maintenance and auto repair needs. This means that for an investor it’s a proven business model and there are ample opportunities to find the right investment in automotive industry stores. From a small town to a large city, there are bound to be auto parts stores for sale that meet your goals and add to your portfolio in a meaningful way.
Why You Should Invest in Auto Parts Businesses
As you search for your next auto parts franchise investment opportunity, you may have an idea of what type of business you want to pursue. While there is no one right answer to the question of what investment opportunity to take, you should consider your goals in adding to your investment portfolio. A car parts business is often a great choice for many investors, as it offers a good future outlook. Here are 5 reasons you should consider investing in an auto parts business:
1. Always a necessity
An auto parts franchise or business is always a necessity, even in a more challenging economic climate. When people are experiencing hard financial times, they will not buy a new vehicle. However, if something does go wrong with the vehicle they have, they need to repair it. Quality auto parts stores sell everything from windshield wipers to engine parts that will help fix up an older car. People will buy those parts, maybe even doing the auto repair work themselves, so they can get their vehicle in working condition again to get them where they need to go—and avoid the costs of a new vehicle. Auto parts businesses are considered recession-proof.
2. Long-term revenue stream
Because auto parts are always in demand, you know you will be investing in a long term revenue stream. Auto parts stores tend to stay in one location and one community for a long time, so the tenant of your store will likely stick around for the long haul. With a constant revenue stream for the auto parts business, as the investor you know that you will also have that constant revenue from the business that you can invest into future projects or opportunities that you are drawn to.
3. Specialty shop possibilities
With an automotive business, there’s no shortage of options for products. However, one thing that can set the business apart from others is specializing in a certain manufacturer, older vehicles with parts that are hard to come by, or everyday essentials. If a specialty auto repair or parts shop is something you’re interested in investing in, that can help to narrow down your search for investment opportunities. But even if you choose to go the more mainstream auto parts business route, there will be a need in the community for that type of store.
4. Good location options
Because there is always a need, and because auto repair and parts are often an urgent need, there are often multiple auto parts shops in a city—and even smaller towns have a need for one of these types of businesses. The need for an car repair and/or auto parts business isn’t limited to a certain geography, so if you have a specific town in mind, it can be a good fit for the investment. You can buy an already established auto parts business or buy a storefront that can easily be converted into an auto part store, as long as you are near where the customer base is, the store can be a success.
5. Future opportunities for growth and change
Each year in the U.S., new cars are released into the market. The future of automobiles is looking to be more environmentally friendly, with the hybrid and electric car category growing in popularity. Aside from this giving auto parts stores the knowledge that there will always be a market for their products, it also offers an opportunity for growth and change in the future. Auto parts stores will need to keep the products in stock that are in demand—even for older model cars, as some people will keep their car as long as possible—but they also need to be able to adapt to current and future technologies. This gives you the knowledge that your investment is sound and ready for the future, as the store can continue to evolve with the U.S. market.
Factors to Consider When Investing in an Auto Parts Business
Now that you know why you should invest in an auto parts business, you need to know what you should consider as you begin your research into your next investment. It can be complicated if you have never invested in this type of retail store before, but a few key factors can help you find the right auto parts business for your portfolio. Here are 3 key factors to consider when investing in an auto parts business.
As with any real estate, auto parts businesses are all about location! There are a few key areas that may make good locations for an automotive franchise or independent store:
- Shopping centers and strip malls
- Industrial areas
- Urban centers
- Residential areas
- Central business development areas
Whether you choose an urban or suburban area (or even a rural community), you should consider the size of the community, the potential growth of the area, nearby traffic (like interstates or highways, as well as well travelled local roads), and other commonly shopped locations. All of these indicate the likelihood of a steady stream of customers.
Another thing you should be looking at is other similar businesses. Specifically, how many other auto parts franchise stores are there in town, or for larger cities in the immediate area? What would set this auto parts store apart from the others (a specialization in foreign vehicles, perhaps)? Is there a similar and bigger company store nearby? If there are one or two other similar stores in the area, it may not necessarily be a bad thing, but you should always consider competition and how likely it is for a number of businesses offering the same services or products to succeed.
3. Store size
As you browse the listings for auto parts businesses for sale, think about the size of the store and the size of the parking lot. These could be important factors. The parking lot of an auto parts store is often where people park for an error code reading and even a quick repair they can do themselves. People may be parked in the lot for awhile, so you want to ensure adequate parking for other customers to come and go as well. Inside the store, you want to ensure there is enough space for additional inventory to serve all customers. New vehicles and older models have different requirements for parts, so you want to ensure this store has the space to accommodate all current and future parts it will need to sell.
Find the Right Team for Your Investment Opportunities
You don’t have to go at it alone. You can partner with a team of dedicated professionals who have experience finding auto parts franchises and businesses for investors. The automotive business team at Sands Investment Group is made up of experts who know what they’re looking for and can take your goals for your investment portfolio and present you with opportunities that fit. The auto team will help you find just the right opportunity, sharing listings that meet your needs and helping you through the entire process. This team can also bring you value added services, including:
- Existing Real Estate Assets
- Acquisitions and 1031 Exchanges
- Financing and Refinancing
- Development and Redevelopment
With decades of combined experience, the team is ready to assist with the growth, expansion and management of your portfolio. Contact the automotive commercial real estate team today by calling 844.4.SIG.NNN or sending an email to get started with your next U.S. auto parts store investment.