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.
SIG broker Kaveh Ebrahimi successfully closed 34 urgent care locations capitalizing on sector growth, selling 23 properties in 2020 and 11 YTD, while continuing to add listings into 2021.
Working with SIG brokers is the best way to leverage top listings, lending, and marketing efforts. SIG broker Kaveh Ebrahimi has specialized in urgent care facilities over the past 6 years, pioneering the sale of urgent care properties by closing on his first location back in 2015. Since then, his sales numbers continue to increase as he currently has 14 urgent care clinics in escrow with 4 scheduled to close in April 2021.
Opening the doors of Sands Investment Group during the global financial crisis in 2010, Chris Sands has thrived in the face of hard times from the very beginning. He stays committed to investing for success well into the future by focusing on relationships built by win-win deals, collaboration and transparency. In 2020, through its founder’s leadership, SIG doubled in size—gaining recognition as one of Inc 5000’s Fastest Growing Private Companies in America.
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.
March 12, 2021 – By Chris Sands: Throughout 2020, commercial real estate demonstrated its stability and value despite a wide range of unanticipated challenges. While we can generally understand the market within a 10-year timeframe that includes adapting to market corrections, the global Covid-19 pandemic created a more significant challenge than we’ve seen before in terms of our ability to predict investors’ outcomes.
Sands Investment Group (SIG), one of the nation’s fastest-growing net lease brokerage firms, has completed the sale of a 70,000-square-foot office space in Huntington, West Virginia. SIG net lease broker offer unparalleled coverage of buyers and sectors in commercial real estate – nationwide.
In this transaction, SIG lead broker Teddy Leonard, along with co-broker Matson Kane, were able to assist their client in the successful acquisition of this 70,000 SF Amazon Customer Service property in Huntington, WV despite many challenges that arose in March at the end of the transaction due to the pandemic. SIG got involved on a local level by setting up meetings with local officials, including the Huntington Mayor, and the leaders of the investment group to alleviate concerns the investors had in the deal.
- Amazon Customer Service, Huntington, WV
- Property Type: Office Space
- Client Type: Private Equity Buyer
- Price: $16,851,771
- CAP: 7.00%
- Challenge 1: First large-scale transaction for the Buyer. The Seller needed to be made comfortable with their ability to close the transaction.
- Challenge 2: Asset in secondary market.
- Challenge 3: 70,000 square foot building with large rent presented some challenges to provide sale/rent comps.
- Placed the client goal as a top priority which was looking for an investment grade tenant with a 7%+ yield.
- Pandemic wiped out 30% of the committed money in syndication and buyer had to get creative to find replacement investors two weeks before closing.
Interested in acquiring an office property for sale to add consistent returns in your investment portfolio? SIG handles new loans on locations for clients who are seeking to expand their portfolio and acquire NNN properties in all different niches. When the goal is growing an investment portfolio with specific properties, you can’t trust a typical real estate agency to walk you through the process. SIG is a commercial real estate brokerage firm with a wealth of experience helping clients find, secure, and purchase properties to round out their investment portfolio.
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.
Working with SIG brokers is the best way to leverage top listings, lending, and marketing efforts. In this deal, SIG lead broker Gerald Nash, along with co-broker Nick Stockton, was able to secure a buyer for this DaVita property for sale by leveraging the SIG platform, which allowed the client to gain a 13% profit.
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.
Investing in Restaurants: The Basics
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:
1. Why Is the owner selling the restaurant?
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:
- The owners may want to retire, or they may be weary of being their own bosses. Operating a restaurant is a tough job, and the long hours can take a toll. Health complications, family issues, or other personal problems may make some people decide to sell. If it is not working for the owners, you should be confident that you are ready to run it.
- They may not be making sufficient money to meet their costs and want to make the restaurant for sale sooner than later, before incurring a greater loss.
2. How are the restaurant’s financials?
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.
3. Are There Any Tax Problems or Legal Issues?
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.
4. How Is the Location?
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?
Fast Food Restaurant For Sale Opportunities
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:
- Low-risk reliability/creditworthy tenant financials and reporting
- Expense-free ownership with stable monthly income
- Corporate-backed lease guarantee for 10-15 years with extension options
- Rental increases during the lease term to offset inflation
- Preservation of wealth and investment diversification
- The chance to build equity over the lease term
1031 Exchange Investors and Restaurants
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:
- Steak N’ Shake locations in Indiana and South Carolina
- Starbucks outlets in California, Florida and Arkansas
- Panera Bread locations in California, North Carolina and Virginia
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.
SIG brokers handled a 1031 exchange on an Industrial Outdoor Storage property leased to Maxim Crane Works with a repeat buyer.
Working with SIG brokers is the best way to leverage top listings, lending, and marketing efforts. In this deal, SIG broker Amar Goli, along with co-brokers Greg Laughton and Clarissa Tarandy, was able to secure this 1031 exchange deal for a repeat client and demonstrate expertise in the industrial sector to best serve all parties involved.
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.
Despite the challenges we’ve seen this year, 2020 has been very inspiring and eye opening in terms of demonstrating the stability of commercial real estate through shifting times. Generally, we are privy to understanding the market within a 10-year timeframe that includes adapting to market corrections—however, with the last global pandemic taking place nearly 100 years ago and an industry shift that wasn’t brought on by a market correction, it was a greater challenge than ever to anticipate and predict the outcome for investors. Read more
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.
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.
What is the Definition of Bondable Lease?
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:
- Rental fees for the property
- Property taxes
- Insurance premiums
- Maintenance and repairs for the property, including structure and roof
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.
Considerations For Bondable Leases
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:
- Division of financial responsibilities
- Pass throughs of taxes and operating costs
- NNN lease insurance policies and premiums
- Rebuilding the structure if necessary (after hurricanes, tornadoes, etc.)
- General maintenance coverage for structural or roof damage
The Benefits of Bondable Leases
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.
4 Benefits For Landlords
- Consistent Occupancy: Triple net leases are usually long term (somewhere between 10 and 25 years), so landlords will know they have a consistent, reliable income stream for that property. This can help to reduce the time and money spent on searching for new tenants or letting properties sit empty for periods of time. The regular rent, without additional costs associated with the property, can give landlords more freedom from spending time on the bondable lease property.
- Fewer Responsibilities: With a bondable lease, landlords do not have as much responsibility as other types of leases. The responsibility for property taxes, insurance premiums and maintenance or repairs falls on the tenant. This gives the landlord more freedom and time to focus on other projects or properties.
- Predictable Cash Flow: Because of the consistent occupancy and the limited responsibilities landlords of bondable leases have, they can find a passive source of predictable income, allowing them to know how much money they will bring in each month for a set amount of time and freeing up their focus for new or other properties.
- Low Risk and High Return: NNN leases each have their own terms, but because most (if not all) of the risk is passed to the tenant, landlords often see these properties as low risk and high return. Again, the bondable lease property gives landlords the freedom to continue to add to their portfolios in other ways.
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.
3 Benefits For Tenants
- Established Location: As a business owner, it can be challenging to have a shorter-term lease. With the long-term lease afforded by the bondable net lease, tenants can have an established location their customers can rely to be there for many years. This can give them the freedom and opportunity to grow a stronger customer base.
- Long-Lasting Footprint: With a stronger customer base at an established location, tenants can develop a long-lasting footprint in the area. They can focus more on building their business, rather than finding a new place to do business every few years. By creating a long-lasting footprint, tenants can grow their in-the-door traffic for their business, giving them the freedom to become a part of the community.
- Property Control: With a bondable lease in triple net real estate, the tenant is responsible for the property they are renting – which means they have more control than in other types of leases. If the tenant notices a maintenance issue, they can go ahead and get it repaired as they see fit, without needing to involve the landlord. This gives them the ability to fix issues as they arise and on their schedule, often resolving problems quicker than they may otherwise.
Tenants can find freedom to build their business and establish themselves in their community because of the longevity of their bondable lease.
Investing in Bonded Lease Properties
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.