Triple net lease (NNN) properties are some of the best assets to invest in. Unlike other types of commercial properties, NNN properties offer a unique set of benefits that you will not get from other investments.
Now, one reputable tenant in the NNN world is Family Dollar. This variety store chain is one of the most recognizable names in the retail business and has been around since 1959. By owning one of their stores, you can expect to receive a steady stream of rental income.
But before you dive into this type of investment, it is best to educate yourself first, and this article is designed to do just that. Here, we will discuss everything you need to know when investing in a Family Dollar for sale, from tenant information to some tips on how to search for the best properties that will give you the best returns. So, without further ado, let us get started!
Family Dollar: Tenant Information
Family Dollar is a leading name in the discount retail business, with 64 years of experience. Having more than 8,000 stores in 45 states, it is safe to say that this company dominates the market.
Its presence is especially strong in the Southeastern United States where it has more than 3,000 stores. Family Dollar operates on a model of renting out small spaces to local entrepreneurs who are interested in setting up shops but do not have enough capital for their own buildings or properties. This makes the business a reliable tenant as they will always have a way to make money even if times get tough economically.
In terms of financials, Family Dollar has a long track record of delivering consistent profits. It reported billions of dollars in revenue and operating income in the past years, also boasting healthy growth rates.
When it comes to leases, the company usually prefers NNN properties since they are more cost-efficient in terms of upkeep and maintenance. This is beneficial to both parties as you do not have to worry about major repairs or renovations that may be needed due to normal wear and tear while still having a steady stream of rental income from your tenant.
So, your decision to buy a Family Dollar for sale should be able to open up great opportunities for you as an investor.
4 Notable Benefits of Investing in Family Dollar NNN Properties for Sale
As an NNN investor, you will enjoy several benefits that come with Family Dollar properties for sale. Here are those which are worth noting.
1. Fewer Landlord Responsibilities
One strong attribute of owning a property that you rent out on a triple-net lease is that you have fewer responsibilities to take care of. Typically, the tenant is responsible for covering all costs related to repairs, insurance, taxes, and other expenses associated with running a business on the property. All you need to do is collect rent at regular intervals while enjoying your profits from the investment.
This perk does not only apply to Family Dollar net leased properties but all triple net leases in general. It can be a huge time and money saver, especially if you plan on investing in multiple properties.
2. Company Guarantee
As the landlord, you are typically not liable for any damages made by your tenants on the property. This is because these types of leases have very specific clauses that define and limit your liability as a landlord. This can be beneficial if something were to go wrong with the business operations of the tenant, like bankruptcy or lawsuits.
Aside from this, Family Dollar has a stellar reputation in terms of being responsible tenants. With their track record of promoting local entrepreneurs and providing them with quality services, it is quite unlikely that they would default on their rent payments or cause other problems which may incur liabilities for you as an investor.
3. Longer Lease Terms
Family Dollar NNN properties for sale often come with 15-year lease terms. This is longer than most retail properties, and it gives you more time to reap the benefits of your investment. You also get more stability as a landlord since you can rest assured that the tenant will remain on the property for a significant amount of time.
This also means predictable cash flow, which is what you want when investing in an NNN property. Having a reliable source of income over a long period of time can be very rewarding for those who want to build a real estate portfolio.
4. Standard Rent Increases Every Five Years
When buying an NNN property, you have to pay close attention to the terms of every lease agreement. This is especially the case for Family Dollar leases which usually provide standard rent increases at regular intervals.
In most cases, tenants will agree to increase their rent every five years or so. This helps protect your investments as inflation and other factors can cause the value of money to go down over time. With rental increases, you are guaranteed that your profits remain intact over a long period of time.
Apart from these four benefits, you can also enjoy tax advantages and appreciation potential, as you would when investing in any NNN property. This means that you can enjoy even greater returns from your investments in the long run.
Key Pointers to Look at When Investing in Family Dollar Net Leased Properties
Now that you know why you should invest in a Family Dollar for sale, it is time to look for the best properties out there. The following are essential factors that you should examine during your search.
While Family Dollar is one of the most popular discount retailers in the US, it is still important to consider the location of any property being considered for purchase. Make sure that you do your research and determine if a particular area has the right demographics and features that are attractive to prospective tenants.
You should also take into account the presence of other businesses in the vicinity. You want to make sure that your tenant will benefit from being close to complementary establishments, such as restaurants or shopping outlets.
Knowing the cap rate of an existing NNN property is important, especially when you are buying it in cash. This will help you determine your potential returns on investment. The cap rate is also a good indicator of a property’s value, which can provide more insight into the decision-making process.
To calculate the cap rate of potential Family Dollar investment properties, you have to determine its net operating income (NOI) and then divide it by the purchase price.
So, for example, if you are buying a Family Dollar for $1,500,000 with an NOI of $120,000, the cap rate would be, $120,000 / $1,500,000 = 8%.
While there are no set numbers for the ideal NNN cap rates, this one is generally considered decent.
Existing Lease Term
In the world of NNN investment, it is commonplace that you are buying a property that is already leased out. You should make sure that you look into the existing lease term and determine if it is something that works for you.
For Family Dollar properties, 15-year leases are common, but there may be some discrepancies depending on when the tenant first signed up with the property. It will also tell you how long you have to enjoy your returns before you have to renegotiate or find a new tenant.
Unless you are buying a property that is newly built, you must always inspect it for its structural soundness. This is especially important for older properties that may have sustained some damage or deterioration over time.
You should also look into tenant improvements and any other necessary upgrades that need to be done before the property can be fully operational once again.
As your investment grows, there is also the possibility of structural expansions in the future. For example, you may want to add more parking lots or store space in the future. Or, you may want to convert the property into a multi-tenant unit.
These plans will require special zoning permits, so make sure that you are aware of the existing laws and regulations that govern NNN properties in the area you are buying. This way, you can avoid any legal complications down the line.
Where to Search for NNN Family Dollar Investment Properties
The best place to look for these properties at the best deals is on Family Dollar real estate listings that are run by people who specialize in this type of investment, such as https://www.buynnnproperties.com/family-dollar/. On these sites, you can find detailed information about the property including its location, size, cap rate, lease term, condition, and amenities.
You can also contact local real estate agents who specialize in NNN investment opportunities. These professionals have an extensive network of contacts and will be able to give you insight into the market. They often have access to off-market deals which may be potentially more lucrative than regular listings on websites.
Additionally, you may want to consider attending auctions or open houses where owners are selling their Family Dollar NNN properties. You may even get a chance to negotiate lower prices with the owner if you show interest in the property.
Investing in a Family Dollar for sale is an attractive option for those looking to get into NNN investments. As long as you do your due diligence and properly evaluate each potential property, this could be a great way to start making good money through real estate, diversify your portfolio, and achieve ultimate financial freedom. With this guide, you should now have all the information you need to make smart decisions about where to invest your money.
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