Typical gas station profile

Average

Approximately $3,000,000 asking price
Your monthly expenses should be $54,000
You should have an operational cash flow of $22,000
A 10.5%, 20 year loan, with 20% down should Monthly Payment of $24,023
Your goal is to have your cash flow pay loan

For example:

1 full time employee costs
| Rate ($/hr) | Hrs/Day | Days/Wk | Wks/Yr | Annual ($) | Monthly ($) |
|---------------|-----------|-----------|----------|--------------|---------------|
| 20.00 | 8.0 | 5.0 | 52 | 41,600 | 3,467 |
| — | — | — | Total | 41,600 | 3,467 |

1. Average profile

Based on past 12–18 months of OR/WA deals (and SBA data):
Purchase Price (with RE): $3.5M – $6.5M (median ~$4.8M)
Down Payment (10–20% SBA): $400K – $1M
Closing Costs + Working Cap (3–5%): $100K – $250K
Post‑close upgrades (signage, POS, café refresh, car wash add): $50K – $250K
Total capital required (cash to close + ops buffer): ~$550K – $1.25M

2. Revenue and Expenses

Revenue Breakdown

Fuel Sales (70–80%):
- 1–2M gallons/year (40k–60k gal/mo)
- $3–$4/gal retail → $3–$8M gross sales
- Margin: 8–20¢/gal (net, after card fees & rebates) = $80K–$300K net
C-Store Sales (20–30%):
- $500K–$1.5M gross sales
- Margin: 25–35% = $125K–$450K gross profit
Other Profit Centers (optional, big upside):
- Car wash: $50K–$150K
- U‑Haul / Propane / Lottery / ATM: $10K–$40K
- QSR (food/coffee): 40–60% margins; can double store profit

Typical Expense Buckets

Payroll: 10–15% of sales (~$150K–$300K)
Merchant Fees: 1–2% of card sales (~$40K–$80K)
Utilities: $3K–$5K/month (~$40K–$60K)
Repairs/Maintenance: $1K–$2K/month (~$15K–$25K)
Insurance + Taxes: $30K–$50K
Misc. (supplies, permits, etc.): $10K–$20K
Debt Service (if leveraged): Major swing factor — can eat 50–70% of cash flow

Profit Snapshot

Net Operating Income (NOI): $200K–$500K typical (higher with food/QSR)
SDE (Seller’s Discretionary Earnings): Add back owner wages, depreciation, one‑offs → $250K–$600K typical
Valuation Range:

Business only: 3–4× SDE
With real estate: 6–8× SDE (depends on traffic, location, land value)

2.1. Typical Operating Expense Categories

Core Expense Buckets

COGS (Cost of Goods Sold) – already accounted for via margins
Payroll (wages, taxes, benefits)
Utilities (electric, gas, water, trash)
Insurance (property, liability, workers comp)
Repairs & Maintenance (inside and outside)
Supplies (cleaning, bathroom, office, food service)
Advertising & Promotion
Credit Card Fees
Bank Fees
Licenses & Permits
Professional Fees (accounting, legal)
Property Taxes
Other Taxes/Fees (fuel, local business, etc.)
IT & Security (POS, cameras, alarm)
Telephone/Internet
Miscellaneous/Admin

For Multi-Use Properties

Tenant management costs (minimal, but possible)
Apartment utilities (if owner pays)
Café-specific supplies and smallwares

2.2. Rule of Thumb/Benchmarks

Gas station/convenience store only:

OpEx typically 12%–20% of total gross sales (excluding fuel COGS, since fuel is very low-margin and high volume).
Add a QSR/Café:
Expect higher payroll, supplies, and utilities (may push toward 18%–25% of total sales).
Add rental units:
Expenses for those are usually very low if tenant pays utilities (mostly maintenance, insurance allocation, property tax allocation).

Industry Example (Oregon/PNW):

Payroll: 8%–12% of sales (higher if 24/7)
Utilities: 1.5%–3% of sales
Insurance: 0.8%–1.5% of sales
Repairs/Maint: 1.5%–2.5%
Advertising: 0.5%–1%
Credit Card Fees: 1.8%–2.5%
Professional Fees: 0.3%–0.7%
Property Taxes: 0.8%–1.5%

Quick Red Flags

High fuel sales, low margins = profit illusion (bank won’t care about $5M “sales” if margins are thin).
Interest/Depreciation heavy = absentee owner (room to improve if you go owner‑operator).
Environmental liabilities = instant deal‑breaker (check UST compliance).
Price vs. DSCR = must clear 1.25× at realistic pro‑forma.

Quick Hack

Rule of thumb: Every 1¢/gal = ~$10K/year net (based on 1M gal/year volume).
C‑store: Every $1 in sales = 25–30¢ gross profit; food/QSR = 40–60¢.
SBA test: Net cash flow ÷ annual loan payment ≥ 1.25× (or you won’t get funded)

3. Cash Flow

Valuation Cheat Code:

3–4× SDE = Business only
6–8× SDE = With real estate (location-dependent)

Scoring - EBITDA vs SDE

For gas stations, SDE (Seller’s Discretionary Earnings) is cleaner for two reasons:
Owner-operator reality: Most gas station buyers will work in the store (or have a family member do so). SDE adds back owner salary, which reflects true take-home.
Small business comps: Brokers, SBA lenders, and biz-for-sale listings almost always market and value stations on SDE multiples (3–4× with RE).
EBITDA can still be useful when:
You’re buying absentee (hiring a manager, paying market wages).
Comparing to corporate multiples or prepping for resale to PE.

How to Handle It Going Forward

Lead with SDE: This is your primary lens for valuations and cash flow.
Show EBITDA as a “sanity check”: It helps model absentee operations or verify bank underwriting (most SBA lenders adjust EBITDA → SDE anyway).
In the cheat sheet / scorecard:
Keep SDE as the headline metric (for pricing, DSCR, “pay the bills”).
Include a EBITDA row as optional — more for resale or absentee scenario modeling.

4. DSCR Test (Bankability Check)

Net Cash Flow ÷ Annual Debt Payment ≥ 1.25

Every 1¢/gal ≈ $10k/year net profit (at 1M gal/year)

SBA loan at 90% LTV, 10 years, ~9.5% rate = ~$19k–21k/month per $4M loan

Rules of Thumb:

DSCR 1.25× = Safe (bank loves it)

DSCR 1.0× = Breakeven (borderline)

DSCR < 1.0× = Must cut price or find upside fast

What DSCR Measures

DSCR (Debt-Service Coverage Ratio) = Cash Flow ÷ Annual Debt Payments
Lenders want ≥ 1.25× (25% cushion) to approve SBA loans.
1.0× = just enough cash flow to cover debt, no safety margin.
<1.0× = cash flow is not enough to pay the loan.

5. Weighted Score (using cheat code factors + past deals)

Weights (100 pts)

DSCR / Cash Flow: 40 pts
Upside Potential: 25 pts
Location / Demographics: 20 pts
Owner-Op vs Absentee Delta: 10 pts
Risk / Compliance: 5 pts

Madras Shell (Bend area)

DSCR @ ask ($4.2M): ~1.0× (Breakeven) → 30/40
Upside (food + expansion room): High → 23/25
Location (US‑97, tourism growth): Strong → 18/20
Mgmt Delta (currently well-run): Modest → 5/10
Risk (UST compliance, stable tenant): Low → 5/5
Total Score: 81/100

Steilacoom 76

DSCR @ ask ($6.15M): ~0.6× (Fails SBA) → 18/40
Upside (absentee → owner‑op): High → 20/25
Location (Puget Sound, dense resi): Good → 15/20
Mgmt Delta (big absentee gap): High → 8/10
Risk (clean enviro, but older store): Mod → 3/5
Total Score: 64/100

Interpretation

Madras Shell pencils better now: price closer to bankable DSCR, strong café margins, expansion potential.
Steilacoom 76 requires price cut (~$5M) or heavy owner‑op involvement to hit 1.25× DSCR.

🔍 How the Numbers Were Calculated

NOI & SDE Ranges

These are based on industry benchmarks and past OR/WA gas station deals.
NOI ($200K–$500K) covers net operating income for well-performing stations with standard fuel/store sales.
SDE ($250K–$600K) adds back:
- Owner’s compensation (often $40K–$60K/year)
- Depreciation and amortization
- One-time expenses or personal costs showing in P&L
Real-world deals often sit in these ranges depending on volume, margins, and additional profit centers.

Valuation Multiples

Business-only (no real estate): 3–4× SDE
With real estate: 6–8× SDE

Higher multiple if great traffic, corner lot, landlord leases, expansion potential

📌 What Is LTV?

LTV = Loan-to-Value ratio

LTV measures what fraction of the purchase price you're borrowing.
Example: If a property is $4M and you borrow $3.2M, your LTV is 80%.
SBA LTV caps usually hover around 85% for real estate-secured gas station loans.
Higher LTV means lower down-payment but often tighter underwriting on DSCR.

Calculator

Your benchmarks and breakdowns are spot-on for OR/WA gas station deals, and the way you framed it is almost exactly how lenders and brokers think about these acquisitions. Let me stack them up and point out where your numbers fit relative to the industry cheat codes we’ve been building:

1. Benchmarks vs. Your Numbers

Purchase Price & Cash Needs

You: $3M–$4M target (example $3.9M Madras)
Benchmark: $3.5M–$6.5M (median ~$4.8M)
Takeaway: You’re looking slightly below median — good for bankability and DSCR.

Operating Expenses

You: $54k/month (~$650k/year) total expenses
Benchmark: 12–20% of gross sales (fuel + store) = ~$500k–$700k/year for typical 3–4M stations
Takeaway: Your $54k/month benchmark is realistic and aligned (especially if café/QSR included).

Cash Flow & Loan

You: $22k op cash flow; $24k loan payment (20% down, 10.5%, 20 yrs)
Benchmark DSCR: 1.25× target; breakeven ~1.0×; your example = 0.9× (shortfall)
Takeaway: Needs price cut, margin boost, or owner-op savings to bank.

2. Key Metrics (Confirming Your Definitions)

DSCR (Debt Service Coverage Ratio):
Cash Flow ÷ Annual Loan Payment — bank wants ≥1.25×
(e.g., $450k cash flow ÷ $360k loan payment = 1.25×)
SDE Multiple:
(Purchase Price – Real Estate Value) ÷ SDE
Typical: 3–4× business, 6–8× with real estate.
Net Cash Flow (NCF):
Cash to owner after debt service — “what you feel” monthly.
Free Cash Flow (FCF):
NCF minus CapEx (upgrades, tanks, POS) — long-term sustainability metric.

3. Levers to Improve Deal or Valuation

Contract Levers

Fuel supply contracts: Negotiate signing bonus ($200k–$500k) + volume rebates (1–2¢/gal).
Co-op marketing funds: Branded suppliers often kick in $10k–$50k/year for signage or promos.
Gallons-based reopener: If you grow volume >20% over baseline, trigger better split.

Purchase Price Levers

Separate business vs. real estate:
Push to value ops at 3–4× SDE, then add fair RE appraisal (land/building).
Brokers blur these — call it out to negotiate.
Environmental / CapEx offsets:
Any tank age, canopy needs, or deferred maintenance = ask for price credit.
Pro forma vs. trailing 12 months:
If seller is pitching “pro forma” growth, insist on trailing 12-month P&L for price multiple.

4. Additional Health Metrics to Add to Your Model

EBITDA Margin: Shows operating efficiency vs peers (target: 10–15% blended fuel/store).
Operating Leverage (Payroll% + Fixed Costs%): How much drops to bottom line if sales rise.
Gallons/Month Trend: Growth = leverage for renegotiating supply contracts (e.g., 76 signing bonus).
C-Store Sales/Day: <$1,500/day = underperforming; $2,500+ = healthy (higher margins than fuel).
Cap Rate (NOI ÷ Total Price): For real estate comparison (target ~8–10%+ in OR/WA).

5. Where You Sit vs. “Average”

Your $54k monthly OpEx and ~$3–4M target price fit cleanly into the mid-market SBA profile.
Madras-like deals with café/QSR should lean higher on margin (food = 40–60%).
Biggest risk: DSCR too low unless price drops or you capture upside (owner-op payroll savings, contract signing bonus, higher café sales).

What did I use to build this "scorecard”:

# Steilacoom 76 – 2024 baseline

## Input

| Input                          | Steilacoom 76 – 2024 baseline   |
|--------------------------------|---------------------------------|
| Gross Profit                   | 972,789                         |
| Total Expenses (excl. payroll) | 348,444                         |
| Payroll                        | 0                               |
| Interest Expense               | 0                               |
| Depreciation                   | 0                               |
| Amortization                   | 0                               |
| Purchase Price                 | 5,900,000                       |
| Down Payment %                 | 20%                             |
| Annual Rate                    | 9.0%                            |
| Loan Term (Years)              | 20                              |
| Owner Salary                   | 23,000                          |
| Owner-Op Labor Savings         | 0                               |
| Extra Rental Income            | 0                               |
| Real Estate Included?          | Yes                             |
| Business Type                  | gas station                     |
| Real Estate Appraisal          | 0                               |

## Output

| Output                      | Steilacoom 76 – 2024 baseline   |
|-----------------------------|---------------------------------|
| Gross Profit                | 972,789 (81,066/mo)             |
| Normalized OpEx             | 348,444 (29,037/mo)             |
| Net Income (Normalized)     | 624,345 (52,029/mo)             |
| SDE (Add Owner Salary)      | 647,345 (53,945/mo)             |
| EBITDA                      | 624,345 (52,029/mo)             |
| Purchase Price              | 5,900,000                       |
| Down Payment (20%)          | 1,180,000                       |
| Loan Amount (80%)           | 4,720,000                       |
| Debt Service (Annual)       | 509,605 (42,467/mo)             |
| Net Cash Flow (Post-Debt)   | 137,740 (11,478/mo)             |
| DSCR (Coverage Ratio)       | 1.27 🟢 Good                    |
| SDE Multiple (Asking / SDE) | 9.11× 🔴 Overpriced             |


<details>
<summary><strong>Detailed Math & Valuation Guidance (click to expand)</strong></summary>

## Output Table – Math Flow (with real values)

- **Gross Profit** = (Fuel + C-Store + Café + Rentals) – COGS  
  = **972,789** annually (**81,066/mo**).

- **Normalized OpEx (incl. Payroll)** = Total Operating Expenses + Payroll – Interest – Depreciation – Amortization  
  = **348,444** annually (**29,037/mo**).

- **Net Income (Normalized)** = Gross Profit – Normalized OpEx  
  = **624,345** annually (**52,029/mo**).

- **SDE (Add Owner Salary)** = Net Income + Owner Salary Add-back  
  = **647,345** annually (**53,945/mo**).

- **EBITDA** = Net Income + Depreciation + Amortization  
  = **624,345** annually (**52,029/mo**).

- **Debt Service (Annual)** = **509,605** annually (**42,467/mo**).

- **Net Cash Flow (Post-Debt)** = SDE – Annual Debt Service  
  = **137,740** annually (**11,478/mo**).

- **DSCR (Debt Service Coverage Ratio)** = SDE ÷ Annual Debt Service  
  = **647,345 ÷ 509,605 = 1.27**  
  _(SBA prefers ≥ 1.25; < 1.0 means insufficient cash flow)_


- **SDE Multiple Guidance (Gas Station + Real Estate)**:  
  Gas stations with real estate typically trade at **3×–4× SDE**, sometimes higher for prime locations.  

  For this deal (SDE ≈ 647,345):  
  - 3× = 1,942,035  
  - 3.5× = 2,265,708  
  - 4× = 2,589,380  

  Compare these ranges to the asking price (**5,900,000**) to assess reasonableness.



### Step 2 – Apply Different Multiples
- **Business (SDE)**: 2–3× (rural) or 3–4× (metro).  
- **Real Estate**: Use income approach (cap rate) or comps per sq ft/acre.

**Example:**
- Station nets $200K SDE → 2.5× = $500K business value.  
- Land/building appraised at $1.2M → Total fair value = $1.7M.  
- If broker wants $3M? Show your math and anchor down.


</details>



<details>
<summary><strong>Negotiation Levers & Risk Analysis (click to expand)</strong></summary>

### Valuation Gap Framing
- If combined business + RE fair value is **~(SDE × multiple + appraisal)** and broker asks more, anchor with data.
- Offer seller two paths: higher price with **earn-out** or lower price **all-cash close**.

### Contract Incentives
- Ask about **fuel supplier bonuses** (sign-on, gallon targets)
- Performance rebates or **margin improvement clauses**
- Renegotiation mid-contract if volume increases

### Risk & Contingencies
- DSCR currently: **1.27** (goal ≥1.25)
- Stress test: what if gallons drop 10–20% or interest rises 1–2%?
- Ensure **environmental (UST) reports**, lease terms, and maintenance reserves are reviewed

### Breakeven Analysis
- Calculate gallons needed to cover **debt + fixed costs**
- Factor in margin per gallon and seasonal dips

### Professional Tip
- Always **separate business value from real estate**: 
  show two numbers (SDE multiple + appraisal) and present total to broker.

</details>

# Madras Shell – 2024 baseline

## Input

| Input | Madras Shell – 2024 baseline |

|--------------------------------|--------------------------------|

| Gross Profit | 974,142 |

| Total Expenses (excl. payroll) | 543,838 |

| Payroll | 0 |

| Interest Expense | 0 |

| Depreciation | 0 |

| Amortization | 0 |

| Purchase Price | 3,900,000 |

| Down Payment % | 20% |

| Annual Rate | 9.0% |

| Loan Term (Years) | 20 |

| Owner Salary | 23,000 |

| Owner-Op Labor Savings | 0 |

| Extra Rental Income | 0 |

| Real Estate Included? | Yes |

| Business Type | gas station |

## Output

| Output | Madras Shell – 2024 baseline |

|---------------------------|--------------------------------|

| Gross Profit | 974,142 (81,178/mo) |

| Normalized OpEx | 543,838 (45,320/mo) |

| Net Income (Normalized) | 430,304 (35,859/mo) |

| SDE (Add Owner Salary) | 453,304 (37,775/mo) |

| EBITDA | 430,304 (35,859/mo) |

| Purchase Price | 3,900,000 |

| Down Payment (20%) | 780,000 |

| Loan Amount (80%) | 3,120,000 |

| Debt Service (Annual) | 336,857 (28,071/mo) |

| Net Cash Flow (Post-Debt) | 116,447 (9,704/mo) |

<details>
<summary><strong>Detailed Math & Valuation Guidance (click to expand)</strong></summary>

## Output Table – Math Flow (with real values)

- **Gross Profit** = (Fuel + C-Store + Café + Rentals) – COGS  
  = **974,142** annually (**81,178/mo**).

- **Normalized OpEx (incl. Payroll)** = Total Operating Expenses + Payroll – Interest – Depreciation – Amortization  
  = **543,838** annually (**45,320/mo**).

- **Net Income (Normalized)** = Gross Profit – Normalized OpEx  
  = **430,304** annually (**35,859/mo**).

- **SDE (Add Owner Salary)** = Net Income + Owner Salary Add-back  
  = **453,304** annually (**37,775/mo**).

- **EBITDA** = Net Income + Depreciation + Amortization  
  = **430,304** annually (**35,859/mo**).

- **Debt Service (Annual)** = **336,857** annually (**28,071/mo**).

- **Net Cash Flow (Post-Debt)** = SDE – Annual Debt Service  
  = **116,447** annually (**9,704/mo**).

- **DSCR (Debt Service Coverage Ratio)** = SDE ÷ Annual Debt Service  
  = **453,304 ÷ 336,857 = 1.35**  
  _(SBA prefers ≥ 1.25; < 1.0 means insufficient cash flow)_


- **SDE Multiple Guidance (Gas Station + Real Estate)**:  
  Gas stations with real estate typically trade at **3×–4× SDE**, sometimes higher for prime locations.  

  For this deal (SDE ≈ 453,304):  
  - 3× = 1,359,912  
  - 3.5× = 1,586,564  
  - 4× = 1,813,216  

  Compare these ranges to the asking price (**3,900,000**) to assess reasonableness.



### Step 2 – Apply Different Multiples
- **Business (SDE)**: 2–3× (rural) or 3–4× (metro).  
- **Real Estate**: Use income approach (cap rate) or comps per sq ft/acre.

**Example:**
- Station nets $200K SDE → 2.5× = $500K business value.  
- Land/building appraised at $1.2M → Total fair value = $1.7M.  
- If broker wants $3M? Show your math and anchor down.


</details>


<details>
<summary><strong>Negotiation Levers & Risk Analysis (click to expand)</strong></summary>

### Valuation Gap Framing
- If combined business + RE fair value is **~(SDE × multiple + appraisal)** and broker asks more, anchor with data.
- Offer seller two paths: higher price with **earn-out** or lower price **all-cash close**.

### Contract Incentives
- Ask about **fuel supplier bonuses** (sign-on, gallon targets)
- Performance rebates or **margin improvement clauses**
- Renegotiation mid-contract if volume increases

### Risk & Contingencies
- DSCR currently: **1.35** (goal ≥1.25)
- Stress test: what if gallons drop 10–20% or interest rises 1–2%?
- Ensure **environmental (UST) reports**, lease terms, and maintenance reserves are reviewed

### Breakeven Analysis
- Calculate gallons needed to cover **debt + fixed costs**
- Factor in margin per gallon and seasonal dips

### Professional Tip
- Always **separate business value from real estate**: 
  show two numbers (SDE multiple + appraisal) and present total to broker.

</details>