Gas Station Triple Net Strategy

Patrick Campbell shares his strategy of purchasing gas stations as a real estate investment, focusing on tax advantages and passive income through triple net leases. The strategy involves buying multiple locations from distressed or transitioning sellers while leveraging tax benefits.

Key Points:

• Portfolio Acquisition:

  • Purchased 19 gas stations in North/South Carolina
  • Part of larger 120 station portfolio being sold off in blocks
  • Total investment around $30 million

• Structure & Operations:

  • Triple net leases - no management or operational responsibilities
  • Corporate-backed tenants
  • Partner handles analysis and management aspects
  • Generates over $1 million annually in cash flow

• Tax Benefits:

  • Leverages real estate professional status through spouse
  • Converts passive losses to active losses
  • Can offset active gains from other business sales
  • Uses bonus depreciation - roughly 80% of purchase price can be depreciated in first year

• Deal Advantages:

  • CPI-based rent increases written into old leases (early 2000s)
  • Significant rent increases during inflation periods
  • Cap rate around 5.5%
  • Minimal operational headaches due to lease structure

• Strategy Elements:

  • Partner with experienced real estate professionals
  • Focus on corporate-backed tenants
  • Look for portfolios being sold due to estate/tax issues
  • Time purchase to maximize tax advantages