Yes! Interest rates have risen and make it harder to justify current-day cap rates. There’s hope! Here are a few strategies that will improve investor yield and enable you to get into the market. Read “How to Succeed in this Market!”
1. Shorter Term Leases: Consider established dollar stores with shorter remaining lease terms.
WHY?
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If they are the current SF prototype and have good “situs” (location, traffic counts, visibility, access, etc.), they are likely to renew.
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Rent increases will come sooner than a new 10- or 15-year lease, which improves yield.
2. NN vs. NNN Leases:
WHY?
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NN leases put more responsibility on the purchaser, BUT in return they get a higher cap rate.
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NN leases often have rent increases sooner than the longer 15-year NNN leases, greatly improving the investor yield.
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Newer NN leases with the Family Dollar and Dollar Tree stores have fewer landlord responsibilities and should be considered.
3. Consider small towns acquisitions: These are often great locations!
WHY?
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There is little chance that a BIG BOX will land in a small town and these folks need toilet paper, milk and chips.
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This is where the real bargains are in terms of higher cap rates, with both new construction and older stores.
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Small town stores are the life blood of the area, often dubbed “The Baby Walmart.”
4. Are you an ALL-CASH buyer?
5. Portfolio Buyers: Buying multiple properties renders discounted cap rates.
6. Alternate Financing Strategies?
TWO APPROACHES…
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Assume the Existing Loan: Ask if the seller’s loan is assumable? Their interest rate will likely be lower than current rates. You will need to be prepared to bring cash to the transaction as a down payment.
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Consider Seller Financing: If there is no loan on the property, consider making an offer with Seller Financing, offering a price close to the asking price with terms that make sense. Everyone wins!
After 20+ years as an investment sales broker AND living through the ups and downs of various cycles, I can confidently say, without hesitation that the dollar store space will provide long-term security and diversification for investors.
Below are some available properties that are worth considering.
New Construction Dollar Trees, NC – strong traffic counts, “main and main”, density of population:
Family Dollar– established and expanded inner city store with heavy traffic counts.
“Bite Size” Dollar Tree – historic strong store sales, rebranded to Dollar Tree in 2019.
Rare NNN Family Dollar – outstanding location with upcoming rent increase in 2026
New Off-Market Dollar Generals
15-year NNN leases – inquire for details
We would love to hear from you. Feel free to call and share YOUR STRATEGIES or let us know if we can give you a hand with the timing of your portfolio strategies.
Nancy Miller, CCIM, MBA
Partner, Bull Realty
President, Net Lease Investment Group
Nancy@BullRealty.com
404-876-1640 x118