would buying a gas station be crazy? **updated with pics i took this morning

[Dr. Detroit]

Someone is doing his bookkeeping so you should be able to review the income statement.

Find out what the cash skim is as you will not be paying taxes on that amount and the other income streams that don't hit the books.

Does the conveniance store sell alcohol like beer and tobacco? I'd assume thos are hihgly profitable as well.

$350K seems low but my assumption is you own nothing but inventory as the building is a lease?

 

[gsethi]

With buying any business, you need to be careful. You need to look at all the expenses, not just the sales. Unfortunately, the gas station business is one where a seller can easily hide their actual expenses and there are several other expenses in running a business that you have never thought of.

if you can PM me some basic financial info (average gallons sold per month, avg. monthly mart sales, avg. monthly car wash sales, monthly rent and hours open, I might give you a rough number that you *might* make at the end of the month).

In response to aloser, (pls take no offense) but you dont know much about the gas station business. If the gas station where you worked at only had ~$1800 deposit per day, I dont see as to how that station was even operating. Total revenue of ~3-3.5k/day (~90k/month - taking a guess here for CASH + credit card sales) is awefully LOW for a gas station unless this was couple of decades ago.

and oh...remember that while owning your business...you might end up putting ~70+ hours per week in it. I have put 80+ (sometimes 85-90 hours) per week many times at my stores (many times, working straight 7 days a week for 3-4 weeks) when I started/took over possession.

Many of the businesses listed for sale will show huge exaggerated numbers for profits (while in reality, the business is not even making 1/2 or 1/4th of that number). You need to know some basic understanding of the costs associated with running that particular type of business and work on your own numbers.

Example: in one of the business that I bought, seller claimed that he was taking home $x/month. My calculated numbers came out to 70% of what seller was claiming as profit. My actual take home was less than 60% of seller claimed profit (~15% lower than my calculations...there were few expenses that I had undercalculated or even didnt know about at the time). (Do I regret it...no...why ? b/c I know that running your business is always a risk and nothing is guaranteed).

 

[kranky]

I have noticed many gas stations for sale - there must be a reason.

There's one gas station near us which people say is really bringing in the money. They not only have a (very) small convenience store, they do state vehicle inspections, they rent cars, sell kerosene, propane and diesel, sell firewood, and rent space on their property in the summer to vendors who want to set up a little stand on the weekend to sell flowers or T-shirts or other little items.

 

[reeserock]

Convenience store profit is in beer and smokes, not gas. I hope there is a store attached.

 

[Vette73]

Originally posted by: JS80
Horrible idea. That price is fishy (i.e. too low). My great uncle bought a gas station and he just had to fire two employees and now works there himself to minimize losses. Those franchises will rape you the chance they get.

The saving grace of yours may be the car wash.

I would also consider soaring gas prices and possible decline in economy (i.e. less patrons). Lower traffic = bankruptcy.

I don;t agree with JS80 much but this I do. When you said $350k I thought that can't be right. Esp since you said it has several things on site.

Also is the land and building owned or is it leased. What is the mortage/lease payments and what does it say about transfer. Are there any debts in the business's name? Are there any leins? Court actions? etc...

I ahve seen gas stations by themself go for a lot more then that with far less. Soemthing is hidden and not being covered?

 

[dabuddha]

Get ready to clean up the puke/diarrhea in the bathrooms

 

[Rock Hydra]

Originally posted by: kranky
I have noticed many gas stations for sale - there must be a reason.

There's one gas station near us which people say is really bringing in the money. They not only have a (very) small convenience store, they do state vehicle inspections, they rent cars, sell kerosene, propane and diesel, sell firewood, and rent space on their property in the summer to vendors who want to set up a little stand on the weekend to sell flowers or T-shirts or other little items.

Neato ideas. Do you have space for such facilities, OP?

 

[OutHouse]

Originally posted by: Rock Hydra

Originally posted by: kranky
I have noticed many gas stations for sale - there must be a reason.

There's one gas station near us which people say is really bringing in the money. They not only have a (very) small convenience store, they do state vehicle inspections, they rent cars, sell kerosene, propane and diesel, sell firewood, and rent space on their property in the summer to vendors who want to set up a little stand on the weekend to sell flowers or T-shirts or other little items.

Neato ideas. Do you have space for such facilities, OP?

yes it does.

 

[OutHouse]

^ for pics

 

[FoBoT]

another thing to think about, your neffing time will be greatly reduced, i mean, how much can you surf ATOT if you are working in the store/running a cash register?

however, the flip side, if you buy it, you got to setup a live webcam feed so we can see all the nice people coming into your store buying your crap

 

[Papagayo]

My Dad was telling me that, if you own a gas station in S Korea. You are in great shape.

 

[OutHouse]

Originally posted by: FoBoT
another thing to think about, your neffing time will be greatly reduced, i mean, how much can you surf ATOT if you are working in the store/running a cash register?

however, the flip side, if you buy it, you got to setup a live webcam feed so we can see all the nice people coming into your store buying your crap

if i do get it, ill be sure to put a message out on the marquee just for you.

 

[alien42]

DO IT

 

[Anubis]

i would advise against this

 

[Josh]

make sure you sell beer, cigarettes, cigars (specifically dutch masters, phillies) & snacks

 

[onlyCOpunk]

Originally posted by: Citrix

Originally posted by: DaveSimmons
How often does someone bring a gun into your current workplace and hold it up?

"Oh, the searing kiss of hot lead, how I've missed you!" - Apu

the store closes at 9 but the pumps are 24 hours.

this is also in a small town between Denver and Greeley.

How small of a town? Is it around new developments. And is it off the Interstate or the split off at Ft. Collins.

You should really have a professional go over his financial statements and someone else to take a hard look at current and future sales.

A gas station just seems too unstable to take on, even if it is established. And if you have no experience with small business and a huge list of inventory.

 

[Beev]

That town looks pretty podunk. I think it'd be a much better investment if it were in big city. Granted it'd be way more expensive, but the profits would be insane.

 

[alkemyst]

I thought you gave happy endings for people with bowel disorders.

 

[gsethi]

Originally posted by: reeserock
Convenience store profit is in beer and smokes, not gas. I hope there is a store attached.

Not entirely. Actually, in cigarettes, the profit margin is way less.

Originally posted by: Marlin1975

Originally posted by: JS80
Horrible idea. That price is fishy (i.e. too low). My great uncle bought a gas station and he just had to fire two employees and now works there himself to minimize losses. Those franchises will rape you the chance they get.

The saving grace of yours may be the car wash.

I would also consider soaring gas prices and possible decline in economy (i.e. less patrons). Lower traffic = bankruptcy.

I don;t agree with JS80 much but this I do. When you said $350k I thought that can't be right. Esp since you said it has several things on site.

Also is the land and building owned or is it leased. What is the mortage/lease payments and what does it say about transfer. Are there any debts in the business's name? Are there any leins? Court actions? etc...

I ahve seen gas stations by themself go for a lot more then that with far less. Soemthing is hidden and not being covered?

with that price of ~350k, he is probably just buying the business goodwill. Since it is a Phillips 66 (franchise), i am sure that Phillips will be doing maintainence on the building/gas pumps/lot and will be responsible for any upgrades and in return, the franchise pays rent + royalty to Phillips. If incase the seller does own the building + pumps + tanks, then you are responsible for any upgrades required by the govt/phillips. I am 99.99% sure that this asking price of 350k does not includes the RE, so OP will still have to pay rent.

There are just too many variables and scenarios as follows:
1) Phillips owns the Land, building and other FFE and owner/operator pays them Rent + Royalty
2) Some Landlord owns the Land and Phillips owns/maintains the building and other FFE and owner/operator pays them Rent to landlord + Royalty to Phillips
3) Phillips/some landlord owns the land but owner/operator owns/maintains the Building + FFE and owner/operator pays the Rent + royalty.
4) Phillips/some landlord owns the land but owner/operator owns/maintains the Building + FFE and owner/operator pays the Rent (no royalty).

There can be some other conditions/scenarios also. You have to look at all these scenarios and depending on which scenario it is, the market price and your take home *MIGHT* be different from other scenarios.

You also have to look at how long the lease is for the place. Since it is a Phillips gas station, most probably Phillips owns the master lease and in turn subleases to the franchise. The sublease will most probably be for 3 years (which gets renewed every 3 years for 3 more years IF you are doing good and are in good terms with Phillips)

 

[vi edit]

Originally posted by: Beev
That town looks pretty podunk. I think it'd be a much better investment if it were in big city. Granted it'd be way more expensive, but the profits would be insane.

There's a simple concept called market share. In podunkville you have very limited options where people can go to get gas, wash the car, hit the DQ.

They don't have the option of going to a different gas station on any number of corners.

 

[OutHouse]

he is independent so no royalties are paid to conoco/phillips.

the only royalties he pays are to Tastee Freez and that is .05% of sales.

the price is low because he leases the land from the previous owner, he owns everything above ground.

the land lease thing is a road block. i just called my credit union and they say its rare for them to grant a loan when the business is land that is not part of the loan, they have no security if they have to repo. Grrrrrr

 

[rudder]

Crazy is scanning in 1000 magazines.

as others have mentioned... find out why this "friend" really wants to sell.

 

[Mahaguru]

Why not get another IT job? Not all jobs require dealing with crazy users, and doing midnight installs.

 

[Jhill]

How does that tastee-freeze work? Do you have to run it or is it someone elses. What do they sell?

 

[OutHouse]

Originally posted by: rudder
Crazy is scanning in 1000 magazines.

as others have mentioned... find out why this "friend" really wants to sell.

he wants to slow down and just concentrate on his other two businesses.