Buying Or Leasing Your Gas Station Business and Convenience Store

Should I buy or Should I lease!

The answer relies on your budget. A typical cheap gas station business and convenience store cost anywhere from 250k to all the way 2 mills depending on location, age and many other factors.

Buy

 

A good solid profitable gas station business and convenience store maybe sold with real estate and priced high compare to a mediocre store on lease. But again it all depends on your personal finances. If you have a good bit of savings for down payment along with good credit and other collateral than you may be able to obtain a loan for a top notch station that is profitable from the very first day.

Before you decide to go this route, there are few things you need to do to make sure you will be able to accomplish this goal. Check your credit and make sure there are no errors or mistakes which are often found in 60% of the credit reports now days. Than talk to a CPA and get a good personal financial statement prepared for yourself,  where your debt to income ratio is favorable. Do an online appraisal (like Zillow.com) to check the market value of your home or land and or other real estate investments you may have t see what your true equity is in those. Once you determined that you have enough down payments and enough equity and a good established credit report behind you, you can start your search to find that perfect cheap gas station you want to buy and operate.

Next step would be to contact some brokers and commercial real estate agents and let them know you are in the market for a store. Make it known that you are only looking for stores with proven financial track record and with real estate.

Once you get a list of all the available gas station business and convenience stores for sale, the most important part of this process will begin, determining which one to buy. This is by far the most important factor of all the decision making process you will go through, and once you are able to pick the winner, everything else will fall in the right places from that point and on.

Once you get a few stores to consider, first ask for as much information as they can provide to you, you may have to sign a NDA to be able to access the financials. Get professional help in reviewing these financials as most times a typical seller will provide 6-12 months of P&L and or income statements. Keep in mind these financials are a good starting point to narrow down the choices but they are only as good as the owners providing of sales and expense data to his or her accountant, so in other words these is never the ultimate decider as these number can easily be manipulated to make it look more attractive than it actually is.

OK now let’s say you narrowed the choices down to 3 stores after doing the basic review of the financials, next you need to physically visit the stores to get the feel of the business, look at the location the neighborhood and take plenty of notes. One general rule of thumb is not to make it obvious or known to the cashier or person behind the counter than you are assessing the business to buy, instead keep it low profile and act like any other customer would do. You may have to visit each store more than once at different time of the day to see different time traffic flow so you can determine what prime business hours for that specific location are.

Once you visited the stores and taken plenty of notes, it’s time to create a work sheet like this one below

 

 

 

 

 

 

 

Time for you to ask the agent to make a face to face meeting with the seller

Lease

 

Let’s say you only have 50-100K and average credit than your options are more limited. In this situation you may still be able to find a station to buy with real estate, but you may have to find one that is FSBO where the owner will agree to sell it you on a Vendor’s lien (where seller does in-house financing)  or you can find one that is for lease with little to no goodwill value. Most times these types of stations are barely breaking even and require more hands on approach to make them profitable through excellent customer service to lower prices to be the most competitive store around and a top notch marketing effort.

Contact some brokers and check the previously mentioned sites online to see what gas station business and convenience stores are available for lease. For more about buying vs leasing a gas station or Convenience store go here.

I would love your feedback and thoughts, I am new to this, please post your advice and comments, it will help me improve this blog.

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