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6 SS Bay for First Investment

Msaxonii

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7K taxes on a 90,000 property seems outrageous! What is it assessed at? Is it high dollar dirt under the wash? You may be able to get it assessed lower based on your purchase price.

Oh while I'm writing this novel, I'll tell you that it is taking about 8 to 10 hours a week to service the wash on average. at least 4 trips a week and I wish I could get there every day. Dont forget to pay yourself for your time.
The thing about the time investment is that this is right across the street from my house, and my wife is a sahm. With both of us working together for the daily maintenance, I think we have a benefit compared to others who would have actual time costs in travel to it.

Our tax assessments are out of whack. Somehow, they use 1972 as the base year. Neighboring county just had a court ordered county wide reassessment done a few years back that made a huge fiasco. I just read an article suggesting that the reported tax assessment is somehow supposed to be 14% of fair market value. By that standard, the land would be 200k. Don't ask. I don't understand how the stuff is valued because the town I'm from has had redevelopment the past couple decades and have houses selling for outrageous prices. Something about a fool and his money.
 

Msaxonii

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Here's my reading on the P&L. The owners are insisting that the car wash business as a whole is dropping off. However, with the 3 year gross at 27k, 24k, 27k, the gross revenue is relatively constant. Utility costs and taxes have greatly increased with the owners failing to pass on to customers these increased costs. Basically, instead of functioning as a business, they're functioning as a pass through collection point for government and utilities.

The wash was constructed in 1990. The floor heat and water heater is natural gas with a electric wall heater to heat the equipment room. Unlike you guys out west with cheap electric from hydropower, our grid here is fossil and nuclear so gas is cheaper than electric. It's also listed as 200 amp single phase service instead of the 3 phase I was expecting.

So, we've established at the beginning that pricing is an issue. Assuming all else remains the same, taking the bays to 1.75 and the vacuums to 1, that's a roughly 40% increase which would give projected total gross at 35k with the only change being increasing pricing to current norms.

The other issue is taxes. Pennsylvania has a concept of Keystone Opportunity Zones which encourage communities to attract businesses by giving exemptions on a number of taxes and fees. We have a new mayor and city council and with my work schedule recently changing to give me a Tuesday\Wednesday weekend, I'm able to make the council meetings and get involved. Our neighboring town has a designated KOZ that stops a few blocks from the border. If I get the town I'm in to get that extended through the main strip and a block in either direction to cover the property, it would be the best opportunity to keep revenue for the business instead of the government sucking it faster than a vacuum takes the change.

Then we come to dealing with utilities. I know there's a pretreatment permit on file which I imagine might just be for a oil/ water separator. I could try getting a sewer meter so I'm not paying for water not going to the sewer to begin with. The electric company does offer a rebate program to modernize commercial lighting, and I think replacing the equipment room heating to gas would drop costs as well. I also think that the weeping system could be improved to reduce wasting water, which depending on it's current setup could actual be running up every bill without taking anything in.

Seeing the actual numbers and listening to the advice from you guys definitely gives me pause. I'm still questioning whether it's a dead wash vs underperforming and mismanaged. I definitely see a convenience factor to a count up Cryptopay system letting customers actually focus on getting a quality wash instead of rushing to beat the timer. As stated, I don't see a rush of buyers for this property. One of the big dollar stores backed out because the neighbor wouldn't sell them a piece to meet their land specs. I may not be opposed to working with the owner on learning the business if he'd be receptive to trying to get improvement instead of running stagnant.
 
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Msaxonii

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Researched records and confirmed what I had suspected after looking at Manni's Wash Systems. Manni's bought the property from the railroad in 1990 and built the car wash. Current owners bought it in 2006 for 230k with a mortgage of 187k. Unfortunately, they bought it during a population decline of 15% between 2000 and 2017. Coupled with failing to raise prices or make an effort to reduce operating costs, along with carrying the cost of the mortgage, makes it a bad investment currently due to the amount of liquid capital that would have to be invested to generate reasonable returns.

I do think that a purchase price between 50k and 75k max would be more reasonable. As it is with them having a mortgage that's only 14 years old, it's doubtful I could get it that low. I think my best move forward is putting a business plan together for this place and put it on a shelf until it's at foreclosure point or short sale.
 

Waxman

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You are looking at the income equation in a lopsided, incorrect way.

Think $2 or $3 start for SS bays and $2 for vacs. Make sure it's WORTH IT; Good pressure, quality chems, warm water, Spot Free Rinse, air blowers, thick foam from the brush. Keep it clean and operational. Fix the leaks when they occur. Replace hoses, wands, brushes and nozzles as needed.

Have your minimum credit card charge high; $5 if possible.

Instead of a sewer meter ( towns balk at this ), think soda machine. Air machine for tires. More drop shelf vendors.

You need to look more at the income side, instead of fretting over the expense side so much.
 

Kramerwv

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Declining population plus very little revenue at a cheap wash site sounds like a potential disaster. You might throw money at this thing, raise prices and quality and still fail to substantially raise revenue due to weak demographics. Risk versus reward doesn’t seem to be there.
 

Msaxonii

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Declining population plus very little revenue at a cheap wash site sounds like a potential disaster. You might throw money at this thing, raise prices and quality and still fail to substantially raise revenue due to weak demographics. Risk versus reward doesn’t seem to be there.
Markets are a rollercoaster. They bought in 2006. 3 years steady revenue shows that the loss has leveled off. Better Block Initiative and other redevelopment programs have started in the area to get businesses rebuilt. It's just life in the Rust Belt going through a crucible.
 

tdlconceptsllc

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I would run from this deal in all honestly I would kill myself if I lived this close to my wash. I couldn't imagine People knocking on your door for a refund & don’t put your poor wife through that. Single phase is a deal breaker because you would have to spend some jack if you wanted to install a Automatic also. I see to many negatives I would look for a better opportunity.
 

Roz

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Offer amount that makes the project and opportunity worth your time and effort. They can only say no thank you or counter. Everything has a right price....

Could be a good low risk learning opportunity.
 

MEP001

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The last time I saw inside a city meter box, the 208 WYE leg didn't even go through the meter, so I'd guess they use the same meter for single- and 3-phase. It was funny because the guy had let his power get shut off for nonpayment and his lights and half the vacs still worked. Means he wasn't paying electric for lighting.
 

Msaxonii

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The last time I saw inside a city meter box, the 208 WYE leg didn't even go through the meter, so I'd guess they use the same meter for single- and 3-phase. It was funny because the guy had let his power get shut off for nonpayment and his lights and half the vacs still worked. Means he wasn't paying electric for lighting.
My dad knew a guy with a commercial apartment building with a visibly convoluted arrangement of pipes in the basement, and he was able to jump the meter if a number of valves were switched the correct way. My dad would have to let the meter man in to read the meter, and he would always accuse the owner of jumping the meter but wasn't able to take the time to figure out the system.

We just had all of our meters updated to smart meters within the past few years. My understanding is the 4W(Y/D) is indicating it's 3 phase, and you can see on the digital portion of the meter indicating A, B, C.

Picture of my house meter added to this for reference.
 

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MEP001

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My dad knew a guy with a commercial apartment building with a visibly convoluted arrangement of pipes in the basement, and he was able to jump the meter if a number of valves were switched the correct way. My dad would have to let the meter man in to read the meter, and he would always accuse the owner of jumping the meter but wasn't able to take the time to figure out the system.

We just had all of our meters updated to smart meters within the past few years. My understanding is the 4W(Y/D) is indicating it's 3 phase, and you can see on the digital portion of the meter indicating A, B, C.

Picture of my house meter added to this for reference.
Could be that the wash I mentioned was just never wired correctly. The meter was left on the temporary pole that should have gotten removed when the wash was finished.

Edit: This shows what you said is the case:

 

Msaxonii

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Fingers crossed that I may have found a way to get control of the business with a lot less headache. Warehouse building across the street was sold for an apparel company. I submitted my letter of interest to be placed on Urban Redevelopment Committee and the clerk said apparel company was looking at car wash property for parking. Trying to reach out to company owner now to see if he'd be open to a partnership of him purchasing the property and using the extra space for his parking while I make an attempt at reviving the car wash. It also gives me an exit strategy of if it doesn't work out, he can continue with demolition of the wash.
 

Msaxonii

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Just had an introduction to WashCard today. An initial rollout to put AlOne's on the bays comes out to under 15k with a little more wiggle room if I hold off on a couple bays. He had mentioned a possible financing agreement if I could put out 50% of the equipment cost. Their forecast on revenue increase was from the 26k currently to about 36k. Following the same line, add my calculation based on price increase, I'm at a projected 46k for the year. Plus, I think I could leverage being the only wash in the area with cards and fleet offerings for selfserve bays, and the fundraising abilities were right in line with what I was looking for.

I have city meeting tonight to hopefully be selected for redevelopment committee meeting and building a network there.

So, I'm now looking at needing around 120k investment to purchase lot, add equipment, and a little reserve for operation and unexpected. I might knock that down to 60 to 75k if I can get the owner's willing to land contract for a couple years for me to improve to get conventional financing.
 

docopp

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I agree about pricing
better before cheaper
our vacuums get $2.00 for 4 minutes..
we clean them well weekly and strong new motors....
Bays get $2.50 for 4 minutes, again bays cleaned well daily, great products, tons of soap etc...
(When I bought the car wash 3 years ago, $1.25/ bay 4 minutes and $1.00/vacuum for 5 minutes)
 
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