High Crime Rate City and Triple Net Retail

Rental Property Investor · Lucasville, OH · Member since 2018 · 6 posts · 0 votes

Does anyone have any experience with a high crime rate area (70% above national average), and NNN retail commercial property? Would like to know what experiences you had to put up with, and if the investment was worth the risk.

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David M Trapani

Rental Property Investor · Franklin, TN · Member since 2019 · 160 posts · 125 votes

Hello Shane,

Have 2 NNN QSR's in arguably higher than avg crime areas East Memphis, TN and Dearborn, MI. Both are brand name fast food businesses owned by 2 of the largest QSR operators in their field. Long term NNN leases with bumps built into the leases. They both do very well. People need to eat & fast food (esp with drive-thru) tends to be high demand even during pandemic times. Highly recommend the drive-thru aspect. Hope this helps. Cheers & best wishes.

David

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David M Trapani
Rental Property Investor · Franklin, TN · Member since 2019 · 160 posts · 125 votes
5y
Hello Shane,
Have 2 NNN QSR's in arguably higher than avg crime areas East Memphis, TN and Dearborn, MI. Both are brand name fast food businesses owned by 2 of the largest QSR operators in their field. Long term NNN leases with bumps built into the leases. They both do very well. People need to eat & fast food (esp with drive-thru) tends to be high demand even during pandemic times. Highly recommend the drive-thru aspect. Hope this helps. Cheers & best wishes.
David
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
5y
Figure out what they have to pay to bail if they give up and close the store like Walgreens in San Fran, or the grocery stores in Seattle with their “hero pay tax”, I’m sure those woulda been considered ultra safe a year A year ago.
I can’t imagine trying to talk someone in to renting a space that Walgreens bailed on because of theft.
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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
5y
My principles are founded on dirt quality in good areas.
I don't want high crime areas or areas that are more rural in nature. I want to invest where the growth is headed, crime is low, incomes are good, taxes are reasonable, etc.
People want to live where they perceive a high quality of life standard if they can afford it.
I like warm belt states that are more pro business. That's the best way I can say it without getting political.
If you do buy in a cold belt state try to stay away from NN leases as the roofs and parking lots tend to get beat up faster with the snow, ice, etc. You want tenants taking care of that with absolute NNN leases. In warm belt states with a roof warranty in place a NN with limited responsibility is typically not bad.
Over time the land dirt value can just be worth a lot more in a warm belt high growth area over a cold belt high crime area. So it's not worth whatever the higher cap rate to me to invest in an iffy area.
NNN unless doing value add is usually for people that already have very high incomes and wealth as with a strong suburban area in a warm belt state with a national tenant about 2 million price and 600k down with 50k closing costs is about entry level.
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Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
5y
I would avoid high crime unless you live nearby and know it to be a "safe block" within a warzone. Real risk if you're far away from the location.
If its gentrifying, that risk=reward.
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Scott Lieberg
Investor / Principal, · Star, ID · Member since 2016 · 47 posts · 24 votes
5y
Joel Owens has it right.
Why put you self and money at risk?
Deals are like trains, there will be another one along. Good luck.
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