When you’re looking for a solid investment, gas stations for sale can be a great option. Not only are they profitable businesses, but they’re also relatively low-maintenance.
However, there are a few things you need to keep in mind when buying these types of real estate assets. This article will walk you through the process of finding and buying the perfect property for your needs.
Qualities of a Good Gas Station to Buy
While gas stations for sale are great investment opportunities to take, you should remember that not all of them offer the same return potential. Here are some essential qualities that you should look for when assessing property listings.
Typically, the gas station you buy should be in a good location. This means that it should be situated in an area with a lot of traffic and high footfall. In a way, it will make more money if it’s easy for people to stop by.
Don’t forget to take into account the competition in the area, too. If there are already a few gas stations nearby, you’ll need to make sure that your property can offer something different or better.
You’ll also want to factor in things, like local zoning laws and regulations, when assessing a gas station’s profitability. For example, some areas might have restrictions on how much you can expand within a certain radius. So, make sure you’re aware of these limitations before making an offer to buy gas station properties.
High Cap Rate
The cap rate is one of the most important metrics that you should look at when assessing a gas station to buy. This measures its annual income relative to its purchase price.
Ideally, you want to find a property with a high cap rate. This means that it will give you a good return on your investment. Keep in mind, however, that not all gas stations offer the same level of profitability. So, do your research and make sure you know what to expect before making an offer.
To calculate the cap rate of an existing gas station, you can use this formula:
Cap Rate = (Annual Income/Purchase Price) x 100
Good Property Condition
The property should be up and running and shouldn’t require any major repairs or renovations. If you’re buying a gas station that’s not currently operational, you’ll need to factor in the cost of getting it up and running. Typically, this will include hiring a contractor to do some basic repairs and getting the necessary permits from the local government.
It’s also important to make sure that the business has all of its licenses and permits in place. If there are any licensing issues, it could delay your ability to start operating the business.
Long Lease Term
The longer the lease term of a property is, the more confident you will be to expect passive income for the long haul. A gas station with a long-term lease is also a good sign that the property is in high demand.
Those with reputable tenants, like a 7-Eleven or a Shell gas station for lease, usually have a long-term lease in place. This gives the buyer peace of mind that they won’t have to worry about finding a new tenant for the property anytime soon.
Flexible Lease Renewal Options
While having a long-term lease is great, it’s also important to have flexible lease renewal options. This means that the tenant has the option to renew the lease for a set number of years, but isn’t obligated to do so.
This gives you some security in case the gas station operator decides to leave the property. However, it also allows the tenant to renegotiate the terms of the lease if they feel like they’re not getting a good deal.
Steps to Buying a Gas Station for Sale
Now that you know about the important qualities a gas station should have, it is time to learn the steps of buying one.
Step 1: Get financing.
This will be one of your biggest expenses, so it’s important to make sure you have the funds in place before making an offer on a gas station for sale with property. There are many different types of financing available, so take some time to research what’s best for you.
One thing to keep in mind is that gas stations typically have a higher loan-to-value (LTV) than other commercial properties. This means that you’ll need to have a higher down payment in order to secure a loan.
Step 2: Find a gas station for sale.
There are many different ways to find gas stations for sale. You can use online listings services, or you can contact a broker who specializes in gas stations.
It’s important to note that not all gas stations are listed publicly. So, if you’re looking for a specific property, it might be best to contact a broker who has access to exclusive listings.
Step 3: Analyze the property.
Once you’ve found a gas station for lease that interests you, it’s time to analyze its potential profitability. This will include things like the cap rate, the condition of the property, and the length of the lease term.
Step 4: Make an offer.
Once you’ve done your due diligence and are confident in the property’s potential, it’s time to make an offer. Keep in mind that gas stations are often priced higher than other commercial properties, so be prepared to pay a premium price.
Step 5: Get the keys.
Assuming that your offer is accepted, the final step is getting the keys to the property. This usually involves signing a purchase agreement and paying a deposit. Once all of the paperwork is signed, you will become the new owner of a gas station!
Importance of Working with an NNN Broker
While you can do a quick “gas stations for sale near me” search on Google to find these properties, it is important to work with someone who knows the market well. Considering that these properties are usually triple net leases (NNNs), you should seek the help of a real estate broker who specializes in them.
With their knowledge and experience, it will be so much easier to find the ideal Shell, 7 Eleven and other gas stations for sale. Not only that, but they can also help with negotiating the price and getting the deals.
Moreover, they have a broad network of professionals who could help you manage the property down the line.
Without a doubt, buying gas stations for sale is one of the best investment decisions that one can make today. However, it is important to do your due diligence to purchase one that fits your investment goals and gives you the highest possible returns. With this guide, you should now be able to start on the right foot to becoming a successful owner of a profitable business.
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