Need Help: Looking to buy a car wash. (1 IBA,4 Self Serve)

[ZippyZ55]

Hello, I am looking at buying a car wash in my small town. The population is a little more than 6,000 and growing. The place I'm looking at has four self-serve bays in great shape and 1 IBA that needs updating, along with Paystation. Current Numbers are roughly 95k revenue in the self-service and 50k in the IBA. Current Expenses are roughly 6-7k a month, with everything average. Land Value is about 150k, and the Building is in good shape.

What is the best way to figure out the valuation of this property, and what should I be willing to pay for it?

All help is appreciated.

Thank you,
Zippy

 

[Waxman]

gross income multiplier is one way. Gross of $145,000 x 3= $435,000. Gross x 5=$725,000.

This is just a starting point for determining value.

 

[washbaycowboy25]

I paid 3X gross for mine 2 bays IBA simple wash. Land was cheap. Happy with it.

 

[ZippyZ55]

gross income multiplier is one way. Gross of $145,000 x 3= $435,000. Gross x 5=$725,000.

This is just a starting point for determining value.

Are you saying I should be looking at 3x plus land value?

 

[ZippyZ55]

I paid 3X gross for mine 2 bays IBA simple wash. Land was cheap. Happy with it.

Plus land or that included all of it?

 

[washbaycowboy25]

Plus land or that included all of it?

That included all of it.

 

[Keno]

You will be hard pressed to find a wash trading at 3-5x with how popular they are right now. Multiples have increased dramatically in just the past few years

 

[ZippyZ55]

You will be hard pressed to find a wash trading at 3-5x with how popular they are right now. Multiples have increased dramatically in just the past few years

What’s your opinion on price for this opportunity?

 

[Keno]

What area of the country are you in?

According to your numbers, you would net $61k before debt service. That's buying a job, you won't have much or any $ to hire anything out. The hope is to increase revenue, but that extra revenue is not something you should be willing to pay for.

 

[ZippyZ55]

Minnesota. Roughly PMI would be $3500 a month. Just trying to base on new equipment. First timer here. Currently has an older Oasis XP wash needs some upgrades and Pay station needs upgraded as well. Currently not able to do any sort of memberships or tap to pay.

 

[OurTown]

I say $600K because it needs an auto. Is there any competition in that small town?

 

[ZippyZ55]

Only one Kwik Trip and they push hard for washes.

 

[Roz]

You will be hard pressed to find a wash trading at 3-5x with how popular they are right now. Multiples have increased dramatically in just the past few years

You need to differientiate between a tunnel which will sell the real estate without the business for a CAP rate in the 7-10 range (basically buying cash flow without any work) vs a non attended self service wash that will sell in the 3x-6x gross revenue range for everything (land and biz). the variable has to do with the brand and age of the equipment.

 

[Keno]

You need to differientiate between a tunnel which will sell the real estate without the business for a CAP rate in the 7-10 range (basically buying cash flow without any work) vs a non attended self service wash that will sell in the 3x-6x gross revenue range for everything (land and biz). the variable has to do with the brand and age of the equipment.

I was referring to self serves, every market is going to be different, and land value has a lot to do with it, nothing is trading in the Atlanta area for 3-5x right now. That will obviously change as the economy, RE values, and popularity for car washes changes. But that is the market I am seeing locally, and I would guess this isn't the only market experiencing these valuations.

 

[Roz]

I was referring to self serves, every market is going to be different, and land value has a lot to do with it, nothing is trading in the Atlanta area for 3-5x right now. That will obviously change as the economy, RE values, and popularity for car washes changes. But that is the market I am seeing locally, and I would guess this isn't the only market experiencing these valuations.

Interesting. Probably for the land value instead of business value.

We see many SS locations being turned into retail spaces as the land is worth more than the business. Other situation is for a SS that is significantly underperforming for the location with gross revenue of say $100K and a tiny profit. Atlanta did go through a recent housing price surge during the pandemic years which I hear is now starting to move towards a correction.

 

[OurTown]

I was referring to self serves, every market is going to be different, and land value has a lot to do with it, nothing is trading in the Atlanta area for 3-5x right now. That will obviously change as the economy, RE values, and popularity for car washes changes. But that is the market I am seeing locally, and I would guess this isn't the only market experiencing these valuations.

5X seems to be the starting point these days around here. Those are the ones that need a bunch of money thrown at them. We would like to buy a second wash but the prices and other things (interest rates, new tunnel builds) keep us gun shy.

 

[Roz]

5X seems to be the starting point these days around here. Those are the ones that need a bunch of money thrown at them. We would like to buy a second wash but the prices and other things (interest rates, new tunnel builds) keep us gun shy.

When people are ready to sell and end the fishing prices come down to reality where they make sense for both parties. We have several inflated listings in our area too however the owners are not really ready to sell unless someone overpays. Too many people think their land is work crazy numbers. If that was the case they would be selling quickly. Patience is the key.

Too bad you are not close to WV as I am selling one of my locations. We are listed at 5x but have the numbers and equipment to support that ask. All equipment is new and top of the line. Totally remote control available.