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Loan for gas station - LoanUniverse Community

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Loan for gas station


12 replies to this topic

#1 Vassk1

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Posted 28 July 2005 - 11:51 PM

I currently reside in Connecticut but I am moving to Florida in the next few months. I am intersted in purchasing a gas station. I will probably have around 60k when I move and not much else. My credit score is in the mid 600's because of a judegement I had received a year ago that has since been paid. Before this my credit score was around 700.

Is it feasible that I can obtain some type of financing to purchase said gas station? What is the highest price I will be able to purchase the gas station for? I am willing to use a large chunk of the money I have for deposit.

I don't have any real experience in operating a gas station/convenience store but I do have a degree in Finance, if that will help the lender.

Does this sound about right...800k in sales equates to around 75-80k net?

Any help is greatly appreciated.

#2 Commercial LO

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Posted 29 July 2005 - 08:05 AM

For a gas station, you will need 20-25% down plus closing costs plus working capital reserves for a commercial mortgage. You can lower the amount you need down by having the seller hold asecond mortgage (you will still need 10% down minimum) or find an owner who is willing to finance the entire thing wth little to nothing down.

#3 loanuniverse

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Posted 29 July 2005 - 09:53 AM

This can only be possible with seller financing like Commercial LO mentioned.

Regarding ” Does this sound about right...800k in sales equates to around 75-80k net?”

It is possible to get those numbers, but you would have to have substantial convenience store or car wash revenue. If you are buying a gas station that derives its revenue from gas alone, then it is not possible. I remember doing a spreadsheet to test certain projections from one of our gas station clients and the contribution of a gallon of gas to the bottom line is less than $0.10 {about $0.15 in gross margin}.

Make sure to go through all of the financial information that they are providing.

#4 Vassk1

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Posted 29 July 2005 - 10:00 AM

Thank you for the quick reply. Let's say I put down 50k of my own money. How much of a commercial loan could I obtain and what are the chances of me obtaining the loan. This gas station does have convenience store with about 40,000 month sales at around 25-30% GP. Also sells lottery, Atm..etc. Do those numbers make more sense?

How much should I have in reserve for working capital?

Thanks.

#5 loanuniverse

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Posted 29 July 2005 - 11:17 AM

Somehow when I first read your post I misread it as if we were talking about a purchase of $600K. I also assumed that you were buying the real estate also, which might be wrong.

Esentially, there is no way to determine if $50K is enough without knowing the purchase amount, the amount the seller is willing to finance, if real estate is involved, and double checking the performance and condition of the gas station.

Know regarding the net amount…. I don’t know it seems a bit high.

$40,000 in store sales at 30% GP = $12,000 gross profit
$10,000 in lottery and other at 10% GP = $1,000 gross profit
$750,000 in gas sales / $2.25 per gallon = 333,333 gallons
333,333 gallons X $0.15 GP per gallon = $50,000

Total gross profit = $63,000

#6 Vassk1

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Posted 29 July 2005 - 11:39 AM

Thanks for your reply.

I was looking for a station in the 150k range..no real estate. I was just throwing out numbers before.

Numbers look more like this per month:

c.store: 48,000@.30=14400
gas:60,000gallons@.07=4200
misc rebates: 1200
no atm not sure about lottery
total income for month is 19800 * 12=237600 for year

what do you figure on expenses for year? I would work around 50-60 hours per week. Figure store is open 18 hrs per day.

Offered at $130,000 with inventory of 40k not included in purchase price.

Is there actually money to be made doing this or will I be working for free at these prices?

Thanks.

#7 loanuniverse

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Posted 29 July 2005 - 12:01 PM

Ask for financials.

Really only $0.07 cents gross profit on gas? Wow, that is low.... My guy was getting $0.14 and I went with $0.15 for the roundness of it.

Lottery retailers in Florida get 5%

I would also hesitate at calling the number that you came up with "income".

Biggest expense other than your salary? The rent. Find out more details from the seller if he does not want to give you the financials.

Account for:
Rent
Salary
Licenses

I would do my calculations as if I was hiring someone to work 40 hours for me. Like it or not, you probably are going to have to be opened 7 days for 12-15 hours each. Find out the hours that the station is opened now and figure out how much help you need.

Also how long is the lease for?

#8 Commercial LO

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Posted 29 July 2005 - 12:29 PM

loanuniverse touched on a very important caveat. Ask for financials in the form of federal tax returns or audited and attested to financials. If the seller is not willing to share them with you, walk away. Don't guess or estimate expenses when valuing a business.

Don't fall in love with a business, fall in love with it's cash flow.

#9 loanuniverse

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Posted 29 July 2005 - 01:02 PM

I find it ironic that my website comes in as the first and second result in google searches when people look for “gas station loan”. Taking into consideration that I have done only a couple of these deals and that most of my employers have been adverse at doing those types of loans.

It is clear to me that I rule the internet! rolleyes.gif

#10 Vassk1

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Posted 29 July 2005 - 03:23 PM

Thanks for the replies.

The numbers I used were for one for sale that I saw on the internet. I never actually contacted them just crunched the numbers in my head to see if owning one was feasible.

The way I see it, you need to work like 18 hour days in order to make a profit because the labor eats everything up.

Figure I work 10 hour days, 5 days a week. THat leaves 8 hours per day plus 18 hours a day per weekend.

76 hrs per week =304hr per month @ $7.5=$2280 labor plus rent which can be anything. Let's say it is $5000 per month.

Labor: 2280
Rent: 5000
Insurance: 2000
utility: 1200
acct: 150
maint: 200
credit card fee: 1000

Total: $11830 per month * 12 = $141960 Expenses per year

Income (from my other post) $237600 - $141960 = $95640

$95k before income taxes is an acceptable number for me. But what if the rent is $7000. Now 95k turns into 71k.

Do you guys basically agree with these (fictitious) numbers? I appreciate the help.

#11 loanuniverse

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Posted 04 August 2005 - 01:30 PM

"Do you guys basically agree with these (fictitious) numbers?"

Not really.

Just look at your first post when you say $800,000 in revenue, then a couple of posts later you are talking 60,000 gallons. Somewhere, the price per gallon got lost, because I pay much more when I fill up.

Lets stay away from hypotheticals or we can come up with 10,000 scenarios.

#12 Guest_WholesaleLender_*

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Posted 08 November 2005 - 10:15 PM

I am trying to find a bank that is able to do a Gas Station Loan. I am here in So. Cal i just need some help finding a bank. Ive spoken to about 4 of my bank Reps and have asked them. They Dont know where to go either. If some one can possibly let me know where to go for that loan. That would be awesome.

QUOTE(loanuniverse @ Aug 4 2005, 01:30 PM)
"Do you guys basically agree with these (fictitious) numbers?"

Not really.

Just look at your first post when you say $800,000 in revenue, then a couple of posts later you are talking 60,000 gallons. Somewhere, the price per gallon got lost, because I pay much more when I fill up.

Lets stay away from hypotheticals or we can come up with 10,000 scenarios.

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#13 GURUFINCORP

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Posted 10 November 2005 - 01:52 PM

I work out of California and have done many gas stations here locally (high desert) and in other states. Click on my username and click on the e-mail link and give me more information in the borrower and situation. What type of franchise (mobil,chevron, etc.) Is the borrower already certified??, etc.. Let me know and I will see what I can do for you. Thanks





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