One of the best ways to make money in real estate is by buying a triple net lease (NNN) property. However, to make such an investment work, you should ensure you are purchasing one that is currently leased by a creditworthy tenant.
Now, one of the most reputable NNN tenants today is O’Reilly Auto Parts. This company is one of the biggest vehicle parts retailers in the US, with thousands of outlets across the country.
In this article, we will provide you with a quick—but concise—guide to finding ideal O’Reilly Auto Parts NNN properties for sale. So, whether you are a new investor or one who is looking to diversify your portfolio, read on.
O’Reilly Auto Parts: The Company and Its History
O’Reilly Auto Parts is a publicly-traded company that started in Springfield, Missouri back in 1957. It got its start when Charles F. O’Reilly and his partner, David Glass, purchased a single auto parts store called Ozark Auto Supply. From there, they grew the company rapidly by following three key principles: always put the customer first, invest in team members, and reinvest profits back into the business.
In just four years’ time, they had opened 100 stores across eight states. Then, in 1972 O’Reilly went public on the Nasdaq under the ticker symbol “ORLY”. And the rest, as they say, is history.
Today, the company has over 5,000 locations in 47 states. O’Reilly Auto Parts is also a member of the S&P 500 and Fortune 500, and it has been on Forbes’ list of America’s largest private companies for 14 consecutive years.
In terms of revenue, the company generated $11.78 billion in 2019 alone. Plus, the company has a current market capitalization of $24.73 billion.
So, with all of this in mind, it is easy to see why O’Reilly Auto Parts makes for a great NNN tenant—and why real estate investors should consider properties leased by this company.
Where to Find O’Reilly Auto Parts Stores for Sale
The best way to look for O’Reilly Auto Parts NNN properties for sale today is by working with an experienced real estate broker who specializes in net lease properties. They know the ins and outs of the NNN property market and can definitely help you find stores that fit your investment criteria—whether you are looking for properties in a specific state or price range.
What’s more, they can also provide you with an analysis of each property to help you make an informed decision. And, once you’ve found the right property, they will even assist with the due diligence and negotiation process.
Apart from working with a broker, you can look for O Reilly real estate on your own. You can start by searching online using keywords, such as “O’Reilly Auto Parts NNN property for sale”. However, this method may not be as effective since you will likely come across a lot of properties that are not actually being offered for sale.
You can also drive around and look for stores in the area you are interested in. When you find one, simply jot down the address and contact information of the property owner so you can inquire about purchasing the store.
Of course, you can visit O’Reilly’s official website itself. The company has a page dedicated to real estate, which includes a listing of properties that are currently for sale.
Keep in mind, though, that most of the time, the best O’Reilly properties are not actually listed online. So, working with an experienced broker is still your best bet if you want to find hidden gem investment opportunities.
Important Factors to Consider When Buying O’Reilly NNN Properties
Like buying any other type of real estate, purchasing NNN O’Reilly Auto Parts properties requires you to consider a set of certain factors to ensure you are picking the right property. Here are the most important things to keep in mind.
Location
O’Reilly stores tend to do well in locations with high traffic counts, whether it be from pedestrians or vehicles. The same goes in areas with a high concentration of households—particularly ones with an average income of $50,000 or more.
You should also look at the surrounding businesses and see if they complement O’Reilly’s target market. For example, stores that are near home improvement centers or gas stations tend to do well, since O’Reilly’s target market is typically made up of DIY-ers and car owners.
Property Size
O Reilly Auto Parts real estate typically ranges from around 12,000 to 16,000 square feet. However, the company has been also known to open smaller stores in certain locations. For example, O’Reilly’s “Mini” stores are only around 4,000 square feet.
The size of the property determines its price, so you also need to consider your budget when deciding which size of a property you should opt for.
Condition of the Property
Of course, you would want to pick a property that is in good condition. Not only will this help ensure that the store can generate revenue from day one, but it will also help you save on repairs and renovations down the line.
A property’s condition can be determined by doing a physical inspection or by ordering a professional assessment report. Either way, it is important that you do your due diligence before making a decision.
Cap Rate
The cap rate is a measure of the property’s potential return on investment and is typically expressed as a percentage. In general, you should look for O’Reilly Auto Parts NNN for sale with a cap rate of around six to eight percent. However, this will also depend on the location and condition of the property, as well as the current market conditions.
Calculating the cap rate of a potential property can be done easily with the following formula:
Cap Rate = Net Operating Income / Purchase Price
So, let’s say you are looking at a store that is for sale at $600,000. The property has a net operating income of $40,000. Using the formula above, we can calculate that the property has a cap rate of around six percent.
Lease Term
When looking at NNN properties, you will want to pay close attention to the lease term. More often than not, O’Reilly would sign 20-year leases with two five-year renewal options.
If you are looking at a property with a shorter lease, it may be more difficult to find a tenant when the current one expires.
On the other hand, if you are looking at a property with a longer lease, it may be more expensive upfront. However, it will also provide you with more stability in the long run since you will have a tenant locked in for a longer period of time.
The trick here is to weigh each option’s pros and cons to know which of them fits your investment strategy and goals.
Legal Compliance
Last but not least, you should make sure that the store you are buying is in compliance with all the relevant laws and regulations. These include things like zoning laws, building codes, environmental regulations, and so on.
Checking for compliance can be done by ordering a professional assessment report or by contacting the local authorities.
Conclusion
Without a doubt, buying O’Reilly Auto Parts NNN properties for sale is a good way to build wealth and attain financial freedom through real estate. However, it is always important to remember that not all properties are the same. So, make sure to do your research and perform some due diligence. With the information provided in this article, you should now be able to start on the right foot in finding the ideal O’Reilly stores to buy.
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