cash flow, need opinion please

[1carwash1]

I'm looking at a closed car wash in the Southeast. No financial records available as the foreclosing bank also went under and assets were transferred to another bank. Using the freedom of information act, i was able to obtain the water bill and usage for approximately six years. The wash has six bays and one touch free automatic. The average water use per month was approximately 130,000 gallons. The last month in operation it used approximately 140,000 gallons of water. From a water use perspective, it seemed to be a decent wash; it appears it closed because it was pledged as collateral against another project.
The bank now handling this property has no information regarding this wash.
I know it is impossible to determine gross income strictly from water use, but from historical water use it appears to be a decent wash. Any input would be greatly appreciated.

 

[jimbeaux]

I would start out trying to talk to the previous owner, suppliers and even some of the competitors.

 

[packerscw]

Is the closed car wash in a small town or big town? How is the equipment?

The National Average is $1300 per month gross income per bay. Study show that it takes

1000-1500 city population to support 1 self serve bay.

 

[Greg Pack]

130,000 is a good bit of water. If no significant leak or weeping that could translate into 12-15K revenue per month. But there are way too many variables to this. Did he weep much? Is there an undetected leak? Did he reclaim RO reject, was his business more auto or SS? Or, was the previous owner originally dumping water to make his car wash volume look greater? Who knows? A talk with the previous owner might be in order but take it all with a grain of salt. .

Also, don't worry about water volume over the past six years. Just the last year. There are many carwashes in the southeast whose volumes are not coming back. Buy it based on pessimistic financial forecast. If it is closed, start by offering the value of the dirt. Any upside to that will be a pleasant surprise and icing on the cake.

 

[robert roman]

History would be most helpful in identifying a trend for the location.

Otherwise, I would begin by looking at the wash as a greenfield.

In other words, I would base my expectations for the site not on history but on the anticipation of sales based on current economic outlook, competitive density, demography, traffic flow, etc. in relation to the anticipated expense to bring the facility to a commerically viable state that is consistent with industry standards.