Over the past few decades, more and more real estate stakeholders have been investing in triple-net lease properties due to their unique benefits.
Triple-net lease properties, also called NNN properties, are low-risk investments with relatively predictable and consistent cash flows.
A triple-net lease requires the tenant to pay a monthly rental sum and most of the property’s operational expenditures, such as annual property taxes, maintenance costs, and insurance.
Many investors lean towards NNN leases because it allows them to earn a passive income due to their minimal involvement in running and maintaining the building.
Triple net investments are also an excellent way to increase equity and diversify an investment portfolio.
Consequently, many investors are looking to transition from high-involvement property types (such as apartment complexes) to low-involvement, steady return NNN properties to add a passive income line that aligns with their investment strategies.
A famous investment market that shows some potential is CVS Real Estate. CVS (Consumer Value Stores) is a well-known pharmacy brand in the United States, with numerous healthcare achievements.
The company is the largest pharmacy chain in America regarding store count and types of prescriptions filled.
What’s Good About CVS?
The corporation has over 9000 stores nationwide dealing in numerous services outside healthcare.
CVS stores sell everything you’d expect to find in a retail outlet, including over-the-counter medications, greeting cards, beauty products, film and photo finishing services, seasonal goods, and convenience meals, to name a few.
Triple-net lease CVS pharmacies run a massive pharmacy benefit management program with millions of customers registered.
Also, CVS made a big move in May 2018 when it bought Aetna Inc, an American health insurance provider. As a result, the corporation made more money after the transaction, particularly in August of the same year.
According to CVS’s report, net revenues for the second quarter of 2018 increased by 5.3 % compared to the last quarter of the previous year.
The brand presents a favorable investment opportunity to stakeholders and interested investors. This article enumerates five reasons you should consider investing in or purchasing triple-net lease CVS pharmacies:
- It Offers You a Reliable and Passive Source of Income
One of the perks of purchasing a triple-net property is that you get to receive paychecks every month.
If you buy a NNN CVS store and incorporate an absolute lease, you’ll reap exponential benefits because it offers a consistent flow of income without requiring any work on your part.
The NNN absolute rental contract is set up such that the occupant pays you a specific amount as rent each month for an agreed time frame.
Additionally, triple-net leases usually have a flat rent or a fixed increase in the rental payment to adjust for inflation.
So, whether the economy is favorable or the CVS average store sales are taking a hit, there will always be money coming into your pocket at the end of each month.
- You’ll Have Few Landlord Duties
The owner of an NNN commercial property doesn’t need to be actively involved in the daily operations or management of the building.
When a tenant signs a lease to rent your CVS property, he or she automatically becomes the building’s manager and caretaker and is accountable for all decisions and operational costs.
Occupants wouldn’t have to wait weeks for their landlord, who is swamped with property maintenance. Instead, they would handle everything on their own.
An absolute triple-net lease presents a win-win situation in which tenants enjoy the sense of control the policy affords them. At the same time, organization owners profit from the simplicity and absence of financial commitment.
Furthermore, since your tenant handles all taxes, you’ll benefit from tax breaks. Finally, having few duties reduces your workload, which can be beneficial if you have other investments to manage or work a full-time job.
- It Involves Minimal Risks
Another intriguing advantage of purchasing triple-net lease CVS pharmacies is that it’s a low-risk investment.
As a landlord, fixing an absolute rental policy typically exempts you from most of the risks of running your commercial establishment.
The lease agreement will require your tenant to pay all the property costs, taxes, maintenance charges, and insurance fees, in addition to the rent and utility costs.
If there’s an unfortunate incident such as a fire outbreak or theft, your tenant would have to bear the loss alone.
By acquiring CVS NNN real estate investments with an absolute rent agreement, all you’ll have to do is collect your monthly rent checks while your occupant handles everything else.
- Your Store Can Gain Equity
Triple-net lease properties are sometimes included in investment portfolios as a low-risk, conservative strategy to grow equity.
Equity means the value returned to an organization’s owner(s) if all of their assets are liquidated, and all of their debts are paid off.
By owning a popular commercial property like a CVS pharmacy, you could gain from rapid and smooth equity growth, which enhances returns that are proportional to your property’s value.
More so, you can consider selling the building when the market reaches a high, if the population grows, or if you’re ready to invest in a new business.
- It Has a Low Turnover Rate
Turnover in real estate means the number of tenants who vacate a property at the end of each lease period.
Most commercial real estate buildings usually have a long occupancy period. While the standard commercial lease policy typically lasts three to five years, a triple-net contract can last up to twenty-five years or more.
Setting a longer lease time frame benefits you because there is less turnover and fewer vacancies available.
Searching for new tenants can be time-consuming for you as a property owner, so purchasing an establishment such as a CVS pharmacy with a triple-net policy can help ensure that your occupant stays put for an extended period.
Bottom Line
Purchasing a NNN CVS pharmacy can offer you many benefits such as monthly paychecks, few landlord duties, minimal risks, possible equity, and a low vacancy rate.
However, to achieve optimum efficiency, you would need to enlighten yourself adequately on all the risks involved.
If you are looking to invest in American healthcare, you can try searching for CVS for sale online and conduct more research on the processes involved in buying a triple-net property.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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