Automotive Properties in High Demand for Real Estate Investors
Automotive net leased investments are a secure way to hedge against inflation.
Net leased automotive properties have become one of the most sought-after asset classes for commercial real estate investors
Net leased automotive properties have become popular, low-risk assets for commercial real estate investors. Private and publicly traded real estate investment companies are actively acquiring sites and becoming landlords to parts retailers, service shops, and gas stations for three reasons: the future state of the U.S. automotive market, the high demand of their tenants' products and services, and the corporate guaranteed escalating lease structure.
As new car prices remain stable due to the chip shortage and supply chain constraints, more drivers are keeping their current vehicles on the road longer. The average owner keeps their car for 12 years. The length of ownership time may increase in coming years because of the economic downturn and recent tech sector layoffs nationwide. Automotive parts and service businesses reap the benefits of the changing market.
Big name automotive parts retailers like Advanced Auto Parts and AutoZone have brand recognition, with a strong tenant credit rating. Time sensitive customers can purchase parts immediately from a brick-and-mortar location, instead of waiting to be delivered from an e-commerce store. Price sensitive car owners shop for the best deal on automotive services. Service providers like Express Oil Change, Jiffy Lube, Goodyear Tire, and Caliber Collision typically offer dealership quality repairs at a slightly discounted price. Some even offer mobile repair services. Consumer brand recognition and increasing demand for their services make them attractive tenants to net leased investors.
Automotive net leases are typically guaranteed by the corporate franchisor. This means that in the event of a franchisee default, the national corporation will back end the lease and continue paying rent. Rent escalations are typically built into automotive leases, both for credit rated and non-credit rated tenants. Rent bumps may not be included in other asset classes. This means automotive net leased investments are a secure way to hedge against inflation.
Whether you're an investor evaluating net leased automotive properties for sale, or a business owner ready to purchase the building your dealership, repair shop, body shop, or detail shop operates from, choosing the right financing structure matters.
Buying Your Own Automotive Building: Financing Options for Owner-Operators
While NNN investors are drawn to automotive real estate for its stability, many independent automotive business owners are asking a different question: how do I stop leasing and buy the building my business operates out of? Whether you run a car dealership, work as a car broker, or operate an auto repair shop, auto body shop, or window tinting and detail shop, owning your own automotive property can lock in your occupancy costs, build long-term equity, and shield you from rising commercial rents. Here are the most common ways automotive business owners finance a property purchase.
SBA 7(a) Loans The SBA 7(a) loan is one of the most flexible financing options available to small business owners purchasing commercial real estate. It can be used to acquire an existing automotive building, refinance existing debt, or combine real estate acquisition with working capital, equipment, or renovation costs — useful for a detail shop needing new bay equipment or a body shop upgrading its paint booth. SBA 7(a) loans typically offer competitive rates, long repayment terms, and lower down payments than conventional financing, making them a strong fit for car dealerships, auto repair shops, and detail shops looking to purchase real estate for the first time.
SBA 504 Loans The SBA 504 loan is specifically designed for the purchase of owner-occupied commercial real estate and heavy equipment, making it a popular choice for auto body shops, tire and service centers, and dealerships purchasing a large facility. SBA 504 loans are structured with a bank or lender providing a portion of the financing, a Certified Development Company (CDC) providing a second portion, and a smaller down payment from the borrower. This structure often results in below-market fixed interest rates, which can be especially valuable for automotive businesses financing large-footprint properties like dealership lots or multi-bay repair facilities.
Institutional Loans Institutional loans through banks, credit unions, and commercial lenders remain a common path for established automotive businesses with strong financials and time in business. These loans can offer competitive terms for well-qualified borrowers purchasing a dealership building, car broker office, or auto repair facility, though they often come with stricter underwriting requirements than SBA-backed options.
Private Money Loans For automotive business owners who need to move quickly on a property, don't yet meet conventional or SBA underwriting requirements, or are purchasing a building that needs significant renovation before it can be occupied, a private money loan can bridge the gap. Private money financing is typically faster to close and more flexible on qualification criteria, making it an option worth exploring for car brokers, window tinting and detail shops, or newer auto repair businesses working to establish a longer financial track record.
Finding the Right Fit for Your Automotive Business
Whether you're an investor evaluating net leased automotive properties for sale, or a business owner ready to purchase the building your dealership, repair shop, body shop, or detail shop operates from, choosing the right financing structure matters. At Funding My Venture, we help connect business owners with the funding solutions that fit their stage of growth, credit profile, and timeline.
Ready to explore your financing options? Browse our funding solutions, including SBA 7(a), SBA 504, institutional, and private money loans.
Looking to raise capital for your automotive business? List your business with us to connect with investors and lenders.
Curious how other companies have used funding to grow? Take a look at the businesses we've helped along the way.
Not sure why business owners choose us? Read why business owners choose Funding My Venture.
New to the startup funding process? Learn how a green page can finally fund your startup.
Weighing your options between a HELOC and an SBA loan? Check out our ultimate guide to funding a business startup.
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