Investment can be very complicated, especially when it comes to real estate. There are so many options out there, and making a profit through a passive investment seems like an impossible task.
Hence savvy investors are currently going for triple net properties like 7-Eleven. While that may sound complicated, it’s not. Buying one of the numerous 7-Eleven stores for sale from a reputable triple net lease properties company like Buy NNN Properties may turn out to be your most profitable investment of 2021.
However, we’ve compiled a couple of things every investor should know before attempting to buy one of the 7-Eleven new stores available as a triple net lease deal.
Knowing these will help you make better decisions, driving the most profit out of the 7-Eleven store in the long run.
Things to Know Before Buying 7-Eleven Stores
Buying a franchise might be a good idea, but it’s quite expensive that affording the 7-Eleven franchise cost in the USA, as well as setting up a store yourself, might be a risky investment.
Also, franchise profits aren’t very enticing since 50 percent of the revenue, or more in some cases, goes to 7-Eleven in the case of a franchise. Having to pay this outrageous amount while managing the store on your own is undoubtedly too much work for the franchisee.
However, in the case of a triple net lease investment, you only have to pay the overhead cost and sit back, getting recurring payments via rent throughout the lease contract.
Here are some things you must know to make your 7-Eleven acquisition a worthwhile investment.
1. The Idea of a Triple Net Lease
Most 7-Eleven stores sell as triple net lease properties. So, you must understand what triple net investments are before attempting to buy any of the stores.
A triple net lease, otherwise known as an absolute lease, makes the tenant responsible for all expenses relating to the leased property throughout the lease contract.
In an absolute lease, the tenant pays for the repair and maintenance costs and building insurance in addition to the property taxes.
However, in a typical double or single net lease, the landlord will cover some or most of these costs. These extra expenses lower the rent costs in triple net lease property compared to the other lease types.
Before buying 7-Eleven stores for sale, you must understand the idea of a triple net lease, which will bind the whole contract.
2. The Possible Expenses
While most investors see triple net lease properties as zero expense properties, it seems that may not be the case.
Before attempting to buy one of the 7-Eleven stores for sale, it’d be best to know some of the expenses that this investment might incur.
As a landlord of a 7-Eleven store, you may need to shell out a few expenses to encourage tenants to keep renting the space. Some of these expenses include tenant inducements, tenant inducement allowances, and trade fixtures.
Failure to provide these incentives makes it less appealing to rent the store, rendering the 7-Eleven store purchase a terrible investment.
3. The location of the Store
Before signing on the dotted lines, it sounds natural to enquire about its location and how well the store will potentially perform there.
It may seem like this isn’t necessary when buying a triple net lease 7-Eleven store with tenants. However, you want to ensure that the store is attractive to prospective tenants if the incumbent tenants terminate their lease contract.
In the case of 7-Eleven stores, virtually all stores are corner locations with high visibility and a steady flow of customers, so this shouldn’t be a cause for worry.
Some 7-Eleven stores are situated near filling stations with around 25,000 to 100,000 passing cars daily. In addition, most of the stores have high-income residents around, making them ideal spots for convenience stores.
Before attempting to buy a 7-Eleven store, you should verify that you’re getting one in an optimal location with high earning potential.
4. The Tenant’s Creditworthiness
As a triple net lease store owner, it’d be best to check how creditworthy the existing tenants are before paying for the store.
This quality is the most important thing to know when buying a convenience store on a triple net lease contract, as it directly concerns what you’ll be making after the purchase.
If you’re buying a store with creditworthy tenants, you have a better chance of getting rent on time, making your investment worthwhile.
About creditworthiness, there are only a few tenants as creditworthy as 7-Eleven. With most stores serving hundreds of customers per day, getting your rent on time should be the last source of worry. Thus, 7-Eleven franchise profits make it a quality and creditworthy tenant.
5. The Lease Term
The lease term refers to the number of years remaining on the lease contract. Before getting one of those 7-Eleven stores for sale, pay attention to the number of years remaining on the lease term.
The reason for this is simple. If you buy a 7-Eleven store with a short lease term, you’ll only be getting rent for the time remaining on the lease contract. If you wish to release the property, you may have to shell out exorbitant cash.
Since most 7-Eleven triple net properties have lease terms exceeding five years, you shouldn’t have to worry about the lease term.
To maximize profit, however, consider buying a store with ten years left on the lease. Also, you may get a price reduction from the seller if the lease term is short, but that’s if you negotiate from that standpoint.
Conclusion
Investing in profitable triple net lease properties isn’t just about buying 7-Eleven stores for sale. It involves making your due diligence and using the gathered information to make informed decisions.
If you don’t know what information to gather, you can start from here. In this article, we’ve helped you identify five things to know before attempting to buy a 7-Eleven store for sale from a triple net lease investment company like Buy NNN Properties. You can also visit the website to see available 7-Eleven stores that match your budget.