We recently closed a small 1031 Exchange Replacement Property retail deal in Denver. As a way of saying thanks to our clients for the business we give them an option of making a donation on their behalf to a cause of their choice or doing a normal closing gift like Wine of the Month or dinner etc.
This client chose to support The Wounded Warrior Project.
What nearby deal is a good NNN real estate investment?
TMO plays a game of deal roulette and looks at a net leased NNN Dunkin Donuts property for sale with 9 years on a absolute triple net lease.
It is a nice NNN building in downtown Phoenix, an attractive piece of real estate. It features a great location on 16th St and Bethany Home Road NNN Dunkin Donut For Sale which is quite a busy intersection with high traffic volume and a number of other properties nearby.
However, it has pretty aggressive cap rate and high per square foot rate, but it looks like it could be a good deal.
The price is $2,375,000
Deal Roulette rating is A- to B+.
Make sure you don't mess up your 1031 exchange.
Learn about the common 1031 mistakes and errors people have made.
About the NNN Dunkin Donut For Sale Tenant:
Dunkin’ Brands Group, Inc., together with its subsidiaries, owns, operates, and franchises quick service restaurants under NNN Dunkin’ Donuts worldwide. The company operates in four segments: NNN Dunkin’ Donuts U.S., NNN Dunkin’ Donuts International, Baskin-Robbins International, and Baskin-Robbins U.S. Its restaurants offer hot and cold coffee, donuts, bagels, muffins and sandwiches, hard-serve ice cream, frozen beverages, baked goods, and other products. As of February 10, 2014, the company had approximately 11,000 Dunkin’ Donuts restaurants and 7,300 Baskin-Robbins restaurants, which are primarily owned and operated by approximately 2,000 franchisees, licensees, and joint venture partners. Dunkin’ Brands Group, Inc is publicly traded on the NASDAQ (DNKN) with a market capitalization in excess of $4.5 billion.
I’m in Northeast Boulder Colorado hunting for a 1031 exchange replacement property.
Within a few blocks of me, I had a choice of an Office Condo, Industrial Land, and an Office Building with potential redevelopment opportunity.
I chose the third option as it seems to be the best location and have the most upside along with cashflow:
1031 Exchange Replacement Property near the following:
Overall, it’s a solid 1031 opportunity for those looking for 1031 exchange replacement property.
Learn about how a guy got paid $7,967.31 when he did his 1031 exchange.
BONUS: Find out how to do a 1031 exchange for FREE.
Just in.... 1031 NNN Property Want/Need.... This VIP client is the son-in-law of a long time Exclusive client. We have sold his father-in-law almost $30M worth of NNN properties in several states over the years. (Find out about the VIP and Exclusive Buyer programs here)
“Hey Thomas, I have 600k to 800k laying around that I need to get out of the bank and into an income property. Can finance if needed up to, let’s say, $1.5M. It is a partial 1031 exchange so would like to do something sooner than later. I like what you found my father-in-law for his 1031 exchanges and other investments. The triple net properties really appeal to me. Would like to get as high as cap rate as possible, can go anywhere in US. OK with some risk as I am still young and not afraid to get after it if needed. However, would not mind sitting back and just collecting a monthly check! Thanks, AG”
MAYBE - Denny’s in Ohio, $1.76M 6.25% cap rate. Pros: Advertised as absolute net with 13 years on term and strong store sales. Good demographics. Larger, almost 1 acre lot. Strong traffic counts of 31k. Cons: old building - 1970 Status: confirming who guarantees lease and last remodel and to what extent.
MAYBE - 7 year leaseback Boise NNN office $1.16M Pros: curb appeal, 7 year dress lease, 7% cap ask price, $200 psf, downtown location, high population growth, decent size western MSA, nice bite size deal Cons: small .28 acre lot, tenant strength Status: checking on who tenant is, needs more in depth location and market rent analysis
OF INTEREST - 15 year Grease Monkey in IL Pros: new 15 year absolute net lease, low price point of $620k, under $200 psf, corporate lease, 10% bumps, new branding and remodel. Cons: maybe franchisor/franchisee issues, single use building, lot size unknown (for now), unable to assess exact location
PASS - 20 year NNN Salad N Go PHX $1.28M @ 6.8% cap Pros: nice long term absolute net lease. Good location. 2% annual bumps after year three. Cons: small building size of 677 sf puts sale price psf at $1,890! Also puts rent at $128 psf annually! Yikes! Also only has operator guarantees.
PASS - Verizon NC - 9 years left on 11 year lease $1.74M 6.25% cap rate Pros: 9 years left with 600 unit operator. Advertised as NNN lease. New construction 2013. Good highway frontage near Wal-mart. Close to the Western Carolina University, having more than 10,000 students. Cons: high psf of $500. Negative population growth for area. Boonies of NC. Town of only 2,500 people (more in outskirts but still small). Away from main population base and highways especially for a 6.25% cap rate. Flat lease with only 5% bumps in options. $31 psf net rent which would be hard to replace.
PASS - Chase Bank Ohio $600k Pros: long time operation at this location, 26 years, under $200 psf, ok cap for national bank at 6.75%, low $13 psf rent, Chase remodeled in 2015 Cons: 1988 construction, some landlord responsibility, only 4 years left on lease, negative population growth
Off to a good start! However, amazing how many NNN deals look great on the surface only to find out they have major flaws.
Every wish you were a golf pro or could get paid to golf?
Get paid to do what you love.
At some point we all wish we could get paid to do what we love. (see: doing what you love while getting paid) Does it matter where the money comes from? Do you have to be Tiger Woods to get paid while you play golf? No. You can get paid by other sources while playing golf.
Passive investments allow you to be "passive" and collect money from the investments. A business is active and Tiger Woods is a business. He has to work to make money. He has to show up. He has to perform. Then he collects.
Tiger does have many passive parts to his business like his endorsements which allow him to collect money while doing other things besides playing golf. Regardless of his golf performance or his tabloid success Tiger Woods will be able to collect passive income for life just because he is Tiger Woods.
Unfortunately, you are not Tiger Woods.
However, you can still get paid to play golf.
Consider these passive real estate investments.
These triple net properties require little or no management and will pay you while you play golf, they will pay you while you travel, even pay you while you eat and sleep. The leases are triple net so the tenant takes care of pretty much everything and you collect the rent check.... while doing what you love.
These triple net properties pay you to do what you love.
Contact TMO for more details on passive real estate investments like these triple net properties:
Lowe's Net Leased Property $6,665,000 Excellent location across from a Walmart anchored retail corridor,Average Household income of $83,141 in 5mile radius,Absolute net lease, Attractive assumable financing requiring only $1.4M.
FedEx Net Leased Property $6,000,000 Cap rate 7.23% Fifteen (15) Year Lease, FedEx Corporate Guarantee (BBB), Expandable Facility
hhgregg Net Leased Property $6,143,000 8.50 % Situated on Major Retail Corridor with Over 78,000 Vehicles Daily, Irreplaceable Retail Location with Outstanding Residual Value, Growing, Publicly Traded Regional Retailer with 174 Store Network
Orchard Supply Hardware Net Leased Property $11,110,000 Cap Rate 7.5% Rent increase by 11% in 2014, Primary lease, The Kroger Co - S&P rated BBB, Assumable $7.5 million loan
Starbucks Plaza Net Leased Property $4,604,000 8.20% Cap Rate 100% Occupied Strip Center with historically low vacancy. Mix of national, regional and local tenants, heavily Trafficked, Signalized Intersection Location.
National Tire and Battery Net Leased Property $ 3,668,000 Cap Rate: 7.50% Brand New 20-Year Lease with National Tire and Battery.Cpi increases every Five year with max of 12 persent. New sweven year lease with American mattress. average household income in 1 mile radius - $129,000. over 11800 resident in 5 miles.
Contact TMO for more details on any of the above passive investments and net leased NNN property deals via email or phone at 1.866.539.1777
Deals are a sampling of available NNN inventory from around the US and are for reference only.
Guest Post by Will Schnier, P.E., President of BIG RED DOG Engineering | Consulting
There are many reasons why somebody purchasing property would want to obtain the necessary survey products. For this discussion, at a minimum, I recommend that you should always obtain a current title survey, based on a title commitment less than 30-days old. A title survey will include information regarding property lines, location of improvements, easements, utilities and other conditions affecting the property.
I would also suggest that you consider obtaining a full tree, topography, and boundary survey in addition to the title survey if it’s appropriate for your purchase and project/investment intentions. The tree, topography, and boundary survey is also referred to as a design survey, and may be used by an engineer or architect to develop site development and building plans.
My top five reasons for you to obtain a survey are as follows:
1.) Know what you’re buying – the survey will identify the exact limits of the property boundary and improvements on the property.
Real estate can have title and boundary disputes (unfortunately it’s more common than you’d expect), which a title survey would help to uncover. Furthermore, relying upon tax district information on the lot or building size, or seller furnished documentation can be a recipe for expensive trouble without proper due diligence.
2.) Discover the presence and exact location of any easements, restrictions, or other encumbrances that may be imposed upon the property.
You may look out on a piece of property and see a green field, or a paved parking lot, and simply assume that that land is available for you to develop easily. How does that change if there are drainage or utility easements in that location? You may still be able to develop, yes, but your cost just went up a lot more than the cost of the survey.
Or suppose, you’re out in the county, not under the jurisdiction of a municipality that can impose zoning and land use restrictions. So you can build what you want right? What if a former owner of the property restricted its use, in an effort to promote a certain type of community? That 10-acre tract you intended to use for your commercial construction business may not be feasible if there is a deed restriction from 30 years ago limiting the use of the property to residential.
3.) If you’re spending significant money, it makes sense to an additional thousand or few thousand on a title and design survey.
Obtaining a title survey is an affordable way to obtain some more peace of mind with the transaction. Don’t be penny-wise and pound-foolish. You should do everything you can to protect the investment you’re making. A title survey could be as little as $1,000.
4.) The title and/or design survey can be used in the future to prepare drawings and exhibits, and to apply for building permits.
If you’re buying an office building for example, your prospective tenants may ask for a site plan showing the parking locations on the property – well now you have a survey you can supply them. Suppose again you want to apply for a minor building permit to expand the same office building - having a survey in hand will be a necessary step in that process.
5.) You can make the other guy pay!
All real estate contracts, residential or commercial, contain a clause specifically assigning the cost of the tile survey to either the buyer or the seller. Check the box next to the other guys name; this point is rarely an issue of significant contention during the negotiation process.
For more reading, I would encourage you to visit the BIG RED Blog. On you blog you will find very useful information on the land subdivision and site development permitting process, and highlights of specific BIG RED DOG projects, such as our new downtown Austin hotel at 416 Congress Avenue.
About Will Schnier, P.E.:
Will Schnier is the President of BIG RED DOG Engineering | Consulting. He has been responsible for the project management, engineering design, and regulatory permitting of numerous multifamily residential, retail, office, and industrial site development projects throughout central Texas. He can be reached by email at Will.Schnier(atsign)BIGREDDOG.com or by phone at (512) 669-5560.
About BIG RED DOG Engineering | Consulting:
BIG RED DOG is an Austin, Texas-based civil engineering firm specializing in land development engineering, permitting, and land use consulting. Our team of professional civil engineers and certified land planners has over 100-years of combined experience in the Austin and central Texas market. Our commercial project experience includes multi-family, hotel, office, industrial, retail, and single-family subdivision development projects throughout central Texas.
Here are 5 Net leased deals that caught my eye this past week as great passive investments....
Starbucks Texas $1,120,000 7.5% "BBB+" Credit Rating, Out parcel to 191,000 SF Ross & Bealls Anchored Center
NNN AT&T Strip Center Raleigh, NC $4,744,800 Retail shopping center in Raleigh, North Carolina.
AutoZone Office Building CA (Sacramento) $15,700,000 6.64% Autozone Net Leased Office Building Guaranteed by AutoZone, Inc (NYSE: AZO). S&P Rated BBB investment In Rent Class A Build-to-Suit Completed in 2009. Mission Critical Facilty-Headquarter of ALLDATA,Wholly Owned Subsidiary of Autozone.
AT&T Zachary, LA $19,03,000 8% 10 Year Lease (2011 Construction) 10% Increase Every Five year "A" Standard and Poor Credit Rating
Whirlpool Distribution Building Omaha, NE $2,200,000 8.75% Incredible location in one of Omaha’s top Industrial park’s near 96th and L street.
Contact Thomas Morgan, CCIM for more details on any of the above passive investments and net leased NNN property deals via email or phone at 1.866.539.1777
Deals are a sampling of available NNN inventory from around the US and are for reference only.
Here is a great chart of current asking cap rates for single tenant NNN deals. It is sorted by NNN tenant and NNN year built. Originally published in Western Real Estate Business May 2013. Data by Boulder Group.
TSC is one of my favorite NNN tenants. Nice buildings, great locations, solid financials, long leases, low management for owners; the list goes on and on. ABC News Nightline did a segment this week of why TSC is a "Recession Proof Retailer". TSC's internal strategy has been to "ignore the recession". It appears to have worked.
Pension funds expect commercial real estate to generate annual returns of over 7.5% for next three years. Expected yields are higher for apartments and industrial commercial real estate.
National Real Estate Investor magazine reported this study by NCREIF:
Today a 10-year government bond would yield a return of approximately 1.5 percent, while a net lease building offers returns from 5 percent to 8.5 percent or greater. There is also little risk associated with class-A net lease properties—as long as the location is good and the building is well-maintained there will always be tenants willing to sign leases even if the existing occupant leaves. This inspires greater confidence in conservative investors than the recently volatile stock market.
In August, TMO represented the buyer of a northern California NNN Walgreens property. The property sold for $12,184,846 and is leased on an absolute triple net basis to Walgreens (Ticker: WAG) on a 75 year lease with 24 firm years remaining. The buyer was a privately held real estate investment company from New York who was in a 1031 Exchange. The seller was represented by Capital Pacific. The low leverage transaction was financed by Lafayette Life Insurance Company which was placed by Ed Isola from Isola & Associates.
For further details about the cap rate and financing terms, please contact Thomas Morgan, CCIM via email or toll free at 1-866-539-1777.
We sell Walgreens throughout the entire U.S.! Ask about a FREE no obligation NNN consultation.
Contact Thomas Morgan, CCIM to find out more about the benefits of Walgreens Real Estate Investments.
TMO has just closed on the sale of a NNN property in NC that is net leased to Tractor Supply Company. The sale price was just over $3.2M nearing an 8% cap rate. TMO represented the buyer who is a private investor in a 1031 Exchange. The seller was represented by SJC.
The property is leased on an absolute net basis to TSC for another 10 years ensuring a long term passive investment for the owner. Tractor Supply Company is an operator of retail farm and ranch stores in the United States.
TMO provides clients with passive investment opportunities like this around the U.S. Net leased properties give investors peace of mind, long term stable cash flows with very low risk.
Contact TMO for a free investment evaluation via email or toll free at 1.866.539.1777
TMO is pleased to have represented a private investor in the purchase of a NNN leased Tractor Supply property in Texas. The all cash transaction closed in under 30 days for $2,242,500 at a cap rate of 8%.
"Tractor Supply (TSCO) is a great reliable tenant with a solid business model which provides my client with peace of mind for years to come." says Thomas Morgan, CCIM. "TSC's may be in smaller markets but that is where their customers are and they serve the rural farming towns perfectly. Compared to a NNN Walgreens or fast food NNN investment, TSC's have a lot of residual value in the real estate as they are on large lots, usually 4-5 acres and have decent size buildings of around 20,000 sf built of block."
Marcus Millichap represented the Seller.
The "What does NNN stand for in real estate?" has moved to this page: What is Triple Net NNN? Triple net lease definition
See all NNN and Triple Net Posts
