Gas Station to Auto Service Center with Long-Term Triple Net Lease

[Grant Smith]

Investment Info:

Other buy & hold investment.

Purchase price: $155,000
Cash invested: $170,000

Purchased this late 1960's gas station in an up-and-coming area in Southwest, Ohio. I knew I had a tenant for the building at a $1250 per month triple net lease. I went out and found the building, which was previously an old gas station with the gas tanks removed. Everything checked the boxes. I have mailbox money earning 9% on a long-term lease cash on cash return.

What made you interested in investing in this type of deal?

I knew the tenant and their successful business. They had been a long-term tenant for a close family member. When their land got sold at 3x what it was previously purchased for, I found another location just down the road and put them in there at a long-term triple net lease.

How did you find this deal and how did you negotiate it?

I found the property by driving for dollars. There was a small red for sale sign with a number on it. I called the number and bought closed on the property two weeks later. I paid asking price for it which was $155,000.

How did you finance this deal?

I used a line of credit I had against my securities and just paid down the line of credit once I exited another real estate deal.

How did you add value to the deal?

We repaired the roof and added an oil burning heater.

What was the outcome?

I'm earning 9% on the total cash invited ($170,000) with a triple net lease for 6 years. There is a 5% rate hike every 2 years.

Lessons learned? Challenges?

I learned a lot about soil studies and how to underwrite deals that may have issues with oil spills (EPA concerns).

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

This was my first transaction without a real estate agent or lender.