Dollar General NNN Leases for Sale

Dollar General is one of America’s largest discount dollar store chains, and it offers serious discounts on many products. Especially successful during economic recessions and periods of high inflation, it’s been growing a committed base of dedicated customers who enjoy or depend on its low prices to make ends meet.

The company was founded in 1939 as a family-owned business in Kentucky. It went public on the New York Stock Exchange in 1968 and has been ranked as a Fortune 500 company since 1999. Today, it operates over 18,000 stores throughout America. Its low prices make it a steady (and accessible) option for investing in commercial real estate.

Tenant Overview

A big part of what makes Dollar General attractive to consumers, and thus a secure real estate investment is its deep discounts. It offers consumables, home products, seasonal products, and more in no-frills storefronts that are focused on maximizing savings for the customer.

The company generally places its stores in tertiary markets, and over 70% of its locations appear in towns with fewer than 20,000 residents. That said, Dollar General has grown to be one of the most profitable businesses in the rural United States.

Dollar General normally opts for locations with high visibility and full ingress and egress along highly trafficked retail corridors. Their current plans prioritize locations with retail space of around 9,000 square feet on a solid 1-acre lot with at least 30 parking spots.  

When you’re considering investing in a Dollar General NNN lease, you may want to consider some of the factors outlined in the table below.  

Dollar General Lease Structure

New Dollar General stores typically sign 15-year NNN leases, during which the rent prices are set to rise 10% every five years and in options. Due to these NNN leases, landlords are generally not responsible for the maintenance of these properties. For that reason, Dollar General can be a great passive-income opportunity for even out-of-state investors.

Other dollar stores use different lease structures. For example, Dollar Tree and Family Dollar typically use an NN lease structure, where the landlord is responsible for general building maintenance. This is a major benefit of Dollar General NNN properties versus another dollar store, because it’s one less thing you need to worry about as the landlord.

The average cap rate, or capitalization rate, for a Dollar General net lease is 6.08%. Cap rate analyzes a real estate investment’s profitability and its return potential. Generally speaking, cap rates of 5% to 7% are considered good. Dollar General’s 6.08% cap rate is slightly higher than those of some other big names, meaning you’re more likely to recoup your investment a little bit faster.

While discount retail might not sound like a particularly sexy sector of commercial real estate, strong businesses like Dollar General and Family Dollar offer NNN leases with attractive terms and a corporate guarantee can make fantastic investments.

Why Choose a Net Lease Over a Gross Lease When Investing in Commercial Real Estate?

When you’re looking to invest in commercial real estate, you’ll find that there are many benefits to choosing to use a net lease instead of a gross lease. These two types of leases are normally considered opposites.

A gross lease involves a predetermined amount that a tenant pays so that they can use a space. It doesn’t change based on operating expenses like insurance or maintenance, because the landlord is responsible for those costs. On the other hand, a net lease lets the landlord pass operating expenses over to the tenant.

There are three levels of net leases: single, double, and triple. These categories are also referred to as N, NN, and NNN leases. Each tier passes additional expenses onto the tenant, absolving the property owner of more and more risk as the levels increase.

Single net leases, also known as N leases, pass property taxes onto the tenant in addition to the cost of rent. The landlord is still responsible for insurance, maintenance, repairs, and utilities, however. N leases are less common for commercial real estate. Double net leases, or NN leases, and triple net leases, or NNN leases, are seen much more often.

What Types of Net Leases Does Dollar General Operate Under?

New Dollar General stores typically have NNN leases with 15-year initial terms. NNN leases are generally the most attractive type of lease for commercial real estate investors. That’s because these leases involve the tenant paying for all of the property’s operating expenses, including insurance premiums, property taxes, and structural maintenance and repair costs.

Only Dollar General’s older stores will sometimes use NN leases, meaning that the landlord would be responsible for roof and structural repairs. These older stores may also have shorter terms of 10 years and higher cap rates.

NN leases are usually slightly less attractive to investors since the tenant is liable for only rent, insurance, and property taxes. In other words, the property owner is responsible for what’s left, including structural maintenance and repairs, which can prove to be pricey.

When working with an NNN lease, a tenant will generally pay a lower base rent. But that’s because they’re responsible for all of the other operating costs. Still, NNN leases reduce the burden of property management because they pass so many responsibilities onto the tenant.

Thanks to Dollar General’s NNN lease structure, they’re generally stable investments.

How to Evaluate a Dollar General Net Lease 

When you’re considering an NNN lease, it’s crucial to look at the value of the property as well as the strength of the tenant. Especially when you’re looking at single-tenant properties like the ones many new Dollar General locations are using, your tenant concentration can be only 100% or 0% – you’ll be generating your maximum cash flow or none at all.  

Let’s go through an example using a real-life Dollar General NNN property.

With this example, you’d invest $1.54M (putting $450k-$600k down to secure NNN financing) in a Dollar General in Temperance, Michigan. Thanks to the fact you already have a stable tenant, you’d immediately be running at a yearly NOI of $115,680, providing a return of 6.5% after other applicable expenses.

This means that within approximately 15 years (which is how much time is left on the current lease), it would be paid off. Once the lease has expired, you can renegotiate with the tenant, which they’ll be inclined to renew if the location is profitable for them. And at that point, you’re fully in the green, allowing you to pocket that NOI.

And remember, since this is an NNN lease, you’re not on the hook for any of the expenses related to the property. Dollar General covers taxes, insurance, and maintenance. It’s a stable, low-hassle investment in a busy, growing community. Passive income made simple.

Now, with that in mind, on any NNN property you’ll want to do your research to ensure that you’ll receive your payments in a timely manner.

Luckily, NNN lease tenants like Dollar General are typically well-known companies with strong balance sheets. That means you can depend on your payments arriving in a timely fashion and you won’t be chasing down tenants to get your next check.

But at the end of the day, any tenant can create potential problems for you. Luckily, this is where we come in, acting as your personal net lease consultant at no additional charge.

Want more help with buying a Dollar General NNN property? Call us at +1 (800) 443-0507

What Makes Dollar General an Attractive NNN Tenant?

Dollar General has strong brand recognition and a loyal customer base. By combining its reputation with stable financials, a strong credit rating, and an attractive price point, it’s become an interesting option for an NNN lease tenant.

Luckily for investors, 2024 was a great year for Dollar General. They continue to be a reliable and growing tenant, making them a strong choice for NNN lease investors. The company does approximately $40 billion in yearly revenue, with steady increases year-over-year, thanks to its focus on expanding into rural and suburban markets. With over 19,000 stores nationwide and plans to open 575 new locations in 2025, Dollar General is well-positioned for long-term growth.

Dollar General’s consistent performance and expansion strategy make it a low-risk, high-reward tenant for commercial real estate investors. Its ability to thrive in both strong and challenging economic conditions ensures steady returns for property owners, making it a standout option in the single-tenant net lease market.

Overall, Dollar General is a high-quality, investment-grade tenant that has a price point and cap rate that make it an attractive option for an NNN lease. Explore your next potential investment with an investment in a Dollar General net lease today…