Buying a Gas Station With Real Estate

When the real estate comes with the gas station, you are financing a commercial property that happens to have a fuel business attached — and that is a considerably easier thing to finance than the business alone.

Why the property changes the deal

Real estate is collateral a lender can value, insure and, if it comes to it, sell. That single fact improves nearly every term available to you compared with a business-only purchase: longer amortisation, more lenders willing to look, and usually less cash down as a percentage of the total.

It also means the property has to appraise. A fuel property appraisal is its own discipline — the value sits in the improvements, the location and the income, and a general commercial appraiser without fuel experience will slow the file down.

The tanks are the deal

Underground storage tanks decide more fuel transactions than the price does.

Age and material. Fibreglass and modern double-walled steel are financeable. Bare single-walled steel from the 1980s is a different conversation, and some lenders will not touch it at any price.

Compliance records. Line and tank testing, cathodic protection surveys, release detection records. A station with a clean paper trail closes faster than an identical station without one.

Phase I, and possibly Phase II. Nearly every lender requires a Phase I environmental site assessment. If it flags a recognised environmental condition, a Phase II follows — soil borings and groundwater sampling. That is weeks, not days, and it is the most common cause of a fuel deal missing its closing date.

Ask the seller for their most recent Phase I before you are under contract. If they hesitate, that hesitation is information.

How these deals get structured

Most purchases split across two things: the real estate, and the business assets including inventory and goodwill. How the price is allocated between them matters for your taxes and for how the loan is structured, and it is worth having your accountant look at the allocation before the contract is signed rather than after.

Fuel inventory in the tanks at closing is usually bought separately at cost, measured on the day. Budget for it — it is real money and it is not in the purchase price.

What to have ready

• The purchase agreement, with the price allocation
• Three years of tax returns and trailing twelve months of operations
• Fuel volume, separated from inside sales
• The fuel supply agreement and remaining term
• Any existing environmental reports
• Tank age, material and compliance records
• A survey and title work, once under contract

Renovation and improvements

Buying a tired station with the intention of rebranding, adding a car wash or rebuilding the store is financeable, but it is a different structure from a straight acquisition: the lender is underwriting the property as it will be, not as it is. Have a written scope of work with real contractor numbers before that conversation starts. A budget written on the back of the purchase agreement will not survive underwriting.

Where to start

Tell us the address, what it pumps, whether the real estate is included, and what the tanks are. Those four facts are enough to tell you quickly whether it is placeable.