The Pros and Cons of Investing in Gas Stations and Convenience Stores as a Real Estate Investor with Steve Haddadin

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Introduction: Why Gas Stations and Convenience Stores?

Investing in commercial real estate offers a variety of asset classes, from retail centers to multifamily properties. However, one often-overlooked niche that can be incredibly profitable is gas stations and convenience stores. In a recent podcast episode, Steve Haddadin, founder of King Real Estate Group, shared his insights on the opportunities, risks, and unique dynamics of investing in gas stations as a real estate asset.

If you’ve ever wondered whether gas stations and convenience stores are worth adding to your investment portfolio, this blog will break down the key takeaways from the episode and provide additional insights to help you make an informed decision. Whether you are a beginner looking to enter the space, an intermediate investor trying to scale, or an experienced professional aiming for optimization, this guide will offer valuable information.

🎧 Listen to the full podcast episode here: LINK

👁️ Watch the full episode here: LINK

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Key Takeaways from the Podcast

• Gas stations and convenience stores can generate strong cash flow, especially when properly managed.
• Operational involvement is high, making it more of an active investment rather than passive income.
• Many investors also purchase the underlying real estate, which can appreciate over time.
• Margins on fuel sales are slim, while the real profit comes from inside-store purchases.
• EV charging stations are an emerging factor, but they have a long way to go before replacing traditional gas stations.
• Understanding government policies and regulations is crucial, especially in states like California.

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Why Consider Gas Stations as a Real Estate Investment?

1. Strong Cash Flow Potential

Unlike many traditional rental properties, gas stations generate income from multiple revenue streams:

• Fuel sales – While most people assume gas stations make large profits on fuel, the reality is that profit margins on gasoline are typically very thin. Margins often range between 5 to 15 cents per gallon due to fluctuating fuel costs and competition.
• Convenience store sales – This is where the real profit comes from. High-margin items such as snacks, soft drinks, coffee, lottery tickets, and cigarettes generate a significant portion of revenue.
• Automotive services – Many gas stations increase profitability by offering additional services like car washes, tire air pumps, vacuum stations, and minor vehicle repairs. These add-ons improve customer retention and bring in additional revenue.

A well-located gas station with a strong operator can yield solid returns, often outperforming standard commercial properties when managed efficiently.

2. Dual Benefits: Business & Real Estate

Many investors own both the gas station business and the real estate, creating an opportunity for higher profits. Here’s why:

• Real estate appreciation – Owning the land means your property value can increase over time, especially in high-traffic locations.
• Control over operations – When you own the real estate, you have the power to renegotiate leases, make upgrades, or redevelop the property.
• Long-term wealth building – The combination of business income and real estate appreciation allows for a dual wealth-building strategy, offering flexibility in how investors can extract value from the asset.

3. Stable Demand

Despite the rise of electric vehicles (EVs), gas stations remain critical infrastructure. Here’s why demand stays consistent:

• People will always need fuel – Even with the growth of EVs, gasoline-powered vehicles will dominate the roads for the foreseeable future.
• Convenience stores fulfill essential needs – Many consumers stop at gas stations for everyday necessities, quick snacks, or a cup of coffee.
• Strategic locations drive traffic – Many gas stations are positioned near highways, major intersections, or busy neighborhoods, ensuring consistent customer flow.

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The Challenges of Investing in Gas Stations

1. High Operational Involvement

Gas stations are not passive investments. Investors must be prepared to deal with:

• Inventory management – Keeping shelves stocked with the right products to maximize sales.
• Compliance with fuel regulations – Understanding environmental and safety regulations regarding fuel storage and sales.
• Hiring and training staff – Employees must be well-trained to handle transactions, stock inventory, and provide customer service.
• Equipment maintenance – Pumps, air compressors, car wash machines, and store refrigeration units require ongoing maintenance.

2. Thin Fuel Margins

One of the biggest misconceptions about gas stations is that they make a large profit from fuel sales. In reality:

• Profit margins on fuel can be as low as 2-5% per gallon.
• Gas stations compete aggressively on pricing, often relying on fuel sales to attract customers to their convenience store.
• Credit card fees eat into profits – Since gas purchases are frequently made with credit cards, transaction fees further reduce earnings.

3. Environmental & Regulatory Challenges

Gas stations come with environmental risks, such as underground storage tanks that require strict compliance with state and federal regulations. Additionally, zoning laws and government policies (such as California’s push toward EVs) can impact future profitability.

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How to Succeed in Gas Station Investing

✅ Choose the Right Location

• High-traffic areas (near highways or busy intersections)
• Limited nearby competition
• Strong local demand for fuel and convenience store goods

✅ Focus on the Convenience Store

• Offer high-margin products (beverages, snacks, tobacco, lottery tickets)
• Keep the store well-stocked and clean
• Use promotions to drive sales

✅ Consider Adding EV Charging Stations While EV adoption is still in progress, adding EV chargers can help future-proof your gas station. Grants and subsidies may be available to offset installation costs.

✅ Optimize Operations Many successful gas station owners cut costs by taking a hands-on approach. If you’re not managing directly, consider hiring a trusted operator or district manager to oversee daily operations.

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Conclusion

Investing in gas stations and convenience stores can be a lucrative yet demanding venture. With multiple income streams, real estate appreciation, and stable consumer demand, these properties offer tremendous upside. However, success in this space requires active involvement, strong management, and a strategic approach to operations and location selection.

If you are willing to put in the effort—or partner with the right operators—gas station investing can provide steady cash flow and long-term wealth-building potential. Whether you’re looking to diversify your portfolio or scale an existing investment strategy, gas stations present an opportunity worth considering.

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Stay Connected & Learn More

🎧 Listen to the full podcast episode here: LINK

👁️ Watch the full episode here: LINK

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📅 Book a coaching call w/ Matt Aitchison: LINK

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