Bill Manke
Member
Wondering if anyone has built a new wash 5 self-serve 2 automatics lately. Just wondering what the cost to build was. I have been getting bids and they still seem pretty high.
Construction cost of a new wash
- Thread starter Bill Manke
- Start date
Waxman
Super Moderator
I would think that right now there is ample bargaining power in new construction.
P
Patrick H. Crowe
Guest
Indiana Wash
Member
2006 5/2 and 2007 2/3 both including land. Both ashpalt lots. Both 1.4m
I.B. Washincars
Car Washer Emeritus
- Joined
- Aug 30, 2007
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- SW Indiana melon fields.
I'm assuming you mean that "EACH" wash cost 1.4 mil???
Indiana Wash
Member
Yes, I should have been clearer. They were both 1.4m each. OR if they were 1.4 for both of them, I must have been using
http://cgi.ebay.com/ebaymotors/Car-...Z150319434632QQptZMotorsQ5fAutomotiveQ5fTools
for the IBA's. LOL
Bill Manke
Member
Are these prices including equipment or are they building only?
P
Patrick H. Crowe
Guest
Bill:
The 1.6 mil that I quoted for the 2006, 5/2 in the KC area included ALL costs. Land, building, equipment, architect fees, legal fees, permits, beginning inventory and so on. I'll put it another way: from the day the project began all sorts of bills had to be paid to get the place ready to open and all those costs are included in the 1.6 million.
Patrick H. Crowe
The 1.6 mil that I quoted for the 2006, 5/2 in the KC area included ALL costs. Land, building, equipment, architect fees, legal fees, permits, beginning inventory and so on. I'll put it another way: from the day the project began all sorts of bills had to be paid to get the place ready to open and all those costs are included in the 1.6 million.
Patrick H. Crowe
Wally
Member
Pat, how's this wash doing?
P
Patrick H. Crowe
Guest
I have only limited information on how the wash is doing. Here it is:
1. The owner is veteran car washer who knows the bidnez well. He has 4 or 5 other washes and all are well run so far as I can tell. I note this to suggest that it is very unlikely this place would belly up because his other washes would carry it.
2. It was built in a location with very poor demographics, too little population, too many bays. I did a detailed study of this area and there are less than 1,000 people per bay within two miles. As most of us probably know this spells trouble. The wash was put here because this is where the city will allow washes to be built, i.e., not where the demographics would be strong but in areas where you are far less apt to get NIMBY reactions.
3. As any believer in supply and demand would predict the competitive washes felt the overbuilding crunch. The closest wash to the north is an 8 bay self-serve. It sold, then returned to the market. Then tried the 25 cent start uo, looks like it's in trouble. The closest wash to the south a six bay self-serve, is on the market and priced out of sight. I believe the owner is upside down in the wash. He's tried the quarter start up and seems to be in trouble. Same is true for the two washes a bit further south; both on the market, one sold, the other went at absolute auction but it's on leased land and I heard the deal fell apart.
4. The new wash has two touchless automatics, they work reasonably well and I have tried them repeatedly; they include dryers in the $8 wash. The only nearby automatic is at a convenience store, is a brush type and poorly operated. The owner promotes the automatics with quantity token sales so the if a customer buys $20 worth of tokens he can get the $5 wash for less than $3.
5. The wash often appears to have customers in many bays while the competitors do not. It is attended daily, many hours each week while none of the competitors are.
Patrick H. Crowe
1. The owner is veteran car washer who knows the bidnez well. He has 4 or 5 other washes and all are well run so far as I can tell. I note this to suggest that it is very unlikely this place would belly up because his other washes would carry it.
2. It was built in a location with very poor demographics, too little population, too many bays. I did a detailed study of this area and there are less than 1,000 people per bay within two miles. As most of us probably know this spells trouble. The wash was put here because this is where the city will allow washes to be built, i.e., not where the demographics would be strong but in areas where you are far less apt to get NIMBY reactions.
3. As any believer in supply and demand would predict the competitive washes felt the overbuilding crunch. The closest wash to the north is an 8 bay self-serve. It sold, then returned to the market. Then tried the 25 cent start uo, looks like it's in trouble. The closest wash to the south a six bay self-serve, is on the market and priced out of sight. I believe the owner is upside down in the wash. He's tried the quarter start up and seems to be in trouble. Same is true for the two washes a bit further south; both on the market, one sold, the other went at absolute auction but it's on leased land and I heard the deal fell apart.
4. The new wash has two touchless automatics, they work reasonably well and I have tried them repeatedly; they include dryers in the $8 wash. The only nearby automatic is at a convenience store, is a brush type and poorly operated. The owner promotes the automatics with quantity token sales so the if a customer buys $20 worth of tokens he can get the $5 wash for less than $3.
5. The wash often appears to have customers in many bays while the competitors do not. It is attended daily, many hours each week while none of the competitors are.
Patrick H. Crowe
Whale of a Wash
5 Washes 36Bays 2Vectors
Let's just say a new wash would cost 1.1 to 1.4m What dollar volume would be needed to break even? A new self serve doesn't seem very feasible any more in our area, or in most areas of the country. For that price a person would be better to get into a good franchise and chase real money.
P
Patrick H. Crowe
Guest
Whale of a wash:
I do look at break even ponts but that focus is minor. What I attempt to explain in my Car Wash Appraisal Handbook is why the risk level in car washing demands that a prudent buyer/investor NEEDS TO expect an ROI in the range of 18 to 20%. In my completely biased view my EVIDENCE for that is so clear, it becomes a no brainer.
Thus the number to look at is not basically break even but the gross revenues which will give the buyer/investor a prudent rate of return in view of the risks involved.
Those owners who report they are "working for nothing" or who report they will get paid "when the place is paid for" seem to me to be admitting they got fooled, they bought the hype, they did not read the books, they craved ownership at any price? I am sympathetic to them, I feel sorry for them but did they do their homework?
I've made and lost a ton of money in the stock market. I know a put from a call, I can short calls but I admit there's tons of homework I'm still working on. As vain as it sounds, that's not the case with self-service car washes.
I've lived and breathed them, bought and sold them, operated them for over 40 years and beagn a $1,000. So then, decades ago, I began writing about them and what they are worth. I also tried my hand at producing coin boxes (lost money).
Here's my overarching point. The fair market value of a car wash can be determined with some work. He who ignores this notion does so at his own peril and many do, as the number of foreclosure now proves. So be it.
Break even? Fair market value ? You decide!
Patrick H. Crowe
I do look at break even ponts but that focus is minor. What I attempt to explain in my Car Wash Appraisal Handbook is why the risk level in car washing demands that a prudent buyer/investor NEEDS TO expect an ROI in the range of 18 to 20%. In my completely biased view my EVIDENCE for that is so clear, it becomes a no brainer.
Thus the number to look at is not basically break even but the gross revenues which will give the buyer/investor a prudent rate of return in view of the risks involved.
Those owners who report they are "working for nothing" or who report they will get paid "when the place is paid for" seem to me to be admitting they got fooled, they bought the hype, they did not read the books, they craved ownership at any price? I am sympathetic to them, I feel sorry for them but did they do their homework?
I've made and lost a ton of money in the stock market. I know a put from a call, I can short calls but I admit there's tons of homework I'm still working on. As vain as it sounds, that's not the case with self-service car washes.
I've lived and breathed them, bought and sold them, operated them for over 40 years and beagn a $1,000. So then, decades ago, I began writing about them and what they are worth. I also tried my hand at producing coin boxes (lost money).
Here's my overarching point. The fair market value of a car wash can be determined with some work. He who ignores this notion does so at his own peril and many do, as the number of foreclosure now proves. So be it.
Break even? Fair market value ? You decide!
Patrick H. Crowe
Waxman
Super Moderator
Fair market value of a carwash, I agree, is important. But to an existing operator, so is break even.
I read the carwash appraisal handbook. It was okay. Alot of it told me what I already knew from independent research. I'm not sure it deserves the hype it gets in many, many posts.
The important point is to not get in over one's head with debt. If a person builds a wash that cannot support their debt service, it seems to me that the error may have likely been in inadequate pro formas and a poor business plan.
A person should create 3 years cash flow projections. They should do a best case, worst case and break even analysis. These are challenging because you must come up with sales and expense numbers from zero. Many numbers can be exact, while many more involve estimates.
Building a new wash involves alot more than break even analysis and the carwash appraisal handbook. An investor could spend years researching and developing their plan before building a new wash. That's what I did.
I read the carwash appraisal handbook. It was okay. Alot of it told me what I already knew from independent research. I'm not sure it deserves the hype it gets in many, many posts.
The important point is to not get in over one's head with debt. If a person builds a wash that cannot support their debt service, it seems to me that the error may have likely been in inadequate pro formas and a poor business plan.
A person should create 3 years cash flow projections. They should do a best case, worst case and break even analysis. These are challenging because you must come up with sales and expense numbers from zero. Many numbers can be exact, while many more involve estimates.
Building a new wash involves alot more than break even analysis and the carwash appraisal handbook. An investor could spend years researching and developing their plan before building a new wash. That's what I did.
P
Patrick H. Crowe
Guest
Waxman:
Here's the key difference between Fair Market Value and break even point.
The FMV tells the buyer/seller what the business is worth NOW, right NOW. It is NOT based on projected income; it is not based on expected growth. It does not consider future possible competition. It does not consider possible increases in soap costs, utility costs and so on. It's a NOW number.
The break even point uses all sorts of IF statements. It is worth knowing but less important than the FMV. It is a future PREDICTION; it is not a NOW number based on facts but on FUTURE hopes, expectations, guesses.
Patrick H. Crowe
Here's the key difference between Fair Market Value and break even point.
The FMV tells the buyer/seller what the business is worth NOW, right NOW. It is NOT based on projected income; it is not based on expected growth. It does not consider future possible competition. It does not consider possible increases in soap costs, utility costs and so on. It's a NOW number.
The break even point uses all sorts of IF statements. It is worth knowing but less important than the FMV. It is a future PREDICTION; it is not a NOW number based on facts but on FUTURE hopes, expectations, guesses.
Patrick H. Crowe
Waxman
Super Moderator
Look, FMV or BEP are all just educated guesses with new construction.
This is a silly argument.
This is a silly argument.
Waxman
Super Moderator
Did anyone catch last weekend's Saturday Night Live? There's a skit called "MacGruber", a take off on the 80's "MacGyver". In last weekend's MacGruber he was sponsored by Pepsi and it reminds me of this thread.
At one point, MacGruber just keeps repeating 'Pepsi" with differing tone and inflection as if it were creating a sentence.
At one point, MacGruber just keeps repeating 'Pepsi" with differing tone and inflection as if it were creating a sentence.
Bubbles Galore
Active member
I saw that skit. It was hilarious!
It is a perfect fit for this thread.
It is a perfect fit for this thread.