Looking how to determine the value of my car wash to possibly sell.

[mfbanks223]

I bought a car wash in 2005 just the building and equipment. Original owner defaulted on loans, so I got for reasonable price. It has 4 ss bays, 4 vacs, 1 touchless automatic about 10 years old (D&S I5000 I upgraded from and outdated auto). All bay meters have been upgraded and take credit cards. We have blower in ss bays also. The place is super nice. We always keep top notch. All ss bays have roll up doors and automatic has air lift doors on entrance and exit. Just to reiterate I do not own the land (owner still does not want to sell). The car wash makes money. The owner of the land came to me and asked if I was interested in selling to them. I think they're wanting to set up some grand kids with a running business. Looking for some advice. I have never put much thought in selling but you never know lol. This has always been my go-to forum since I got in the business. Thanks all

 

[water guy]

What state are you in

 

[mfbanks223]

What state are you in

ohio

 

[Keno]

How much longer is your current lease?

 

[mfbanks223]

How much longer is your current lease?

5 years but they are the lease holder

 

[Keno]

5 years but they are the lease holder

Yep, that's why I was asking, if you don't sell to them now and they want to buy it, do you think they will renew your lease in 5 years? You are in a sticky situation. I would entertain their offer at the very least. Sure you can take all your equipment if they don't renew in 5 years, but where will you put it and at that point it won't hold much value on the secondary market

 

[Axxlrod]

Try to make a deal now for more money than you will net from the wash in the next 5 years. Because the prop owner has basically told you that you will be getting kicked out in 5 years. Your business is worth less every day that goes by.

 

[Keno]

Try to make a deal now for more money than you will net from the wash in the next 5 years. Because the prop owner has basically told you that you will be getting kicked out in 5 years. Your business is worth less every day that goes by.

This is probably a good way to look at it. If you get at least the NPV of the next 5 years worth of cash flow, you will be basically break even with running it for another 5 years without the headaches of running the wash. Equipment value will basically be zero in 5 years when you lose the lease.

 

[Randy]

This is the primary reason we don't buy a car wash on leased ground. Your at the mercy of the land owner at the end of your lease. A friend of mine had a car wash on leased ground the owners sold the lease a few times over the 25 year life of the lease. At the end of the lease the property owners wanted a crazy amount for the lease. On the last day of the lease the car wash owner stripped the car wash clean of everything, the only thing left was the shell of the building. They called the owners of the property and told them the keys are in the equipment room. A couple of hours later he got a call from a pissed off property owner because the car wash was gone. The property owner thought that he was going to get car wash for nothing. The owners of the car wash equipment sold everything for pennies.

 

[sjb]

It’s a hot topic…..

In the future, I would certainly entertain selling my biz and creating mailbox $$ for my daughter……

My question/challenge is to figure out what % of gross is a reasonable lease/rental rate…..?

Thoughts….?!
Thanks.

 

[Blanco]

It’s a hot topic…..

In the future, I would certainly entertain selling my biz and creating mailbox $$ for my daughter……

My question/challenge is to figure out what % of gross is a reasonable lease/rental rate…..?

Thoughts….?!
Thanks.

Sell the washes and convert the funds into storage units. True mail box money. Repair a garage door once a year and thats it. I only do this for my kids but I dont want to leave them car washes,. Too many headaches. Even if I lease them then someone would f it up and then they would get it back with thousands of dollars of repairs needed and a clientele with a bad taste in the mouth. To me car washes are not a business to inherit unless you grew up in it and most importantly ENJOY it.

 

[Greg Pack]

Depends on the lease terms and who gets the equipment but used carwash equipment is sold for pennies on the dollar. If they offer 4X net or more grab it and move on with your life. The closer you get to the end of the term, the less likely you are to run the wash properly and the more you will resent it.

If they become a-holes, I'd be tempted to close the wash down and gut the equipment three months before the lease expires to make sure they lose momentum.

 

[Axxlrod]

This is the primary reason we don't buy a car wash on leased ground. Your at the mercy of the land owner at the end of your lease. A friend of mine had a car wash on leased ground the owners sold the lease a few times over the 25 year life of the lease. At the end of the lease the property owners wanted a crazy amount for the lease. On the last day of the lease the car wash owner stripped the car wash clean of everything, the only thing left was the shell of the building. They called the owners of the property and told them the keys are in the equipment room. A couple of hours later he got a call from a pissed off property owner because the car wash was gone. The property owner thought that he was going to get car wash for nothing. The owners of the car wash equipment sold everything for pennies.

Depends on the situation, location and the lease terms. Many washes are on leased land in the more expensive areas.

I had one that I sold last year for 8 figures. Why so much? Because the barriers to entry are so high, which makes the existing washes worth a King's ransom.