Investors are seeking triple net properties that can generate robust returns, even during market downturns. Another requirement is selecting brick-and-mortar retail properties with the ability to compete with e-commerce as consumers purchase more and more items online. One category of retail property fits these prerequisites to a ‘T’—an auto parts store or business for sale, which may be one of the industry’s best-kept secrets.
Investors who desire optimal opportunities for triple net lease properties may not have considered 7-Eleven stores. 7-Eleven is a known for its Slurpee drinks, but people may not realize that it is the world’s largest convenience store business. It’s consistently ranked as a top-10 franchisor and boasts of 69,000 stores in 17 countries; more than 10,000 company-owned and franchise stores are located in North America. In 2021, Entrepreneur magazine rated it ninth in its ranking of the top 500 franchises.
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.
From medical offices to strip malls and everything in between, real estate investors are constantly looking for the next investment opportunity to expand their portfolios. There is no shortage of investment opportunities, after all, and nearly every industry needs dedicated investors to help them succeed especially when investing in businesses for sale. As an investor, growing your portfolio and seeing a profit on those investments is undoubtedly important to you. Finding the right investment is key to that success.
Reflecting on one year into the COVID-19 pandemic in the United States, we’ve seen an acceleration of the medical sector’s already-booming market outlook, especially as it relates to urgent care facilities. Even before the pandemic, medical clinics were progressively popping up in retail strips and main shopping centers, and around busy commercial offices. Investors are seeking urgent care real estate as a growing sector with stable vehicles to safely invest their money.
Pre-pandemic urgent care facilities were primarily serving the general public for urgent and immediate care needs—however, in a post-pandemic world, research indicates that consumers will prioritize preventative wellness and urgent care centers will see an increase in visitors.
As a result, urgent care centers have come into the mainstream as a new opportunity for private equity, commercial real estate, and retail healthcare individuals. There are big opportunities for investors to take advantage of properties that lean into convenience for the community, especially when it comes to preventative care.
As the sector continues to grow and investors flock to medical offices and modern urgent care facilities, it’s important to understand the benefits as they relate to urgent care as a real estate investment.
As we’ve seen over the last 12 months, urgent care facilities have seen an increase in demand from the COVID-19 pandemic, and research indicates that this trend has staying power as preventative health becomes a priority for everyday consumers and the democracy of healthcare accelerates into communities. Check out Urgent Care facilities on the market.
Healthcare will always be an essential service, and there will always be a demand for urgent care facilities for both medical emergencies and everyday healthcare needs. These facilities support the needs of their communities by offering accessible and convenient options for medical services.
In many cases, urgent care centers provide specialized services with spaces built around specific equipment and providers. If an urgent care practice were to move, the tangible financial cost would be high, which prevents high tenant turnover. Urgent care clinics also typically serve a five-mile radius in surrounding neighborhoods, and the intangible financial cost of losing clients and credibility from a move would be incredibly high.
For owners looking to sell their urgent care businesses and properties, there are two ways a net lease advisor can help structure a deal that identifies the increased value of urgent care facilities, while structuring a transaction that works best for the operator in the long term.
A growing number of urgent care owner-operators are looking to structure a sale leaseback as a way to free up the maximum amount of equity in their property. A sale leaseback is a financing tool that allows an owner-operator to sell their real estate interests to a buyer while simultaneously signing a long-term lease to occupy the property as a tenant and secure the location.
By separating the real estate from the core business, urgent care owner-operators can achieve significantly higher real estate values. Sale leasebacks provide flexibility in allowing owner-operators to sell their real estate while maintaining the freedom to partner their practice with a multi-unit operator down the line.
With a sale leaseback, the owner-operator can pull out 100% of the equity to invest into another project while still controlling the core business. Oftentimes this capital is used to open additional practices, expand their current practice, or acquire another practice or real estate property.
Sale leasebacks are being used across the healthcare industry and are starting to become more prevalent in the urgent care sector, demonstrating their numerous benefits.
Many urgent care owner-operators have built up their practices by taking ownership of the real estate, then growing their practice within it—and oftentimes, they own both the real estate and the urgent care business itself. Because of this, owners are often surprised to learn that a sophisticated investor may value their building more than the standard real estate appraisal. When a multi-unit operator proposes to acquire an urgent care practice, they are solely focused on the business, not the real estate.
However, investors are looking to add these businesses to their portfolios for the long term, so buying a practice from an urgent care operator while simultaneously signing a long-term lease has become an increasingly attractive option. These leases are usually NNN and are very marketable to outside investors.
About Sands Investment Group
Sands Investment Group has extensive experience in all types of commercial real estate and is an industry leader in the urgent care net lease investment space. We can help you navigate and advise you on how to leverage your existing assets in the current economic climate and create capital to fund your future investments.
With over 2,400 transactions in 48 states valued in excess of $5 billion since 2010, Sands Investment Group is the fastest growing net lease investment company in America. We provide highly personalized client services, employ innovative marketing techniques, and have access to an extensive network of investors to help you find the perfect investment or sell a property you own for the best profit. Call 844.4.SIG.NNN or send us an email to get started.
Shopping centers can be a great opportunity for commercial real estate investors. They offer variety in tenants, consistent income, and great potential for growth in the future. A shopping center can look very different, depending on the town or city, as well as the types of tenants the center tends to attract. Some may have a lot of chain stores, while others might have mostly local businesses. There may be a mix of retail, grocery stores, clothing stores, and furniture stores. Oftentimes, there can be many moving parts with shopping center investments, as there are usually multiple retail tenants to manage at any given time.
Whether you have medical experience or are just interested in investing in medical offices because they can make a great long-term investment, medical office properties can be a great addition to any commercial real estate portfolio. There are so many different types of medical properties that can be an asset—from small offices for private practice to large medical buildings or complexes.
In 2021, childcare assets are a product type to watch for commercial real estate investment opportunities. These assets are ideal additions to a net lease portfolio that provide long-term benefits and witness current growth as the industry bounces back from the COVID-19 pandemic. Childcare assets commonly provide long-term leases, corporate tenants with valuable reputations, strong operators, and—perhaps most importantly—owners who are highly committed to their businesses. These owners are passionate about their programs as they genuinely want to see children receive a quality education and care at their facilities.
Restaurants have become popular investments in recent years as busy consumers choose to dine out more frequently—sometimes more than one meal a day. Examining the growth of the industry by its share of consumers’ food dollar and total sales is impressive. The restaurant industry’s share of the food dollar climbed from 25% in 1955 to 51% now, and total US sales have climbed 53% in the past decade to $899 billion, according to the National Restaurant Association. Currently, there are more than 1 million restaurant locations in the United States.
Nevertheless, the industry was negatively impacted by the COVID-19 pandemic that began in March 2020 and led to the closure of many restaurants due to temporary regulations that restricted inside dining. The restaurant industry’s total sales for 2020 were $240 billion less than the National Restaurant Association’s pre-pandemic forecast for the year. Also, more than 110,000 eating and drinking places were closed for business temporarily, or for permanently, as of December 1, 2020.
The pandemic was challenging for restaurants of all sizes, but the companies that fared better tended to be larger franchises that have outlets throughout the country and feature what is described as omnichannel platforms—restaurants that provide several ways for customers to order, pay, and get their meals. Today, consumers desire a consistent experience, no matter the sales channel they use.
Generally, fast food restaurants were able to pivot quickly and adapt to operating during the pandemic. Many fast food restaurants already featured drive-throughs and online ordering with contactless curbside carry-out.
If you’re interested in investing in small restaurants for sale, buying an existing restaurant property can be an excellent option to become a restaurant owner. You can avoid the difficult early years of getting a restaurant off the ground. As with buying a restaurant franchise, you gain instant name recognition and a built-in customer base. Also, you do not have to create a business plan and menu from scratch. But, in a purchase, you inherit both the good and the bad, and it’s crucial to ask the right questions before investing in restaurant properties.
Questions to ask before purchasing a restaurant property:
This is the most critical question—why does the owner want to sell the restaurant if it is successful? Typically, two main reasons cause owners to sell:
Before you purchase a restaurant, you need to know if it will be a viable business. No matter how much you love that taco place or how successful it seems, you must carefully examine its financials along with the asking price. The due diligence will make you aware of any significant issues from the outset. In fact, if you plan to apply for a small business loan, you must create a detailed outline of the finances for your restaurant business plan.
You and your accountant must scrutinize all the financials, including profit and loss, cash flow statements, balance sheets, bank records, and tax history. Things you should look at include food and beverage sales (monthly and yearly), labor costs, food costs and check averages. Also, look at the cost of utilities, rent, insurance and taxes. Examine existing vendor contracts and the state of any assets (especially equipment) you will be purchasing. Look at the liabilities you would be taking on—to whom will you owe money, how much, and what are the monthly payments?
If an owner refuses to show you the books, do not proceed any further. Anyone serious about selling should provide an accurate picture of the financial health of their restaurant. The owner may ask you to sign a non-disclosure agreement stating that you will not share their information with any other parties.
Restaurant closures are often due to failure to pay sales or payroll taxes. These obligations compound quickly under government penalties, and you want to avoid these types of problems. Other legalities to look for: unpaid wages, customer lawsuits, back rent, health department citations, and more. It may be wise to hire an attorney to review all public records to avoid these issues.
Unless you are already familiar with the restaurant for sale, you should research the area and ask yourself several questions to help determine it’s value and fit within your portfolio. Questions including but not limited to: Is the location advantageous, is it located in a busy area? Is the restaurant in a shopping center or is it standalone? Is it visible enough to attract foot traffic and passing cars? Is there sufficient parking? What is the competition like nearby? Have new restaurants opened that might draw business away? What are the future terms of the lease?
A profitable way to invest in the restaurant niche is to select a quick-service restaurants AKA fast food restaurants for sale, with a triple net lease (NNN). Due to the great variety of fast food restaurants, investors can choose the property they want to invest in based on location, price, and brand. Choosing a name brand also eliminates the risk of a local restaurant having a poor reputation. There are several reasons why fast food restaurants that are available to buy make great NNN investments, including location, drive thru access, type of business and lease length.
There are more than 200,000 fast food restaurants in the US and, according to Brand Z rankings, and 2018 revenue for the top eight fast-food brands was $229 billion. Entrepreneur and QSR Magazine report that McDonald’s, Starbucks, and Subway are among the top fast food restaurant brands. They have continued to perform well during the pandemic with the advantage of drive thru service, making the industry an excellent place to invest. Fifty million Americans dine at a fast-food restaurant every day. Restaurants like McDonald’s, KFC, Wendy’s, and Starbucks are stable long-term net lease investments with reliable, creditworthy tenants, effortless monthly income, periodic rent increases for 10-15 years, and few or no maintenance responsibilities.
Many restaurant corporations depend on triple net (NNN) leases investors to expand and open new locations, which creates a profitable circumstance for both property owners and the fast-food corporations.
NNN real estate provide a bevy of benefits that enable buyers to continue to work, build a portfolio, or enjoy retirement. To make the most of those benefits, look for high-credit companies that choose total control over their properties and brand image without involvement from the landlord. You also want to make sure the investment provides:
In addition to NNN investors, 1031 exchange investors are turning to restaurants as replacement properties because these asset types are easy to understand, and buyers like the familiarity with the brands and the ability to their favorite name brand. In addition, restaurants that are clearly growing are particularly attractive, especially since the typical price point (between $2-$3 million) is perfect for individual investors.
The triple net real estate experts at Sands Investment Group have helped investors close deals on many fast food restaurants, including various locations like:
The trusted advisors at Sands Investment Group can bring more to the table than simply identifying properties for you. We can help with existing real estate assets, acquiring new operators or businesses, developing new restaurants, and working to restructure leases to reduce your costs. We have handled one-off deals and acquisitions of multiple restaurant locations to help you obtain the right restaurant for your portfolio. If you have a different net lease property type in mind, we can help. We’ve handled deals on some of the most popular NNN business types including: car washes for sale, gas stations for sale, and many more.
For more information or to begin finding your next restaurant for sale investment, get in touch with Sands Investment Group experts. These advisors can help identify and secure a great opportunity for investment. Call 844.4.SIG.NNN or send us an email to get started.
As investors look into new opportunities for triple net lease properties, one type of business that’s repeatedly mentioned is a gas station. The best types of commercial real estate leases involve relationships with businesses that are recession-proof, meaning they will always be needed regardless of the current economy. Therefore, gas stations are a smart investment opportunity to consider.
With its sandy beaches, rolling mountains, and bustling cities, North Carolina features natural beauty, culture, and industry such as furniture manufacturing in High Point and hi-tech in Raleigh, Durham and Chapel Hill, the research triangle region.
With a population close to 11 million, North Carolina is the 28th largest and 9th most populous U.S. state. Raleigh, the state capital, has a population of about 474,000 people (2.2 million for the entire triangle region), while Charlotte has 870,000 residents. However, recent data collected by the U.S. Census Bureau records that both urban areas rank among fastest-growing U.S. cities.
Triple net lease (NNN) properties are often very attractive to investors who are seeking out an investment with consistent, equity-building returns without having to be involved in the day-to-day obligations and financial responsibilities of the property. NNN leases are also structured over a long period of time (usually anywhere from 10-25 years) so they can be an opportunity for consistent, long-term earning potential from the investment standpoint.
Investor interest has recently grown in a popular new class of net lease investments: car wash properties. Demand for car wash businesses continues to grow due to the vast number of cars on U.S. roads. These businesses also have a considerable advantage over other many types of retail—the internet cannot put them out of business. In other words, the only way to wash a car is to drive to the local car wash.
For real estate investors, 1031 exchanges create an opportunity for investors to move from one property to another and provide tax benefits for doing so. With the help of a tax-deferred exchange company, you can sell one or more property and defer the payment of capital gain taxes by acquiring a replacement property. This allows you to keep 100 percent of your money working for you instead of paying about one-third that equity to taxes. However, in a 1031 tax deferred exchange, there are very specific requirements that need to be followed.
When considering using a 1031 exchange for the sale of one property and the purchase of another, investors should consider the benefits they can gain from such a transaction. These 1031 exchanges are transactions that real estate investors often use to increase their wealth, save on taxes with the tax deferrals, and grow their portfolios. It’s a strategy that is used by many investors across the country.
Investing in commercial real estate can bring about many advantages in the form of low-touch income or a diversified portfolio. But not all commercial leases are the same, and even leases of the same type can have varying factors and deal details. In short, every commercial lease is usually as unique as the property itself, so it’s very important that you understand all the particulars and fine print of any property you’re considering adding to your portfolio.
NNN properties are a great way to add diversity to your portfolio, build equity, or add a low-risk, low-touch revenue stream that will pay consistent returns over a long time period. NNN properties are very popular with investors who want to get out of high-touch, high responsibility investments (such as apartment complexes) and into an investment that still generates income without all the time and monetary responsibilities that come along with being a landlord.
Triple net leases, or NNN leases, are a very popular option for real estate. One type of NNN lease is a bondable lease. A bondable lease property has a long term tenant, of often ten years or more, with shared financial responsibilities between the landlord and tenant. Because of this, it can be advantageous for both property owner and business owner to have a bondable lease on the right property.
Many investors like adding NNN properties to their portfolios for the benefits offered for both the property owner and the tenants of the space. However, it’s important to understand the difference between triple net leases and bondable leases. While similar, there are some distinct differences that can be beneficial for landlords and tenants alike.
Read on to find out what a bondable lease is and the benefits in triple net real estate, for both landlords and tenants.
A bondable lease in triple net real estate is a variant of the NNN lease, in which the tenant carries the real estate risks and all operating costs for the property. These additional financial responsibilities may include:
A bondable lease differs from a traditional NNN lease in that more of the financial responsibilities are placed on the tenant. In an NNN lease agreement, the structure, roof, plumbing and other costs may fall on the landlord; while in a bondable lease, it is on the tenant to take care of any issues that arise with these items. Another difference that can benefit the landlord is that often in a bondable lease, the tenant cannot terminate the agreement.
When an investor looks into properties for a bondable lease agreement, there are many things to take into consideration, including the location and the tenant type. Once an investor has made a decision to offer bonded leases in the future, these specifics can help to narrow down the search for properties – and for tenants, in the future.
Location: A good, bondable triple net lease property, is often in a high growth area. These may be new cities, or areas attracting new residents at a higher rate. Popular parts of town, close to well established businesses, are often good bondable lease properties, as the area may be established with customers who can become customers at the new business.
Type of Business: When considering businesses to offer a bondable lease to, landlords should consider the longevity of the company. The best types of businesses for this lease type are ones not susceptible to economic or technological changes. These potential bondable lease examples may include grocery stores, convenience stores, dollar stores, medical offices, etc. These businesses are always necessary and will not shift too much during times of economic crisis.
Lease Terms: Each bondable lease will have its own terms, just like any other type of lease. Landlords need to consider the terms for their bondable lease, and ensure both they and the tenant understand what is expected in the terms. Because of the shared responsibilities, this understanding is especially important. Terms can include:
There are a wide set of benefits associated with NNN bondable leases. Both the property owner and the tenant have several benefits they can find with this type of lease, making this an attractive option for both sides of the agreement. Landlords like the ease of this lease type, and tenants can find more freedom. Generally, both sides of the lease can find more freedom in this agreement than in other NNN leases.
Each of the benefits a landlord finds can free up their time, money or energy to focus on new projects and other properties. This can help investors continue to grow their portfolios.
Tenants can find freedom to build their business and establish themselves in their community because of the longevity of their bondable lease.
Once an investor has decided to invest in bonded lease properties, it can be helpful to do some research on the types of properties for the tenant types the landlord is interested in working with. A net lease real estate expert can help investors sift through the listings to find the best properties for their needs. They know the right questions to ask when looking at listings and how to decipher the fine print on existing leases. This will help the investor know what responsibilities they might inherit in a new property with an existing tenant.
A net lease advisor can help landlords understand the pros and cons of bondable leases. These experts know market trends and know the longevity of different types of investment locations that may be good for a bondable lease property. A bondable lease expert can help find the right property for ongoing, consistent income for property investors.
Sands Investment Group is America’s fastest growing net lease investment company, with over 2,200 transactions in 48 states (to the tune of $4.7 Billion) since 2010. Our experienced team of net lease advisors and brokers are experts in the NNN market and can help you find your next best investment opportunity by helping you navigate through all the opportunity and risk factors of every NNN property that meets your investment goals.
Want to learn more? Get in touch with an expert net lease advisor today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.
Triple net leases are popular options for landlords and tenants alike. They aren’t your standard commercial lease agreement. They give property owners a consistent income stream with more time to focus on other projects, as day to day maintenance is typically passed to the tenant. This gives the tenant more control over the property, allowing them to make repairs when needed and sometimes even update the property as they see fit for their business. The costs associated with the property are split up between landlord and tenant in a different way than most other leases.
Investors are often attracted to NNN leases, or triple net leases, because of the consistent income stream they can provide while still being a lower risk property. These types of leases are a long-term solution for tenants, while providing property owners with plenty of benefits as well.
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