A friend of mine who is into muscle cars but lives in a Condo with limited garage space wants to buy an old unused gas station. It's in a very safe neighborhood with frequent police patrols because of the way the community is set up. In fact the police often park there to doze, "er watch for speeders".
It's been ( aside from a gas station ) a flower shop, antique store, a thrift stop and a dry cleaners.
The building looks to have been built in the 1930's. But it's structurally sound. Brick and block with smaller sized windows.
There are 2 bays, an area that probably was the machine shop, a small office area. And a pretty decent sized storeroom. He can buy it for land value minus the cost of demolition.
Aside from storing his car collection he's planning on selling racing fuel. In the winter there is a big demand for it for snowmobiles. He's forecasting 300 gallons a month for 3 months of winter plus summer sales. Boats, Jet ski's, race cars, Hot Rodders.
The big attraction is the long South facing roof line. The Local Utility will pay to install solar power free. The payments will be about what he's paying in storage so any profit will feed his addiction, er habit, err car hobby. He's thinking he might use the driveway to market his cars. ( he loves to flip them ).
Back in the day, dry cleaners loved to just pour their toxic cocktails down the drain or on the ground behind their businesses. I'd check into that first.
As Derick mentioned, ground contamination is a big concern. Are there still tanks in the ground?
Pumping 300 gallons of fuel a month isn't worth the hassle of dealing with the licenses, paperwork, inspections, etc. to be legal pumping. Might as well just sell pre packaged in 5 gallon cans or larger drums.
Wash for the rent he is paying now? I would do it.
This seems more like a "lose less money on my hobby plan", not that this is a bad thing.
Second that the race gas should probably be sold in prepackaged drums; note that this doesn't have very much margin, but pumping would probably be even worse.
I wouldn't mess with the fuel because it's a headache unless you're selling prepackaged and as noted by others, there's almost no margin in that, or any fuel sales to be honest.
If the snowmobiles and other personal craft is the area are modified and raced, I would look into carrying a limited number of software programmers for ecus. Snowmobiles, side by sides and jet skis don't have the same mandates as motor vehicles. Other than that I would also consider leasing out a bay to a detailer or maybe someone who does vinyl graphics.
Wait, so the utility is PAYING to install the solar and then PAYING him monthly for the power? This smells fishy since I don't see what's in it for them... unless there is some kind of crazy state incentive which there might be.
In reply to Robbie (Forum Supporter) :
Yes the State has mandated a certain percentage of generated power has to be from renewables. I don't know the details since my Southern roof is obstructed by trees and potentially my neighbors building a new house. But we get literature in the monthly bill to that effect.
In reply to captdownshift (Forum Supporter) :
I think he intends to use all the space for his cars. ( and probably turning it into a man cave)
Having given it some thought, wouldn't he be able to write off any loss as a business loss? I know he brags to me how much he makes selling various cars. Although I think he really gets a kick out of driving them too.
NOT A TA said:
As Derick mentioned, ground contamination is a big concern. Are there still tanks in the ground?
Pumping 300 gallons of fuel a month isn't worth the hassle of dealing with the licenses, paperwork, inspections, etc. to be legal pumping. Might as well just sell pre packaged in 5 gallon cans or larger drums.
This guy lives in a very expensive Condo. Probably well into 7 figures. Plus lives an expensive lifestyle. I know he earned it rather than inherited, so I'm pretty sure he covers his bases regarding future liability.
jgrewe
HalfDork
7/13/21 4:53 p.m.
If the tanks are still there I would walk away unless the location is prime for redevelopment. There a ways to store racing fuel in drums and be legal with placards on the doors for the fire department, I'm not sure about selling from them to the public. My dad taught me long ago the most powerful person in a town as actually the fire marshal, not the mayor or council. That would be my first call.
As for taking over a potential superfund site... enviromental testing, even if the tanks are gone, is a must. The dry cleaner operation is a second red flag. I think those chem's soak through concrete pretty well besides down the drain.
We bought a property in the late 80's that had been a truck stop for about 50 years. We had to pull 13 tanks out of the ground before we did anything. The next step involved having some of the dirt removed and cooked to clean it. It was then brought back to be used as fill. Some of the dirt was treated on site in piles covered with tarps for about 6 months. I think there was some kind of bacteria or microbes involved, I don't know. Basically we got a $400K property for about $70K because we could clean it up and the tax laws were changing. My point is make sure he isn't buying a bigger problem than he can afford to fix.
Cities love to hammer new owners when you go in for permits.
FIRST - definitively determine if the property is contaminated. Have that ALL backed up with documentation completely describing exactly what was done to mitigate the problem. Having been involved with a contaminated property issue there cannot be enough documentation. The client we had didn't do that and eventually filed a BK.
My gut says if an old gas station building is still standing then it is by sheer luck it didn't leak or the contamination has not been detected - YET.
In reply to frenchyd :
Here's the thing, gas stations don't make money on gas. They make money on people using their corporate credit card and not paying it off each month for their brand fuel, stations get kickbacks from that based off of gallons per a month pumped. And they make it off the convenience store or service side.
I understand his intention is to keep his vehicles there and have it be a man cave. I'm saying if the real estate is decent lease out the property for enough money to build your own man cave in a spot that doesn't have the traffic where a viable business could otherwise be. If he could make four to five grand a month in leasing the property to another business he can keep his cars wherever he wants for that much or he can build a garage somewhere else and have it completely paid for by the lease income. Keeping his personal vehicles where he wants a business is foolish. The question was asked, is this a good business plan? The answer, is no. The location has opportunity but It is not wise to mix business with pleasure, if you get into a business and you find that you love it and it becomes your pleasure that's different than starting with something that is a pleasure and trying to double dip, it doesn't work as the self restraint and focus of what works on the business side instead of focusing on what would be fun or enjoyable, clouds decision making.
Before I retired I did environmental assessments on properties. You SOBs have stolen my thunder. All the above was good solid info. An old gas station isn't the worst thing, but the dry cleaner sure is. Perc passes through pipe, concrete, soil, whatever. Your friend definitely needs to do a Phase I ESA and more than likely a Phase II. They may not have performed dry cleaning on-site, but used it as a dry drop. The gas station may have been properly closed out with the tanks removed and an NFA issued by the state. I have also been looking at an old gas station for a man cave. I'm too scared to contact the owner.
Selling gas is going to be iffy for the previously mentioned reasons. I suspect it would have to be handled in drums or 5 gallons pails. You might could get it in totes and maybe even store it in an above ground tank. Those are not regulated in SC. BUT, as stated, the fire Marshall reins supreme.
Read all the above posts about fuel tanks and contamination again.
The new owner will be responsible for any EPA problems.
Then read the above comments about contamination one more time.
He needs to do all the due dilligents or he could end up with a costly albatross hanging around his neck.
captdownshift (Forum Supporter) said:
In reply to frenchyd :
Here's the thing, gas stations don't make money on gas. They make money on people using their corporate credit card and not paying it off each month for their brand fuel, stations get kickbacks from that based off of gallons per a month pumped. And they make it off the convenience store or service side.
I understand his intention is to keep his vehicles there and have it be a man cave. I'm saying if the real estate is decent lease out the property for enough money to build your own man cave in a spot that doesn't have the traffic where a viable business could otherwise be. If he could make four to five grand a month in leasing the property to another business he can keep his cars wherever he wants for that much or he can build a garage somewhere else and have it completely paid for by the lease income. Keeping his personal vehicles where he wants a business is foolish. The question was asked, is this a good business plan? The answer, is no. The location has opportunity but It is not wise to mix business with pleasure, if you get into a business and you find that you love it and it becomes your pleasure that's different than starting with something that is a pleasure and trying to double dip, it doesn't work as the self restraint and focus of what works on the business side instead of focusing on what would be fun or enjoyable, clouds decision making.
I'm sure you're right about gas stations. But have you price racing gas lately ? The really good stuff is $8-12 a gallon. Last I looked. My last 5 gallon can cost me over $55. It's close to 20 years old but I still have it since the idea of throwing away $55 would probably send me into cardiac Arrest.
I suspect there might be a bit of change to the dealer at those prices. ( to be fair, I don't know. Maybe that station over in the NE does it as a hobby. ( sorry for the sarcasm).
As for a decent lease out? Well the track record isn't good. Went out of business when neighborhood gas stations were a good bet. Then tried various things like antiques, flowers, Dry cleaning and ?
Apparently the owners are willing to sell the land and willing to underwrite the cost of tearing down the building off the value of the land. Doesn't sound to me like it's very viable.
Everybody has raised the issue of contamination. To be honest I never considered that. I was more concerned about could he make enough money selling racing gas to offset the hassle of selling racing gas.
I know when I was racing I had a few sources of racing gas but the last place I'd buy it was the race track. ( especially towards the end of the season). I had 13:-1 compression ratio and I needed the good stuff. You could pull the timing back a few degrees and get by on race track gas but I liked to race. I could give away 100 cubic inches. But I needed the remaining 258 I had to step up and deliver.
As A result the 40-50 gallons I needed for a weekend meant I was checking my sources ( and prices ) before every race.
I thought he was going to rent bays, tools and car storage...... that is a booming business in Dallas.
I was ready to invest in that.
https://garagesoftexas.com/
L5wolvesf said:
FIRST - definitively determine if the property is contaminated. Have that ALL backed up with documentation completely describing exactly what was done to mitigate the problem. Having been involved with a contaminated property issue there cannot be enough documentation. The client we had didn't do that and eventually filed a BK.
My gut says if an old gas station building is still standing then it is by sheer luck it didn't leak or the contamination has not been detected - YET.
Well I guess he didn't really need my opinion. He owns it. When. I asked about the possibility of contamination he said his lawyer signed off. Since lawyers worry about that sort of thing, I guess I don't have to worry.
He was excited about just buying a 15' Mobil florescent light sign of Pegasus. To put on the end of the building. He also bought a couple of reproduction gas pumps. The ones that pumped the gas up into the glass tank before you let it down into your car. From the 1920's?
He's also got a contractor signed up to clean it out and fix it up. I got the idea that the cost was shocking even to him.
Oops. I guess he's not going to sell gas. Outside tanks like he planned got nixed by his insurance company. I'm not sure he's willing to sell drums or cans. He seems pretty sour on the whole idea.
I suspect part of him just wanted gear heads to have a reason to stop by.
A high sale price for race gas doesn't mean that it's highly profitable right now. In fact it will mean the opposite as less of it moves through the distribution network. Don't look at a sales price and thinks that it equates profit, as it does not. Here's the other issue with race gas if you buy a large inventory of it, if a gas station 3 miles down the road starts carrying E85, your market share is going to take a punch to the gut.
Here's the last two five gallon cans a friend kicked less than two weeks ago, in the back of the escort. He made less power on it than he does on E85...
Compression, forced induction and tuning comes into play with that, but from a business standpoint I'll just say I wouldn't open up a carburetor service shop either. Most people bringing snowmobiles and side by sides into town are towing them in, probably at least 40% of those tow vehicles are pickup trucks they can shop for their race gas before they get into town and haul it with them and they probably will because if they show up for the weekend and you're out then they're screwed if they're going to plan ahead of time which is successful racer does they're not going to wait until they're in town to purchase it.
In reply to captdownshift (Forum Supporter) :
I guess you didn't read my last post?
In reply to frenchyd :
I see it now. So, he can still have a super cool fun spot that will have gear heads wanting to come by.
He should talk to the organizers and sanctioning body of the races about sponsorship opportunities they may be missing and about having a vinyl guy in that space to produce the vinyl required by competitors is part of the sponsorship agreement.
Then he should talk to them about using the logo and likeness of their race or series to have featured on a low production run line of paint protection products with a portion of the proceeds to go back to supporting the race.
There is an outlet out of Indiana that will do private label car wash and protectant products...
Those are the ways that he would make inroads to be the spot to hang out in town. Half of the stage rallies I've been to The Hangout spot for competitors, crew and volunteers has been either a local fire department or a school. I've always been mystified by the fact that there was no small business that would want to partner up in a way that is mutually beneficial from a financial standpoint and helps grow exposure.
But he's not a racer. More of a poseur. Who has the ability to buy the muscle car of the week. ( at a bargain) and later sell it for a song.
But his real skill is getting ahead of the market. He sold all of his commercial real estate a few years ago. Buying vacation real estate.
I think this "GasStation" is a little present for himself for guessing the market right. I can't see it as any future trend.
jgrewe
HalfDork
7/13/21 10:11 p.m.
I'm glad this purchase is his 3rd or 4th rodeo in real estate. It sounds like he has covered himself and has the money to make it into whatever he wants it to be.
I'm more about treating my shop like the Batcave, nobody needs to know what is behind my metal doors with no windows.
frenchyd said:
Having given it some thought, wouldn't he be able to write off any loss as a business loss? I know he brags to me how much he makes selling various cars. Although I think he really gets a kick out of driving them too.
You'll want to talk to a tax pro, but I believe that you need to have the business overall making money. If it's his car lot, and he's overall making money on selling cars, then the place he keeps the cars he's selling would be a legitimate expense. If the business always shows a loss, that tends to make the tax man suspicious.
