What it costs to buy a service station
Service stations trade in three completely different markets wearing one name, and buyers who mix them up overpay. Here is each market priced, and the tank question that should come before any of them.
The three markets
| Structure | Price (current listings) | What you own |
|---|---|---|
| Branded leasehold / franchise resale | $325,000 to $800,000 | the business on a lease |
| Freehold going concern | $1m to $3.4m plus | land, tanks and business |
| Passive leased freehold (major tenant) | $3.7m to $8.6m at ~5 to 6% yields | the bricks and the covenant |
| Commission agency | low entry | you operate for a per-litre commission |
The metrics every listing quotes: litres a week and shop sales. A recent $800,000 franchise resale carried 100,000 litres a week and $2.9m of shop turnover; a $620,000 regional independent ran 70,000 to 80,000 litres a month. Non-fuel income, coffee, food, EV charging, is where valuers see the growth.
The tank question
Underground petroleum storage systems are the due diligence that separates servo buying from every other acquisition: integrity-test the tanks before purchase, and know that a decommissioning report is not a full environmental site assessment. Contamination remediates at the buyer's cost once the keys change hands, and the longer a tank has leaked, the more the clean-up costs and the less the land is worth. Price the test into every offer.
Why lenders are careful, and what that means
Banks treat service stations as specialised security: typical bank appetite runs 50 to 60% of property value, specialist lenders to around 70%, with no low-doc route and business plans expected. That is not a wall, it is a structure problem: the deposit gap is commonly carried by equity in other property at roughly 6% to 9% p.a. as a working rule, and freeholds gear better than leaseholds because the land is takeable security. Property-backed borrowers generally price around 6% to 9% p.a. and non-property-backed deals around 9% to 13%, with approvals commonly back in 24 to 48 hours. Start at business acquisition finance or the property-backed guide.
Frequently asked questions
How much does a service station cost to buy?
Branded leasehold and franchise resales run $325,000 to $800,000, freehold going concerns $1m to $3.4m plus, and passive leased freeholds tenanted to majors trade at $3.7m to $8.6m on roughly 5 to 6% yields.
What do lenders offer against service stations?
Banks treat servos as specialised security: typically 50 to 60% of property value, specialist lenders to about 70%, no low-doc, and freeholds gear better than leaseholds.
What is the biggest due diligence risk buying a servo?
The underground tanks. Integrity-test before purchase; a decommissioning report is not a full environmental assessment, and contamination becomes the buyer's cost.
What numbers should I check on a servo listing?
Litres per week, shop sales, the fuel supply agreement terms, remaining lease or tenure, and the tank compliance records, in that order.
Three markets, one structured deal
Tell us the site and structure and we will come back with the gearing and deposit picture, usually within a day.
This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.