The short answer Buying a gas station means buying a special-purpose property with underground fuel tanks, so environmental due diligence comes first. Check the tanks' age and compliance record with Colorado's Division of Oil and Public Safety, order Phase I (and usually Phase II) environmental reports, and review the fuel supply agreement and convenience store sales. Owner-operators often use an SBA 504 or 7(a) loan, with terms that vary by lender.
Why do the storage tanks matter so much?
Underground storage tanks (USTs) and their piping are the biggest environmental and financial risk in a gas station. A leak can mean cleanup costs, lost operating time and trouble getting financing. Ask for the tank and piping details: number, size, material, installation dates, upgrades, leak detection method and testing results. Ask whether any releases have been reported at the site and whether they have been closed.
Who regulates tanks in Colorado?
The Division of Oil and Public Safety (OPS), part of the Colorado Department of Labor and Employment, runs the state's petroleum storage tank program. It regulates underground tanks holding 110 gallons or more and certain aboveground tanks, oversees cleanup when there is a release, and administers the Petroleum Storage Tank Fund, which can reimburse eligible owners for cleanup costs. Before you buy, review the site's OPS records (registration, inspections, compliance, release history and any open cleanup) and ask your environmental consultant and attorney how fund eligibility would apply to you as a new owner. Federal background on tanks is at EPA's underground storage tank program.
What do Phase I and Phase II reports cover?
- Phase I environmental site assessment. A review of the property's history, government records, a site visit and interviews to identify recognized environmental conditions. Lenders financing a gas station almost always require one.
- Phase II. Sampling of soil, groundwater or soil vapor to confirm whether contamination is present and how much. On an operating station a Phase II is common.
Give your contract a due diligence period long enough to complete both, and the right to walk away or renegotiate based on the results.
How do fuel supply agreements work?
Many stations buy fuel under a contract with a supplier or brand. The agreement sets the brand, how fuel is priced, minimum volumes, image requirements and term. Some include incentives that must be repaid if the agreement ends early. Get a copy, have your attorney review it, and confirm whether it transfers to you, whether you want it to, and what it costs to exit or rebrand.
How important is the convenience store?
Often very. Fuel is a high-volume, thin-margin product, and inside sales can make up a large part of the profit. Ask for fuel gallons and margins separately from store sales, and verify both against tax returns and sales tax filings. Check which licenses the store depends on, such as liquor or tobacco, and what a new owner must apply for. Colorado retail liquor licenses require local and state approval, and a change of ownership needs its own application.
Can you buy a gas station with an SBA loan?
Often, if you will operate it. A gas station is generally treated as special-purpose, so an SBA 504 typically needs about 15 percent down (20 percent for a startup). An SBA 7(a) can combine the real estate, the business and equipment. Expect your lender to require environmental reports before closing. This is general information, not a loan offer; terms vary by lender. See our SBA owner-user page and 504 vs. 7(a) guide.
Gas station due diligence checklist
- Tank and piping records: size, material, age, upgrades, leak detection, test results
- OPS registration, inspection, compliance and release history for the site
- Phase I environmental site assessment, plus Phase II sampling
- Fuel supply or branding agreement, transfer terms and exit costs
- Fuel gallons and margins by month, separate from inside sales
- Three years of tax returns, profit and loss statements and sales tax filings
- Dispenser, canopy, point-of-sale and cooler equipment condition
- Liquor, tobacco and other license transfer requirements
- Zoning, access points and any planned road work
- Building, roof and paving inspection
- Title, survey and what conveys
How Goff CRE Group helps
Goff CRE Group, brokered by Nassar Realty, represents the buyer. We build the contract around environmental due diligence, help separate real estate from business value, negotiate price and terms, and coordinate your lender, environmental consultant, inspectors, title company and attorney through closing. Alex Goff is licensed in Colorado. More on our buyer representation, or see other business properties.
