Good time to sell? What would you do? Soon to be a Vacant lot close to my washes.

[Hoser06]

Hi guys
Need some advise.
I just found out through a commercial real estate broker that a vacant, remeadeated gas site at a very busy intersection is likely to hit the market in three to four months. The sites been dormant for over 10 years and is 2miles from two of my washes.
Both of my washes are on an arterial road that comes off the main heavily trafficked hwy that the vacant lot sits.

My sites are both around 10 years old but well equipped and profitable, SS IBA sites. Credit card equipped bays, paid vacs. Good chemicals with an established customer base.

I'm assuming if an express wash were to go in, two miles from my washes, it would take a pretty big bite out of my profits. There are no express washes in my area.

Also, SS&IBA washes are selling in cities close to me right now. Plus we've just had a banner year in sales and sales have increased year over year for the past five years. A wash in a inferior market close to mine just sold at a 4.5 multiple.
I believe I could sell for 3m before the lot hits the market. If I wait and don't buy it myself, it could certainly be a potential competitor. The lot could accommodate a 100ft tunnel plus Vacs and dual entry lanes.
If I buy it, I would be competing with myself given the proximity to my existing washes.

My options, as I see them are:

A) Sell before the new lot hits the market at top dollar. And look for a new site in a new market. Since a non-compete would preclude me from buying the vacant lot for five or more years.

B) Buy the lot and build an express wash and risk eroding the profitability of my SS IBA sites.
But this would affect any exit strategy to sell off the two SS sites. Who would buy my existing washes after an express goes in close by?

C) do nothing and prey Starbucks buys the lot

What am I missing?
Thanks in advance.

 

[Waxman]

1. i would decide ( maybe you already know) what sales price would make me happy to walk away. for me this is based on what i owe (what the business owes) vs sale price.

2. now is a good time to remember: at what point in the life of a business, is that business if for sale? my answer is immediately. why not; for the right price.

3. if you love and are very passionate about the car wash business, sure go for it and invest in the gas site with hopes of a mini tunnel car wash project.

4. $3M out my way buys you a 50+ plex apartment building. I like commercial real estate and being a land lord, so that is what i would do. you have to know what your true passion is and follow that. just the fact that you are asking this question means that maybe you are ready to take the next business step. cool!

 

[BBE]

Has someone said something that leads you to believe that an EE is what the lot/land would be used for when sold? It's entirely possible that it just stays a gas station, albeit updated and nicer, and perhaps an IBA. I don't think I would jump the gun and just assume that a piece of land/gas station that is about to be sold is going to be an EE.

 

[Hoser06]

Has someone said something that leads you to believe that an EE is what the lot/land would be used for when sold? It's entirely possible that it just stays a gas station, albeit updated and nicer, and perhaps an IBA. I don't think I would jump the gun and just assume that a piece of land/gas station that is about to be sold is going to be an EE.

Very true.
It's what I'd do for sure but No word on what it would be developed into.
I guess as a wash Owner/operator, i tend to see every flat, undeveloped parcel of land as a potential wash

 

[rph9168]

Do you have any idea what that lot would sell for? It sounds like it could be a pretty expensive piece of dirt. If it is I think it would be rather unlikely to become an EE. Sounds more like a location for a fast food joint or as someone suggested another Gas/C-Store. I do agree with Waxman about finding out what you might be able to sell for. It is always a good thing to keep all your options open. In the end you already have two profitable washes which is a pretty good thing.

 

[Hoser06]

It should come in around $700-$800k
Its not a huge lot at 26,000 square ft. or .57 acre but its well positioned at a major intersection.

After seven years of hands on ownership of two busy self serve washes and three aging temperamental touch-less IBAs, and all the fun that comes with that: challenging touch free wash quality, coin jams, self serve bay trashers, break-ins, etc.
I'm getting to the point were I think I might like to try something new with an express tunnel given the trend I see playing out all around me of big express washes entering the market.

Thanks for the input!

 

[rph9168]

An EE would be a real tight fit on a lot that size if it fits at all depending on the shape of the lot. You might want to get the lot dimensions and talk to someone capable of doing a site plan. If you are tired of your washes maybe it would be best to sell rather than build and operate another one. Some of those same problems and jobs you are having with your washes would also be there in an EE.

 

[robert roman]

“I believe I could sell for 3m before the lot hits the market….wash in an inferior market close to mine just sold at a 4.5 multiple.”

$3.0 mil / 4.0 GIM / 2 sites imply sales revenue of $375K per store, maybe NOI $187.5K.

Based on current equation for business-only value, there would need to be assets of around $900,000 for a $1.5 mil price to make sense.

Assets are depreciated building and equipment plus fair market value of real estate.

This doesn’t seem to make sense from practical point of view with 10-year old combination self-serve wash.

As for former gas site, $27 to $30 per SF is going rate for high-stakes corner lots in CA markets.

As for using lot for commercial carwash, it should pass highest and best use of property test.

Is the use legally permissible, physically possible, financially feasible and maximally productive?

If the lot is owned by major oil or is part of master development plan (i.e. shopping center) mostly likely selling gasoline would be prohibited. Also, c-store and gas on 1/2 acre lot at $30 per SF is no longer financially feasible.

As for 100’ tunnel on 26,000 square ft. or .57 acre, most of these small corner gas sites are fairly square.

I’ve worked on over a dozen of these projects and most of these sites can be fit-out with dual 60’ mini tunnel with vacuums.

However, at $30 per SF for land, the site would need to be maximally productive.

While this may not be difficult for national jewelry firm, bank, real estate agency, optical store, dentistry, etc., it may be so for carwash.

Hope this helps.

 

[Car_Wash_Guy]

Check the deed restrictions on that lot before you get too excited.

 

[Waxman]

did you sell your car wash?

 

[Waxman]

well...............did you sell it??? we all want to know!

 

[soonermajic]

Kept it, or sold it.....?