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Updated almost 11 years ago on . Most recent reply

Single tenant store investment
Hi,
I would like to know if anyone can share with me the knowledge on the single-tenant store investment, such as the Family Dollar or General Dollar. What should I look for and how would I know if this is a good investment? Any feedback or info will be appreciated! Thank you!
Most Popular Reply

Bee-Bee,
Usually a Dollar Store, and to a lesser extent a Walgreens will drop in value the longer you own it. A typical Walgreen's will have a 75 year lease without rent bumps. The first 25 will be firm term. You can get really good financing in the early years. A developer of a Walgreen's could potentially get 100% financing when he builds the Walgreen's. A new Walgreen's might trade in the 5s, whereas a Walgreen's in the last 5 years of the firm term might trade in the 9s and up.
With a Dollar Store, they may have rent bumps, but are usually built in rural communities or lower end urban and suburban communities. They will be built with a brick front but typically a steel side and rear wall. They usually pay above market rent for the location, so when the lease comes due, they have the owner over a barrel to renew. I am sure if you ask Joel, he will tell you there are much better investments out there.
Mark