In-n-Out Gets Even Better for our Client with A New Development Across the Street
A NNN lease, interchangeably called a Triple-Net or Triple Net Lease is a commercial lease in which the tenant is responsible for the payment of certain fees in addition to the standard payment for rent and utilities. Those fees include, but are not limited to, building insurance, property maintenance, and real estate taxes leaving fewer responsibilities on the landlord and making it a more passive investment option.
In December of 2019, a client approached us looking for a commercial investment property to invest in. They had just sold off a large portion of their stock portfolio and we’re looking to reinvest their capital. The NNN Lease that we secured for our client served as the perfect example for the passive nature of these investments, and we wanted to share the transaction with you.
At the time, our investor was looking for a legacy property that she could invest into, and eventually pass on to her children. She was looking for a property that would bring in a stable amount of cash flow while making sure that the tenant had a strong track record of making their rental payments on time.
Property Found and Secured
Through our hard work and connections with industry leaders, TFS Properties was able to secure a 20-year, NNN Lease In-n-Out Burger for \$8 million dollars, and to say the least, our client was “through the roof!” Not only were they going to earn a 4.2% cap rate on a stable NNN Lease property, but they were about to own an investment that almost any other investor would have bought up in a second.
With an extremely strong balance sheet and a legendary reputation, we found the perfect legacy property for our investor through this NNN Lease In-N-Out. Not only, were we able to locate and secure this off-market property for our client, but we were also able to negotiate $300K off the asking price!
This In-N-Out is located in Yucaipa, Ca, and can be seen right off the 10-Freeway. With easy access to this major thoroughfare, we were confident that our client was going to see immense value through this investment. What we didn’t foresee at the time, was an additional development project that would bring further stability to the In-n-Out Burger and the NNN Lease overall.
Success After Year 1
About a year after the purchase of this In-n-Out, our agent that represented the buyer on this transaction, Edward Weng, found out that there were plans to build a brand-new Kaiser Permanente right across the street from the In-n-Out! Not only had we helped our investor purchase a strong stable property, but now the property would experience the added bonus of all the extra foot traffic brought on by the new development.
Now, this is not an average situation and we do not always come across a NNN Lease like the In-N-Out Burger mentioned above. However, we do specialize in, amongst other things, NNN Leases and have helped our investors find other stable properties like a Popeyes in Riverside, CA that produced a 5.0% cap rate, or a Wendy’s in Sweetwater, TX that has a cap rate of 6.0%.