Why are drug dealers the best tenants?

February 29, 2012 Thomas Morgan, CCIM

Owning commercial investment property is a great pleasure especially when you have good solid tenants.

Marijuana pays the rent.

In Denver and California commercial retail property owners have found that "pot dispensaries" have filled vacant spaces in the down economy.

"Looking at California, the pioneer state of medical marijuana, shows how great the demand really is for medical marijuana. One study reported that Los Angeles county alone has over 800 marijuana dispensaries."

But the "high" does not last forever.

Considering pot is still illegal, it may be time to find another tenant.

What about a drug dealer that has $72 billion in revenue and a S&P rating of A?

This is not your back alley drug dealer. This drug dealer in on busiest corners. Has well lit parking lots. Incredible signage. Is open 24 hours an has 7,830 stores worldwide.

This drug dealer is Walgreens.

As a commercial property investor looking for long term passive income, you have to consider a Walgreens. Walgreens typically signs 75 year leases. Walgreens has the best locations. Walgreens leases are true triple net meaning the landlord has NO responsibilities. Absolutely none. The owner sits back and deposits the monthly rent.

Triple Net Walgreens range from $4M to $12M and easily produce a 6%+ annual yield for an all cash purchase. Non-recourse financing is easy to obtain especially at 60% or less LTV at sub 5% interest rates which can increase the overall annual yield to 8% or better.

Here are some triple net Walgreens currently for sale around the US. Contact TMO for more information on any of them or to set up a free no-obligation real estate investment consultation.