I'm new to investing in real estate. I'm a junior at FL State University and I was curious about purchasing a vacated gas station and flipping it. Would you recommend this or are there hidden regulations and other fees I should expect?
I would start with a residential flip first. A gas station will almost always have to be a gas station, unless someone wants to hold it for a loooonnnngggg period of time. I can't remember, but I want to say ten years before it can be used for something else. It's been quite a few years since I sold (and yes, I actually have sold one) a gas station, but I doubt it will be a quick flip. If you're hoping to do a simultaneous close, then you could always try. Worst case, you lose your earnest deposit.
Wow thanks for the quick response!
I'm curious as to why it can only be used as a gas station, though. Environmental/safety issues perhaps? I had a vision that maybe I'd renovate it and sell it because it's smack in the middle of campus and I figured someone would want to open up shop considering all the foot traffic around it.
Or is that just naivety?
I don't think any naivety. You have to find about the underground tanks and pipes. Has there been a phase 2 performed recently? What soils reports have done? What will the city allow to be potentially built there. Any history of leaks? What was it abandoned? Lastly, you will need some deep pockets for any potential remediation.
Ditto what Jo-Ann stated above.
It will cost a lot of money to conduct these inspections alone. Dealing with gas stations or locations of where a gas station once was is not for the inexperienced. Even with the inspections, there is still a waiting period for using it for something other than a gas station, just because of the unknowns of gas vapors and potential soil contaminants.
Honestly, if I were your Realtor, I would strongly nudge you in another direction and away from this deal. It would make me nervous for you. That's coming from the Realtor, experienced investor, and the mother in me (you're about the age of my sons).
It does seem like a little more than what I can handle right now. Thanks a lot to the both of you for the insight. Your concerns definitely made me realize this is no quick fix.
Back in the 1980s and 1990s the Federal government was very serious about environmental cleanup and created the Superfund legislation. Gas stations were especially scrutinized and were required to line their tanks to keep them from leaking. I had seen some cut open and sprayed with a ceramic liner, while others were taken out and replaced. The issue was that many (most?) of the tanks were steel, and petroleum products are corrosive. It's entirely possible that while some of the tanks were lined according to regulations, that the ground could still be contaminated and wouldn't be discovered if the property didn't change hands. So you can inherit a toxic liability when acquiring these properties.
Now having said that, I know of at least two gas station conversions in Dallas. One was a restaurant, and IIRC the other was a residence.
Along the lines that you are hearing, you will want to hire an environmental engineering company to perform assessments. Here is one that defines types of assessments that may be needed. http://www.innovatees.com/phaseiesa.html
If indeed your property is clean it may have great potential, as traffic there is likely substantial and I'm guessing it's on a corner?