Anyone own a gas station, or know someone who does?

[Loc R.]

I'm looking at some business listings, and they are claiming a cash-on-cash of 25%, with an all cash purchase. That sounds too good to be true...

[Steve L.]

Hi Loc -

My dad runs a commercial brokerage specializing in brokering gas stations (GasStationExchange.com). There are some opportunities where you will see 25% cash-on-cash return, if you are experienced and operate it.

The industry has some challenges:
1. All the major brands require training and approval. 1-3 weeks at their corporate office.
2. The prices do not include working capital/inventory. Which can easily be over 100k.
3. Employee theft in the industry is a huge problem.
4. Gas prices and the industry have been volatile.

We know some extremely successful owners and some struggling to survive.

In California, it is common for business only to trade at 4-6x earnings. Business with reel estate deals usually are 8%-10% returns.