Do landlords ‘win either way’?
Ramsay’s blunt assessment highlights a critical dynamic in the restaurant business: the leverage landlords hold in commercial real estate. While restaurateurs may find themselves grappling with thin profit margins, rising labor costs, and fluctuating food prices, landlords maintain a consistent advantage — the rent is always due.
When restaurants thrive, they’re often eager to stay in their prime locations, giving landlords the upper hand to renegotiate higher rents. In some cases, landlords may include percentage rent agreements, where tenants pay a base rent plus a percentage of gross sales exceeding a certain threshold. Under this arrangement, landlords directly benefit from a tenant’s success, as higher sales lead to higher rent payments.
When a restaurant struggles and fails to pay its rent, the landlord’s income stream is also at risk. To mitigate losses, landlords often turn to legal remedies to recover unpaid rent. This may include seizing the tenant’s assets on the premises — a process known as distraint — or initiating court proceedings to claim the owed amounts. In cases of prolonged non-payment or other lease violations, landlords may want to terminate the lease to seek a more financially stable tenant.
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If you’re interested in restaurant real estate, consider exploring names like Four Corners Property Trust (FCPT), a real estate investment trust (REIT) that specializes in owning and acquiring net-leased restaurant and retail properties.
But for those seeking more stability, there’s another food-related real estate segment that demands attention — necessity-based properties.
Think about your go-to supermarket — the one you visit every week. How long has it been in the same spot? Likely for years, if not decades. That consistency highlights the appeal of this sector.
Properties anchored by grocery stores often attract long-term tenants, creating more predictable and reliable cash flow for investors.
First National Realty Partners (FNRP) allows accredited investors to diversify their portfolio through grocery-anchored commercial properties, without taking on the responsibilities of being a landlord.
With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to Triple Net (NNN) leases, accredited investors are able to invest in these properties without worrying about tenant costs cutting into their potential returns.
Simply answer a few questions – including how much you would like to invest – to start browsing their full list of available properties.
However, owning a share of a project or property this way holds some risk — for instance, you could receive no returns and these assets are often illiquid. Speak to a professional if this investment is right for you, especially if you are retired or close to retirement.
Beyond grocery stores, residential properties also provide peace of mind for investors seeking reliability. Just as people always need groceries regardless of the economy, they also need a place to live. That makes housing one of the most dependable and enduring sectors in real estate.
And you don’t need to buy a house to get started. Crowdfunding platforms like Arrived have simplified the process, enabling everyday investors to own shares in rental properties without the large down payments or management headaches typically associated with owning real estate.
With Arrived, you can invest in shares of rental homes with as little as $100 without worrying about mowing lawns, fixing leaky faucets, or handling difficult tenants. The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving rental income deposits from your investment.
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