Client wants to purchase a gas station (RE only, tenant in place.) what should we look out for specifically when it comes to environmental issues, storage tanks, etc specific to gas stations?
Tried to warn my client I am not familiar with gas stations, but he is purchasing anyway and wants to include me in on the deal. He's bought real estate with me before and i currently manage one of his shopping centers. I do office, retail, industrial at a boutique brokerage. 

It's a small neighborhood gas station and food/beer store (under $500k) and he is purchasing it for income, tenant currently in place. Not purchasing business, just the RE. I don't need advice on cap, tenant, general RE of course, but I'm looking for more on environmental, gas storage tank issues, unique gas station issues we should watch out for or questions we should ask. 

Thanks in advance.
[{"id": "fys0cfx", "text": "Everything. Other old storage tanks underground. Sometimes radar detects them, sometimes not. They will often be filled with sand and provide enormous issues in removal and disposal.", "replies": [{"id": "fys1iaz", "text": "Yea I've dealt with that mess on an industrial property before and i assumed it could be similar.", "replies": [{"id": "fyt3lzn", "text": "Even phase II doesn\u2019t always catch them.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fys25te", "text": "USTs and leaks are the biggest issues. Phase II at least unless your client understands the risks/costs and is comfortable with their position. Sometimes you just budget for it.\n\nLocation makes a big difference regarding regulation and information availability. Check federal and state data sources for property history and information. Or get a phase I.", "replies": [{"id": "fys8opb", "text": "Someone who knows nothing what is a phase ? Phase I phase II?", "replies": [{"id": "fysbsmn", "text": "Environmental assessments. Phase 1 is basically the desktop version of the assessment. They look at historical uses, databases, surrounding area, etc., to determine the likelihood of contamination. Phase 2 is when they get into the physical evaluation and sampling work to determining what, if anything, is existing onsite.\n\nThis is a gas station and there are 2 kinds of tanks - those that leak and those that are going to leak.", "replies": [{"id": "fyw5i9m", "text": "Those that leak and those that are goin to leak Lol I love that.my friends have been talking about purchasing  a gas station so I was going more into reality of it. Thanks", "replies": [], "depth": 4}], "depth": 3}, {"id": "fysbxgp", "text": "[https://en.wikipedia.org/wiki/Phase\\_I\\_environmental\\_site\\_assessment](https://en.wikipedia.org/wiki/Phase_I_environmental_site_assessment)\n\nIn this case, being a gas station it will automatically trigger a phase II (collect data).", "replies": [{"id": "fyw5cba", "text": "Hmmm interesting stuff lol I\u2019m digging deep now", "replies": [{"id": "fyw5tyi", "text": "I did this work professionally for a few years. \n\nIt's REALLY important to get a good Phase I.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fys2vuj", "text": "I'm not an Enviro Mgr, but have worked on many Phase I/Phase II reports as a borrower:\n\nAn environmental report from a reputable agency would uncover issues.  The main service they provide is scouring public records and contacting the local DNR for you.  They don't bore holes unless something needs to be investigated further.  You could ask the seller if they have an old report, but they probably won't give it to you.  If buying a new report is cost-prohibitive, you could perform your own search to see if there are any obvious red flags.\n\nCheck the local DNR.  You're looking for RECs and HRECs \\[Recognized Environmental Conditions/Historical conditions\\].  RECs are bad and need to be addressed \\[think old, leaky USTs\\]. HRecs are old problems that have been fixed, but even HRECs can come back to bite if environmental laws/standards change.\n\nIs client paying cash or financing; or will they be seeking financing in the future?  If so, you're really going to need to know if there are any environmental issues.", "replies": [], "depth": 1}, {"id": "fys31pa", "text": "Need to get a 'clean' phase II. \n\nExpect to spend some money to see what's down there. If it does not have a sampling program already, expect it to cost 20k+ to find out.", "replies": [{"id": "fysm811", "text": "This is the right answer.  Find a good third party engineering firm to do a phase I &amp; II, if you OP doesn\u2019t have one then the buyers lender will likely have a recommendation.  Also, request the prior environmental reports (if available).  If the seller has a loan then they definitely have these.", "replies": [{"id": "fyt7xcx", "text": "Yes, I have a good environmental company i would refer.. and to my surprise, the seller has a phase 1 but not very useful because it's from 2015. My client has now decided he will get financing so I know they're going to require a new one anyway.", "replies": [{"id": "fytfk84", "text": "Financing will trigger a phase II usually.\n\nThe 2015 phase I should have all the historical use though, if it was a good one, should not take that long to update.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fytfadj", "text": "And get the alta environmental endorsements.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fys6g7z", "text": "Start with your engineers and call them on what needs to be done.  If you have good banking relationships, call them and ask them for specific referrals on groups that do phase 1 and 2 on whatever else needs to be done on the site. Ask if they have a checklist on environmentally risky sites. May be better to go with a bigger group that does environmental on this specific requirement rather than the little shop that does it all.", "replies": [{"id": "fysbzlb", "text": "Being a gas station, it will automatically trigger a phase II. Might as well bid that from the start.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fysi16i", "text": "Lease, good visibility/frontage, historic volumes, what relationship does the tenant have for purchasing fuel aka what shingle do they hang and how do they buy their fuel, and does the station have good ingress/egress.\n\nEnvironmental concerns if the station is pre-2000, I think it was, law that required the new double tanks and monitoring equipment. \n\nIf the gas station is possibly considered rural you can get a USDA guarantee on it and mitigate some additional risk.\n\nHowever, if paying cash, then it really is up to your buyers risk tolerance.\n\nAt a min Environmental Phase 1 from a firm that is VERY competent at reviewing oil/gas. Not all forms are equal.", "replies": [], "depth": 1}, {"id": "fysiqx4", "text": "Apologies if I missed this in the comments already posted, but the due diligence for gas stations is incredibly expensive. \n\nPhase II environmental reviews are REALLY expensive. The costs vary depending on what\u2019s needed, but I\u2019ve personally never seen a Phase II cost less than $10K. \n\nAnother niche issue with gas station / convenience stores not environmentally related are FinCen regulations for MSB (money services businesses) if the store provides money orders or check cashing.", "replies": [{"id": "fyt0f8d", "text": "&gt; Another niche issue with gas station / convenience stores not environmentally related are FinCen regulations for MSB (money services businesses) if the store provides money orders or check cashing.\n\nCan you expand on this and how it impacts the property owner?", "replies": [{"id": "fyt7p17", "text": "It all boils down to an excessive amount of monitoring, reporting, and paperwork from the lender\u2019s perspective, even for a just a property owner who doesn\u2019t own or operate the convenience store.  Between this and all of the environmental issues, finding traditional CRE financing at a decent interest rate is considerably more challenging.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fyt8ady", "text": "Hey down here in Texas I can get me a nice phase 2 for $+/-9k \ud83d\ude02 well, its been a good year or two since I've had to get one so it wouldn't surprise me if even more expensive now. I'm not familiar with the second item you mention?", "replies": [], "depth": 2}], "depth": 1}, {"id": "fysm6nu", "text": "Depending on the state he might be on the hook for a letter of credit or other surety to the state for their version of a leaking underground storage tank fund.  \n\nHe's also now in the chain of title and if a neighbor is affected by a leak he will be named in the suit.  \n\nDepending on the distribution agreement with the tenants fuel jobber he (tenant or landlord) might not own the tanks, pumps, canopy, or some of the equipment inside as those could be provided by \"the flag\" upfront to the operator to sign on and sell their gas.  Find out because it impacts the re-lease potential &amp; landlords potential collateral if the lease defaults. \n\nIn my experience tenants on this type of property are extremely weak and prone to a) folding almost overnight b) subleasing the property both formally and informally c) trying every form of creative financing to buy their location.  Only the last one is beneficial to your client.", "replies": [{"id": "fyssers", "text": "Really good point here. You need to make sure that the entity that holds the asset is purposefully set-up to prevent the state or another company from coming back and attempting to make your buyer clean up the site.", "replies": [], "depth": 2}, {"id": "fyt8n9b", "text": "Very interesting, i'll have to get with our RE attorney on this. Thank you for the info", "replies": [], "depth": 2}], "depth": 1}, {"id": "fysosvc", "text": "obv phase one which may lead to a phase two. keep in mind that if you do have a phase two you need to be very specific about timing, contingencies, and who pays for what. having to go downt that road is like going down the rabbit hole. it could mean a lot of time, effort and money in vain if things arent done right. also, don't be shy and reach out to other brokers listing gas stations and ask for their thoughts and feedback. often times guys/gals are happy to help and htey also may be able to refer you to engineers etc that could be helpful", "replies": [], "depth": 1}, {"id": "fysp7pa", "text": "permit, inspection, past hold up, security, alarm to police, camera. Sales record, food replishment policy, background check on employees.", "replies": [], "depth": 1}, {"id": "fysq6sd", "text": "- Is there a Phase 1 / Phase 2 environmental report?\n- If the environmental reports show contamination, was there remediation completed and a NFR letter issued showing no further work is required?\n- Are there any abandoned underground storage tanks (UST) on site?\n- Are the tanks in place newer / double walled with leak monitoring?", "replies": [], "depth": 1}, {"id": "fytbyow", "text": "You can also look for recent state inspections. In Florida we have a searchable site which indicates exactly what's underground and pictures of recent inspections.", "replies": [], "depth": 1}, {"id": "fytovzw", "text": "Talk w your insurance provider if there are specific products for gas station owners too", "replies": [], "depth": 1}, {"id": "fz3zxqc", "text": "your lender will require phase 1 &amp; 2. if traditional bank financing; expect to spend a lot on phase 1 and 2. If they find underground storage tanks; compliance will require remediation", "replies": [], "depth": 1}, {"id": "g4aja1p", "text": "Sorry I\u2019m late to the party. In a situation like this the first thing I\u2019d do is read the 2015 Phase I. It\u2019s true these only have a 6 month shelf life, but the heavy lifting has already been done.\n\nI\u2019d look at the findings and results before visiting the property and seek to confirm what was found by the previous environmental firm.\n\nThe thing is - having USTs by itself is not a recognized environmental condition. If it\u2019s been looked at in 2015 then maybe a lot of the work, if needed, is already done. Maybe.", "replies": [], "depth": 1}]