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Home » Blog » Case Study: Investor Buys Dollar General in 1031-Exchange Despite COVID

Case Study: Investor Buys Dollar General in 1031-Exchange Despite COVID

Greenville PA dollar general

Dollar General, Greenville, PA
Closing date: April 22, 2020
Price: $1,429,000
Cap rate: 6.70%

NNN Investor Closes on Unique Dollar General Property Amid COVID-19

A California-based real estate investor, who was in the process of selling a rental home and wanted to utilize the 1031-exchange, reached out to Westwood Net Lease Advisors to learn more about investing in NNN lease properties. He knew he needed the knowledge that only an expert could impart, so he began working with Westwood’s President and Buyer’s Advisor, Chris Schellin.

Within a couple of months, despite some COVID obstacles, this investor met the 1031 criteria, deferred capital gains tax, and became the owner of a Dollar General in a non-rural, industrial park entrance with higher than average traffic counts.

Business Make Money Concept

The Process

This buyer was smart and had the foresight to contact Westwood prior to closing on the sale of his rental home. This gave him ample time to learn the NNN process, assess multiple one- and two-tenant property options to decide which best fit his needs, and identify the property he intended to buy within the 45-day, 1031-exchange rule.

Schellin worked with the client to locate listed and off-market properties that met his financial goals and analyzed the different lease details for a variety of potential properties. During this time, Schellin also connected the buyer with one of Westwood’s financial resources to negotiate a loan from a national lender.

After a thorough evaluation of many available fast-food, auto parts, medical, and retail properties, this existing Dollar General, with a 15-year, absolute NNN lease became available. The opportunity to purchase this property with a full-term, corporate-guaranteed lease under $1.5 million generated heavy national interest and multiple offers. However, the client’s buying position and preparation and Schellin’s negotiation skills won out in the end, and his offer was accepted.

Overcoming Significant COVID Obstacles

Midway through the due diligence process, the buyer received news that his loan request was denied because of COVID-19. Knowing that the buyer would receive a significant tax hit from not closing on his 1031 exchange, Schellin was able to secure short-term financing that enabled the deal to close and provided a 6-month window to locate traditional, long-term financing.

Several unique factors made this Dollar General a great investment. Overall, Dollar General is one of the top NNN investments in the market. In addition to the usual factors that make these properties a wise investment choice – corporate-guaranteed, absolute NNN leases, long-term, stable monthly income, no landlord maintenance or costs, and their ever-evolving, essential consumer offerings – this Dollar General had other unique benefits.

  • Non-rural, industrial park entrance.
  • Higher than average traffic counts.
  • A brand new, full-term lease with extension options.

 

The Result

This new NNN investor engaged Schellin to venture into NNN property ownership and couldn’t be happier with the results. He went from owning a rental house with unpredictable landlord responsibilities and expenses to a management-free property with a stable monthly income for the next fifteen years, plus lease extension options and rent increases built in every 5 years.

With Schellin’s assistance, he is also in the process of securing permanent financing for the Dollar General to pull out the additional equity and buy a second NNN property.

Partnering with an experienced triple-net lease buyer’s advisor with a thorough approach is essential to a solid, financially-sound investment. This partnership creates a distinct advantage and helps make the most of every dollar invested. And it costs the buyer nothing.

To Wrap it Up – Buyer Diversified Portfolio by Turning 1 Rental Home into 2 NNN Lease Investments

Utilizing Schellin’s expertise, this California buyer met his 1031-exchange timeline responsibility and deferred all capital gains tax with one of the best NNN investment tenants available, Dollar General. He will also diversify his portfolio by turning the profits from one rental home into ownership of two NNN lease investments that provide a handsome stable monthly income with zero worries.

For more information and a free, no-obligation consultation, call or email Chris Schellin, President of Westwood Net Lease Advisors, at 314-563-2208.

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Tags: 1031 exchange, COVID-19, Dollar General Property