If you are planning to invest in triple net lease (NNN) properties, you should make sure that you are buying assets from a reputable business. In a way, they are not only thriving in a particular area but are also already generating positive returns. So, if the time comes that you are taking over as owner, it does not require much effort on your part to market your business and attract customers, as it already has an existing clientele to cater to.
Now, one of the most lucrative NNN investments to look for in the market today is Pep Boys real estate for sale. Owning one of their stores brings you onboard a strong automotive market and provides you with good returns in the long term.
About Pep Boys
Pep Boys is an automotive aftermarket service chain store that is recognized for selling brand-name auto parts and providing quality car maintenance and repairs to individuals and fleet owners across the US. As of 2016, the company already has more than 9,000 stores and services bays across the country and Puerto Rico and has been growing even more through acquisitions of other auto service businesses, such as Just Brakes.
Over the years, the company has been leasing a number of its retail stores to investors who are passionate about engaging in the automotive industry and meeting the growing needs of car owners in their respective locations.
For those who are looking for a stable source of passive income, a Pep Boys auto triple net lease is one of the best opportunities that they can consider.
Benefits of Buying Pep Boys Stores
Buying any of the Pep Boys auto stores will provide you with the usual benefits of purchasing and owning NNN properties. For example, it generates reliable passive income, while only requiring minimal responsibilities on your part as the owner. Also, as the expenses of owning and operating the property fall directly into the tenant, you are not hooked with the responsibility of paying for the building’s maintenance and repairs, even taxes as well. Not only that, but an NNN investment will ensure long-term occupancy, unlike other rental investments, so you can expect a steady flow of income for many years.
On top of these benefits, investing in a Pep Boys NNN lease also has its own set of advantages. Apart from the fact that the business has strong credit, its lease agreement would also guarantee rental price bumps each year.
Their properties are also situated in prime locations, so you can expect strong sales down the road. Additionally, you will also be given the freedom to repurpose or redevelop the structure as you see fit.
Pep Boys NNN Lease Price and Terms
The cost of Pep Boys real estate for sale depends on certain factors, such as its location and size. However, the typical price of such properties can run from $900,000 to $5,000,000 for buildings measuring 13,500 to 22,500 square feet in size.
As for the lease term, the company usually offers the standard 15-year net leasing absolute terms, with 1.5% rental increases each year or, alternately, 8% rental increases every five years.
As for the cap rate, their properties usually have 6.25% to 6.75%.
Important Things to Keep in Mind When Buying Pep Boys Stores
While buying NNN Pep Boys auto stores eliminates the stress of finding a good tenant, there are things that you still need to consider to find the best investment opportunity for yourself.
Location
No matter which type of NNN property you are investing in, its location is the most important long-term consideration that you have to make. Ideally, the property that you buy has easy access to and from the road and is highly visible to those who are driving by. Also, it would be good for your business if it is located near other anchor stores, which are known to attract more customers to other businesses.
The location would also play an important role in attracting new tenants in case the lease terminates or the one you currently have ceased operation.
Capitalization Rate
Generally speaking, an NNN offer with a high cap rate is a good option for buyers. This means you are actually paying less for the property you are buying while expecting to see great returns down the road.
As previously mentioned, Pep Boys stores typically have a cap rate of 6.25% to 6.75%. This is fairly high compared to other NNN properties on the market today.
If you are unsure about the cap rate of the property you are buying, you can easily calculate it by dividing the property’s net operating income (NOI) by the purchase price (PP).
Cap Rate = NOI / PP
Legal Protection
As you would do when engaging in any other type of business, you should have legal protection when purchasing an NNN property. This means you have to seek legal counsel to guide and advise you throughout the buying process. With them, you will be able to ensure that you are receiving a good title to the property and that the property is compliant with the applicable laws and regulations by the state.
A legal counsel will also help review the purchase and sale agreement, as well as spot potential pitfalls during and after the buying process.
Remember—any issue in the property you are buying could ruin your entire investment, so do not ignore seeking help from legal experts.
Conclusion
As you can see, buying Pep Boys real estate for sale is one of the smartest decisions that you could make when you want to invest in NNN properties. As the company continues to see positive sales revenues in their stores, you will be assured of great returns that will pave your way towards ultimate financial freedom.
However, to ensure you are getting the best value out of your investment, you should do your due diligence and find the best property there is. With the tips mentioned above and expert advice, you can make such a task less stressful and easier.
For more useful and interesting information on real estate and business, check out the rest of our articles!
