The key point in deciding which Gas Station Business or Convenience Store Business to buy boils down to one point and one point only and it is the very important century old questions all perspective business owners have asked for hundreds of years “ does this one make money?”
You are going to have sent out a letter of intent, which I may cover at a later post and you have a formal agreement in the works between yourself and the seller of a property. It is your job, before you sign on any dotted line, to undertake some very important due diligence.
According to most expert real estate investors, you are going to need to follow this 8 step Due Diligence Gas Station Business Checklist before you go ahead and accept a sale:
- Assume nothing about the property – particularly about its value – until the information has been confirmed by the seller with valid documentation. If you are getting a bank to finance your purchase, most banks will require am appraisal done on the property.
- Ensure that you hire a qualified building inspector and a qualified land inspector to make an independent assessment of the property or properties that you are interested in. Specially if it is a gas station business that has UST (Underground Tank Storage), than you will need some testing (Phase I or Phase II) done, to ensure that there are no leaks and the tanks are in good operating condition.
- Secure an inventory list from the seller and be sure to go through the building and double-check that all of the items listed are in fact in place.
- Review all contracts presented to you by the seller or any other party involved in the deal. Be sure that you review the contracts at least once in the presence of your lawyer.
- Instigate a certified property survey or request to receive a copy of a recent certified property survey.
- With the help of your lawyer and real estate broker – or any other contact you deem appropriate – verify that the title for the property in question is valid.
- Verify all liens and debts pertinent to the property.
- Establish a time table and checklist to ensure that you and your team have gone through all the appropriate steps to ensure that the deal you enter into is going to be valid and to ensure that you are not going to be hit by any surprises down the road.
So, that’s my 8 step due diligence gas station business checklist I advised you to take. Don’t worry about appearing cynical; yes, it is cynical to take nothing at face value and to require your seller provide proof of everything they claim about their property but it is also common sense. Whether you are buying a house to live in or a gas station business to be the base of your business, that doesn’t change the reality that most sellers want to offload their properties and they think that the best way to do so is simply to avoid mentioning any problems associated with it. The safest option for you is to ask if the seller can provide you with inspection reports and recent surveys at the beginning of the negotiations because you don’t want to waste too much time pursuing a deal that, at the end of the day, can’t go anywhere because of an insurmountable problem with the property.
Not to mention, you may well be contemplating a sizable investment. There really is no advantage to rushing things when this type of money is involved.