The gas station business is one of the most lucrative industries you can find in the states right now. You don’t have to look too far to see why people think that is so. It’s a business with massive potentials for expansion and revenue increase as well.
Depending on your location, it’s pretty easy to find a gas station property for sale in the country. There are numerous gas station franchises from which you can choose, and you get to have a feel of what it’s like to make profits from such a business model.
However, for all the promises a gas station property might give an individual, there are many misconceptions people tend to have even before they initiate a purchase.
Reality isn’t always what it seems, and buying a high-performing gas station property for sale doesn’t always mean things remain positively the same. How would you ensure to make the right property investment decision?
There are some crucial factors you’d need to include in your research before you begin the purchase. We’ll show you top gas station property points you must not forget as you sign those purchase documents.
Know Your Gas Suppliers
Many people think buying a gas station is only about selling gasoline to the public. In reality, gasoline is only a fraction of the narrative. You’d need to figure out your gas supply source before you purchase the property, as it determines your operation level subsequently.
The most common gas suppliers are jobbers or wholesalers. They operate on the basis that significant oil companies focus their resources on gas refining and marketing. These companies would instead have wholesalers and jobbers buy a substantial portion of their real estate.
Subsequently, the wholesalers lease the properties and include an agreement clause to supply the lessor with a specific gas brand.
You could also go for a gas station property for sale that offers its gas brand. It’s often the case with gas stations leased out by big corporations – even jobbers sometimes.
Overall, whatever gas supply you choose, it’s got its representation and significance on the market as soon as you begin operations. It’d be best if you choose the right supplier and brand that works best for you.
Have a Financial Record at the Ready
It might surprise you to know that many people don’t have adequate financial records for their gas stations. It’s often the case, as these people didn’t plan for extensive financial documentation as they sign the lease agreements.
You’d need to devote careful attention to the recorded gallons sold against recorded gallons received from the jobber. More than that, it’s necessary that you know how much you receive from each sold gallon. Credit card operating fees have to show in your calculations against the average cents they take from each gas product sale.
Typically, you should expect jobbers to give a flat rate on each gallon you sell, but that also depends on the payment method the customers make (i.e., Credit card or cash)
Don’t Leave Out the Convenience Store
A convenience store constitutes a significant portion of potential earnings once you buy a gas station property. You get to keep the entire gross profits from the store unless you’ve taken out a license from a more extensive franchise like 7-Eleven.
Gross sales are essential in the financial estimations and combine category sales and margins from the store. Take care not to confuse the store sales margins with your markups after external payments.
Furthermore, it’s best to go for higher-yielding category items such as candy, cigarettes, and beverages. These products don’t affect your gross sales negatively.
On the other hand, steer clear of low-margin products like lottery and lotto. Overall, buying the convenience store and stocking up with up-to-date inventory is a great way to begin.
Know the Fee Structures
At the point where you purchase a gas station property for sale, specific fees aren’t included. You’d have to account for inventory, gas deposits, and utility fees separately.
Generally, buyers have to spend more on inventory and running costs than it takes to buy the gas station property. For instance, if you’re looking to pay for a gas station for sale in Florida, the property price – called Business price – often excludes the working capital and deposits as well.
Therefore, it’s essential to check with your financier on the various fees. Alternatively, you can negotiate with the seller or ask for purchase financing if they offer it.
Other Details to Note
Gas station property listings typically entreat buyers to observe the store sales for a few weeks before deciding. However, they may not have enough historical sales data or prefer not to show it altogether.
On the surface, it seems adequate to observe the gas station’s real-world performance. However, performing thorough research on previous store sales records and tax filings yields a broader outlook.
Prospective buyers tend to make the mistake that positive performance always gets translated once they assume ownership. Due diligence with the property’s overall assessment is necessary to avoid negative returns later on.
A gas station package for sale often holds massive profit potentials. Buying or leasing one might be an excellent idea, but you’d still need to do extensive research.
On the one hand, gas stations tend to improve sales over time and are suitable if you’re in the property market for long-term and passive real estate investments. However, they require proper management and organization, especially when you’re looking to re-sell the property subsequently.
Buying a gas station for sale is multi-faceted, which is why you need tips such as those mentioned above to make suitable investments.
If handling gas station purchases is too much of a hassle for you, you could approach property purchase companies, such as Buy NNN Properties specializing in NNN Lease Gas Station Properties.
They generally have the suitable properties based on a broad preference range. These companies also play an advisory role in the deal, edging you towards the best option for your needs.