Leasing suggestions.

[Bill Manke]

I am looking at leasing a iba auto at a gas station. Any ideas on what a good lease price would be. this is a older (about 10yrs) iba auto but want to get in and fix it first then later possibly get a new Iba. I already have 2 washes but own the property. So this is kindof a different sittuation. Thoughts are to start out with a low lease payment and offer a set amount for every wash through the iba. What has worked for others.

 

[MEP001]

There are already a bunch of posts in this new forum that's less than five months old that are asking very similar questions. You should read those and realize that the answer is more complicated than can be answered here.

 

[Bill Manke]

I looked through the entire forum. And found very little to do with this same subject. If someone has an idea great, if not so be it. but to always tell someone to do a search gets kinda old. I have seen this many times on hear. Some times it works to do a search, but you are also wanting the most up to date info.

 

[MEP001]

My point wasn't to suggest that you search for the info. My point was to say that the info isn't there. There's no set value for what you're asking - it's like selling a classic car. One guy may think it's ugly and wouldn't give you $100 for it, while another may be willing to spend $20,000. There's no "Kelley Blue Book" for the car wash industry.

 

[raisetheprice]

Had a friend paying $500/month rent once upon a time. I guess it depends on where you are and what you can negociate. If it's tied to the owners gas pumps, you might manuver to say that you'll increase his gas business and he won't have the headache of keeping the wash up and running.

 

[robert roman]

Bill's right, the potential answers to your question exceeds the limitations of this venue. Hire a carwash consultant or an accountant with carwash experience to help solve the problem. Otherwise, your quest will be like trying to hit a moving target while wearing a blindfold.

 

[sticky]

suggestion

hi bill. does the owner have an idea what rent he'd take, or does he want you to give him an offer? if it's the latter, it's probably cuz he doesn't know what to ask, then he'll take your offer and bump it up some. if he's already told you what he needs for rent, then you need to weigh that against his car count, average ticket, etc. basically, known revenue. then, based on your own experience and what you're willing to "earn" on your investment, you could come up with some forcast of what % increase you think you could increase the revenue (through various improvements). the % increase is probably where you'll make hay, as the owner isn't likely to "give away" the operation based on current numbers. you need to be realistic. will the improvements you plan to make really bring in more folks and/or will current customers be willing to eat a price increase, for you efforts? since you have 2 other locations, i think you know enough already to give yourself a realistic answer. debt service on one place might be a somewhat reasonable comparison to rent on another. what debt service are you comfortable with? personally, most folks would likely be comforatable with far less in rent (or a land lease) than they would owning the property and equipment. one thing i wouldn't so is let the owner share in the revenue increases you hope to bring in. set the rent based on current numbers (which areprobably low), then enjoy the spoils of your improvements, rather than give someone else a piece of your sweat-equity. cheers.

 

[Bill Manke]

Thanks just trying to get other ideas. The owner has not told me a price yet. I am trying to figure out what to offer him.

 

[Gabriel]

Keep in mind that a 10 year old IBA is getting long in thet tooth.

 

[joep]

Here in Texas most people are going with profit sharing. It will limit your risk if it does not take off and/or rainy days. What we do is put our machine in a existing bay, split the utilities, and share the profits. You will need a contract so that if anything goes wrong you retain the machine. Since it already has a machine in it, to avoid a lease fee you will need to refurbish it or put another machine in it. We use refurbished machines. Good luck.

 

[bedford]

The time to negotiate for the long term is now. Make him come up with a figure and justify it. If you are successful it will be difficult when the lease is up. First get the initial period you want and then tell him you must have 3 five year options and set the rent in advance. For instance after the initial period of fixed rent say for 5 yrs., you can agree to a 15% increase for the next 5 years and the same at each option renewal. Tell him this is fair to you both. It will cover a 3% increase a year for inflation. Also get the right to put in as many vac's as you can. Ex. If your rent for 500 per mo. for the first 5 yrs., the next 5 yrs the rent would be 575 per mo. and so on. Also write in that the equipment is yours if you decide to upgrade.