Advice on buying a car wash.

[WSR2010]

Hello all, my name is Adam. This is a GREAT site with lots of info! Id like some advice on buying a car wash in my area. A little background of me. Currently my main income is my trucking company (one truck) but am getting out of trucking the end of the year. Second income is renting apartments, currently have a total of 20 units averaging $11,700 per month. All the properties are under property management so my personal involvement is very little other than phone calls every day. I am currently expanding the business to 50 units within the next 2 yrs.

I have always LOVED car washes, may have something to do with keep my vehicles 100% clean, waxed, etc all the time lol. Anyway, the last 2-3 years I have been looking at car washes in my area. I know the real estate business provides me much better cash on cash returns but I have a hard time keeping all my "marbles in the same basket" come the end of the year when I dissolve the trucking business. My mind tells me to just stick with the real estate (better business returns) but my gut says to diversify with a car wash also. One reason is I will be bored with just the real estate. I would enjoy learning/improving a car wash and give me something to do everyday.

Here are some details on the car wash...
The car wash has 4 self service bays and 1 touch less bay, nice condition lot and buildings. The equipment is 11 years old. It is located in a decent city of approx 100,000 people. This is a lower income city. There are two other car washes in this city. A 6 self service wash (very run down) and a full service tunnel that washes cars for $10 and employees dry at the end of tunnel. The wash I am interested in is in the middle of both of these washes on a major artery of the city. The wash has self service starting at $3 and the touch less is $6, $7 & $8. I believe there are 3 or 4 vacuums as well. The asking price is $450k including the real estate. I drove by the wash today, and it was very busy considering on and off rain showers and a cool day for Pennsylvania.

Regarding the numbers.
2016 Gross $114,000.
Utilities $21,000 (cable, electric, gas, water, trash, security)
Supplies $13,000
Maintenance $6000 ($3000 was installing new doors to the equipment room)
Insurance $6000
Property Taxes $8000

Net $60,000


I am very motivated and would devote time and energy into learning, maintaining and expanding the wash as much as possible if I bought. I would fiance the property with debt service costing about $30k a year leaving me $30k net.


Something I should pursue to or to stick with the real estate? Thoughts/concerns?

Thanks!

 

[MEP001]

Food for thought...

You have two options with how you operate, either fully hands-on which will make it an every-day job, or you can hope to find a capable attendant who you'll need to pay very well. Depending on the touchless machine, you can expect to spend $5,000 to $10,000 a year in maintenance unless/until you learn to do it yourself. So there could potentially go your anticipated $30,000 net.

 

[WSR2010]

MEP001, thank you for your response. I would be hands on. I realize the risk due to the numbers of the business if I acquired. Was thinking about upgrading the touchless to include an undercarriage wash with a de-salt. There is not one within 10 miles and where the undercarriage washes are, they are VERY busy in the winter due to the salt/brine on the roads in PA.

 

[soonermajic]

$6k for insurance is a helluva lot. I'd shop around & try to shave $2k off that real quick.

 

[loewem]

You might ask some questions about the equipment. How many washes are on the touchless automatic? Has it been maintained on a schedule? What brand and model is it and who is the distributor and are they good to deal with? What service company has been maintaining the automatic? I think that you'll want to be sure that the automatic will last you several years if you go forward. Even a used machine will eat up that $30k net pretty quickly. My opinion is that the automatic will be the hardest thing to learn to maintain on your own and there may be some things that you won't want to do on the automatic yourself. You might search this sight to get some idea of the reliability and issues with the brand/model that you are looking at. Look at all of the hardware that supports the automatic. See if anything looks to be problematic or may become a problem.

You might ask similar questions about the self-serve equipment. The self-serve equipment isn't as big of an expense, but the repair costs can add up. Look at some simple things like the condition of the belts, hoses and fittings. Ask what type of maintenance has been done and on what schedule. Any leaks? Guages working? None of this is difficult to fix, but time consuming and some costs. You can use any deferred maintenance to negotiate the price.

Other equipment such as water heaters, water softener, air compressor and reverse osmosis (R/O) machine. This equipment might be working fine, but make sure it has been taken care of and is doing what it should be doing (check hardness of water, total dissolved solids for R/O - spot free rinse water). Having to replace any of these will ruin your day. For the purpose of negotiating the price you might consider the value/need to update any of this equipment (More efficient water heater for example).

Check the lighting to see if it needs to be updated. Should be CFL at a minimum and LED preferred. Another thing that you might need to upgrade and can use for negotiations. Also, you almost can't have too much lighting so check the place at night and see if you think it could use more lighting. What condition is the signage in?

Check out the self-serve meter boxes. What condition are they in. Ask to look inside of one and see if it is clean. Doesn't need to be spotless, but if it doesn't look like it has ever been cleaned you might give a harder look at the coin acceptor and bill validator (assuming the meter box has both). Do they look to be in good shape and are they working well? MARS bill validators are good. I would say they are the best. What is the condition of the meter box? Is it a mechanical switch or push button. Do all of the functions work at the switch and out of the guns or brushes? Does the wash accept credit cards? If so, that is a good thing. I would find out which credit card equipment and search for it on here. If not credit cards then you might have another point to negotiate on. I think you'll want to accept credit cards.

What things are in place to deal with cold weather? Floor heat? Weep system(s)? Bay doors? Winterization of hoses/lines to keep from freezing?

How do the vacs look/work? Is there vending? Is there an air machine? A tire shine machine? A carpet cleaning option on a vac? Coin changer machine? If the place has any of these make sure they work well.

Sorry, lots to think about and could probably ramble on. Most others on the forum know far more than I do, but two last thoughts. If there is deferred maintenance (most likely because it is hard to keep up with everything) that you can see, there is probably an equal or greater amount that you can't see. Estimate how much time and effort you think it will take to maintain the place on your own and then double it (at least double).

 

[vinh]

i would not pay more than $300K for the wash. If you pay higher, the return on investment is not worth it. Also I wound not buy the wash if you don't have the cash to buy it outright. the interest is eats too much of gains.

 

[mmurra]

Adam - If your truly love to wash your car, you might want to consider another hobby / investment. This industry can beat the love of washing cars, right out of you! In my almost 50 years in the business, many operators have struggled to make a go of a wash opportunity like yours. Some do. Many do not. Only you can decide. You only live once, so choose well!

 

[MEP001]

It's the same as with any hobby that you turn into a profit business for a living, after 10 or 20 years you won't enjoy doing it anymore.