Are gas stations a bad investment?
Los Angeles, CA · Member since 2017 · 73 posts · 56 votes
Are gas stations a bad investment?
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Peter TverdovBusiness Member
Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votesI think you need to step into reality. Gas powered vehicles are not going anywhere anytime soon.
Gas stations are a good investment if you have convenience stores on them and if they're off a major highway where a premium can be charged on the gasoline. Owning a gas station is a very hard business from what I understand. Most make 1-3 cents off each gallon of gas. Their money is made on the convenience store or autobody shop. Like everything in real estate, location is key.
32 Replies
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
People can still make a business in selling to stagnant markets. Just remember that autos and trucks are 5 year property per the IRS. That's the business time frame. For personal, it's maybe 15 years.
Gas won't go away, just like coal didn't go away, just like horse drawn carriages won't go away.
But look at current sales. How many new horse drawn buggies were delivered in the latest government report? How many new coal fired plants were built or permitted in the US in 2018? When was the last (petroleum) refinery built in the US? How many permits in the US were issued for new coal mines in 2018?
Volvo won't make exclusively gas vehicles anymore. "Volvo Cars, the premium car maker, has announced that every Volvo it launches from 2019 will have an electric motor, marking the historic end of cars that only have an internal combustion engine (ICE)..."
Over time, you'll want to adapt your ICE centric sales to the new cars to make margins on non fuel revenue, which is the only way to play this market.
For me, I've already designed in a charger for a commercial solar farm we will build in 2019. It's Arduino based and costs 20x less than a gas or diesel equivalent and has no environmental issues. Kinda no brainer. Just as @Jay Hinrichs says people can charge at home for a lot less, businesses will provide charging on the farm/business as a customer curtesy. If the farm sells via road side stand, then we will run the cables and put in a couple complementary free charging stations and customers get free "gas" while they shop for peppers, tomatoes, leeks, and hemp buds.
China is going the path of Volvo... as they see that .
You can sell gas all day. Today, tomorrow, and probably for years. Then, it becomes difficult.. or you'll convert to a hybrid station that, like the typewriters that had one line correction capability before the typewriter company closed, failed to keep up with current energy transfer stations.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Chris Martin I was just doing a deep dive into the Tesla semi now that is going to be a disruptor.
The average distance freight is moved is 250 miles..
Tesla semi will go 500 miles on a charge.. and will have Super Duper chargers that will give a full charge in 30 minutes.
so why they are loading and unloading wa la its charged and ready to go.
Also they are FAST and unlike diesel trucks who strain to get to 45 MPH up a 5% grade TEsla will do 60 MPH and oh to 60 with 80,000 pds in 20 seconds compared to over a minute for diesel.. batteries are good for over a million miles.
at least out here in the west were we have a lot of mtn grades on our hwys your shipping time drops you save HUGE money on fuel.. and there is no oil changes .. and very little maintenance.. and brakes will last the life of the truck as the regenerative breaking will stop the rig.. I know in my tesla's it takes a few days but you soon find yourself barely tapping the break when you come to a stop sign or light.
Tesla stock got hammered but its back up the model 3 is a roaring success and once they finally let the 35k one out to the public it will get that much better.. Larry Elison just joined the board and took a position with the purchase of 3 million shares.
this is forcing all the other manufacturers Like you see Volvo Porsche MB BMW and US brands to finally come to grips that they better play or they will be left in the dust.. I have had mine now 2 years I have the X and the S .. never been to the shop never paid more than 2 dollars for a fill up and since mine are grandfathered into superchargers for free for the life of the vehicle I hit those all the time.
it will be tougher though for renters.. as it does cost 200 bucks or so to put the 240V outlet in your house/garage etc.
I think MF owners will have to adapt as well. same with big glass buildings and their parking structures.. it will come.
but Gas vehicles at least in my lifetime and probably my kids are not going away.. but their is a conversion taking place. so for now I would not NOT buy a gas station if that is what someone wants to invest in.. out our way there are folks from specific countries that really dominate the ownership.. Just like the Patel's dominate all the 100 and under motel hotel business s in America.
- Keller, TX · Member since 2017 · 5 posts · 3 votes7y
I think it depends on how well the gas station "adapts". We have these mega stations scattered across Texas called Buc-ee's, and their latest constructions are "travel centers" built on about 20 acres with over 60 gas pumps. On any given weekday there are hundreds of people many of which are there for lunch, or souvenirs. These guys have their own brands of candies, jerkeys, a full bbq smoking operation, and sections of clothing. On weekends it can be hard to find a pump, people actually go here to do Christmas shopping. https://www.forbes.com/sites/petercarbonara/2017/08/22/buc-ees-game-of-porcelain-thrones/#26e4d9237626. I've even seen Tesla's pulled in presumably not for gas.
- 7yMike ReynoldsPro Memberconstruction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
Originally posted by @Dori Clark:
I think it depends on how well the gas station "adapts". We have these mega stations scattered across Texas called Buc-ee's, and their latest constructions are "travel centers" built on about 20 acres with over 60 gas pumps. On any given weekday there are hundreds of people many of which are there for lunch, or souvenirs. These guys have their own brands of candies, jerkeys, a full bbq smoking operation, and sections of clothing. On weekends it can be hard to find a pump, people actually go here to do Christmas shopping. https://www.forbes.com/sites/petercarbonara/2017/0.... I've even seen Tesla's pulled in presumably not for gas.
Everyone thought Arch Aplin was crazy to build a "convenience" store on the interstate that didn't cater to semi's. Look who's laughing now. That one in New Braunfels is the largest so far with 120 pumps....all for 4 wheelers. Truckers need not apply. There is at least one or two tankers parked there at all times for a fast fill up of the tanks.
They broke ground in Ala. in Jan. this year and in June they broke ground in Fla near Daytona.
They really don't care about the gas sales that much. they want to sell Buc-ee Nuggets instead.
Originally posted by @Account Closed:
My dad made a significant amount of money buying and developing gas stations in the 90's. he's held all of them since, collecting rent checks each month, all are on a NNN lease.
He's wanting to buy more now and I personally don't think it's a great investment anymore, seeing as we're trending towards electric vehicles as more time goes on.
While we'll still need gas for several more years, is it a good idea to invest in NNN gas stations if electric cars become more prominent as the years go on? Is my perspective on this matter wrong?
Note: We live in California and gas stations are selling at a premium right now, prices are CRAZY!!
One of the questions, is they might or might not be a good investment, but maybe the question should be are they a good investment for your dad?
It sounds as though he isn't diversified in his real estate holdings and is tied to the health of one niche of the industry (retail gasoline stations).
Have you run different scenarios? IE what happens if every single one of these tenants is having issues financially with regard to gasoline sales. Maybe California has made it so its impossible to make money in the business. IF none of the tenants renew, what is plan B? Can the sites be repositioned to a different industry? if so I would be less concerned about the long term viability of gas.
It might be a case where gas stations are a great investment but not really a good investment for your dad based on his age, concentration of risk with his investment portfolio and the number of current leases coming due in the next 5 years.
Personally I think we will see a move to electric, but I also think we are on the verge of self driving vehicles. And I think when that happens people will move to a sharing model, a self driving Uber. you use your app a car comes and picks you up, and drops you off at your destination.
I could see this turning into a multi modal scenario, a small car picks you up at your door, and drops you off at a bus or train depot where you are moved at a high speed to a city downtown etc. And I think it happens sooner than people expect.
Regardless, I think I would be reluctant to double down on gas stations unless I had a potential exit strategy not connected to transportation. IE maybe Starbucks would rent them, or whatever.
I don't want to be in the position of needing an industry to fight off a disruptive technology, especially in California where the will of the people leans heavily against any form of fossil fuel.
- Killeen, TX · Member since 2017 · 7 posts · 0 votes7y
Is there anyone on here interested in gas stations in Texas?
- WI · Member since 2019 · 77 posts · 10 votes5y
To put it simple for you @accountclosed. I love Tesla and their mission statement says it all. BUT, compare all of the companies that are selling gas combustible vehicles right now and still are! in comparison to the 2-3 EV manufacturers... I'm no Jay Leno, but at the end of the day I would much rather enjoy my V12 options if I were that rich.
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