Because there is always a demand for fuel in America, buying or renting a gas station is a great way to make a consistent annual income. A typical petrol station lease is for the entire land on which the station is located.
This lease might include the petrol station business itself, the underground tanks, the pumps, and other services on the site. However, if you’re about to look for gas stations for sale, note that there are several important factors to consider. This article covers all you need to know.
Factors to Consider When Leasing a Gas Station
You’ll want to familiarize yourself with this market when you check gas stations for lease. Here are four factors to help you get into a gas station rental deal with open eyes:
Is the Gas Station Branded or Unbranded?
First, you should consider whether you want a branded or unbranded gas station. Note that branded gas stations like Shell or Chevron will give you support, training, and advertising privileges. However, note that you’ll have to maintain the quality and image of the brand.
Furthermore, if you’re willing to deal with a brand’s rules and style of services, then you’ll receive all the benefits and perks that come with working with a brand. On the other hand, an unbranded station needs lots of hard work. Note that choosing an unbranded gas station means you’ll be working from scratch.
You’ll have to think outside the box and look for ways to attract customers because people trust brands more.
Consider All Aspects of Your Location
The location of your station will have a significant impact on how well your business will grow. Keep in mind that local regulations, competition, and demographics are also important factors to consider.
Suppose your business is located in a densely populated area or an area with lots of competition. In that case, you’ll have difficulty getting customers to come to your station. On the other hand, if your business is in a favorable location with a strong market, you have a better chance of growing and topping your game.
Florida, for example, is a great place to invest because of its booming economy and numerous opportunities. So, if you’re looking for a gas station for lease in Florida, you can expect higher yields and savings because the state has multiple fast-rising metro areas and no state income tax laws.
Additionally, check to see if there are any ongoing road constructions or any other activities that may be a threat to your business. Overall, when looking for gas stations for lease near me, consider factors like the area’s population, competition, access to good roads, security, and local laws.
Check to see how these factors can affect your business and what you can do to avoid getting caught off guard.
Examine Your Predecessor’s Contract
Check the previous owner’s contract and see what you’ll be inheriting from them. If your predecessor’s supply contract is satisfactory and transferable, you can assume the contract right away.
Furthermore, study the contract thoroughly before signing it to ensure no shady agreements may hurt your business. Also, check to see if the station is profitable; you can take note of the number of customers to inspect the facilities for leaks and any other issues.
If this is your first time searching for gas stations for sale, do your research about available financing options to help your business grow.
Be Clear on What Comes With Your Deal
Make sure you’re clear on everything that comes with your lease agreement before signing it. Is the land and convenience store included in the deal? Is the agreement inclusive of other businesses on the premises, such as a car wash?
As a tip, gas stations with a nice convenience store are a good investment. A convenience shop can help you generate more money by attracting more consumers.
Additionally, while signing a contract, engage the services of a lawyer to assist you in reviewing the contract. A lawyer will be in the best position to tell you if the gas station lease agreement isn’t good enough for your business.
How to Prepare Yourself for the Gas Station Market
Most gas stations with a convenience store require less capital, and you won’t need to take out a loan to fund the transaction. If the business doesn’t work out, you can move on easily. Here are important factors to consider when leasing a gas station:
Have Enough Cash on Hand
First, ensure you have enough money to fund the deal. If you take out a loan, make sure you don’t have to pay it back right away. Note that the first few months of your business will require lots of spending on improvements and other services to help your company grow.
Also, keep in mind that you’ll be required to fill out a credit application at some point, so make sure your funds are in order.
Understand the Costs
Before deciding which store to lease, always take the time to learn about the sales in a gas station. Find out how much rent you’ll be paying to your landlord after all the calculations, as well as the percentage of real estate taxes and insurance you’ll need to cover. Furthermore, check whether or not the landlord will cover the credit card fees for the fuel.
Know Your Lease Options
Have a look at your lease options and how they will benefit or hurt your business. Contracts from listing sites like NNN Deal Finder, for example, can last anywhere from ten to 25 years and benefit both the landlord and the tenant financially.
Make sure the lease option won’t suffocate you and instead allows you to focus on important projects. The goal is to have a long and fruitful relationship, and the majority of leases provide an option to extend the contract.
Leasing or buying a gas station is a lucrative business, and the competition is sure to grow over the years. Starting with a strong firm, on the other hand, can give you a head start and the publicity your business needs.
When looking for gas stations for sale, make sure you have the cash to compete in your market, pick a good location, and understand the costs and your leasing options.
Featured Image by StockSnap from Pixabay