Sales Expectations?

[Moose2424]

I am interested in purchasing a bank owned car was in the Midwest. It has 2 IBA's installed with LaserWash 4000 and 3 SS. The traffic counts are roughly 11k on street and 12k on the other. It's situated on a fairly busy corner...it's not directly on the corner, but one lot off. The town has a population of about 150k. My question is in regards to realistic sales averages (based on our current economic situation). The equipment looks to be in fairly decent shape, but the bank will not allow anyone to turn the water on to test it out. There are some visible busted pipes, so I think it's fair to assume that it wasn't winterized 100% correctly.

Of course, the bank and the distributors (I met with two) think it's a gold mine. I'm still a little skeptical and would love to hear your thoughts. It obviously didn't work for the last guy and it has been on the market for two years. The bank has reduced it a ton and is practically giving it to me. I am new to the industry and my research has only been from this forum and a couple books. Any feedback would be greatly appreciated.


...and this is my first post. Thanks for listening.

 

[Greg Pack]

If it was THAT good of a deal, chances are another area operator would have picked it up. In my area ,a local express carwash just sold by a bank at 25% of the construction cost just a few years ago. All the operators in the area just let it go by. No one thought it was worth the time or energy

To be of real help, we'll need more info:

Competition within 15 minute drive. Any express washes?

Ingress or Egress problems?

Any income records?

What's exactly "giving it to me?" . IMO "giving it away" is selling it for the value of the dirt that a devloper would pay. Any more and there is risk involved

I don't mean to scare you, this may be a great opportunity, but be careful.

 

[Moose2424]

Thank you for the reply. You're right about other seasoned owners jumping all over this...and I've thought about that a lot. I spoke to one owner in town and his thoughts were that it is a good deal, but he's getting into retirement mode and doesn't want the hassel. Other wash owners are not local...most live at least 100 miles away. That being said, if it was that great of a deal the sharks would've sniffed it out long ago. The only thing I can think of at the moment is that I have a good relationship with the bank and they came knocking on my door with this opportunity....the price that it is listed for is not what they are willing to pass it to me for. I know, that's a pretty weak reasoning.

Also there are about 6 similar wash stations nearby (within 15 minutes). I've driven by and washed my car at all the location recently just to scope out the compeition and they all seem reasonably busy. Everytime I went there was at least a car or 2.

 

[rph9168]

You will get a lot of useful information here to help you make a decision but I would also recommend you contact a reputable, independent car wash consultant before reaching a final decision. To save yourself some time and money have as much available information as possible such as traffic count any demographics available, estimate for repair of the wash, and any wash history you can obtain. Some times what looks like a good deal on the surface can have many hidden problems that make it a loser. The guys here are pretty good at helping you tell the difference.

 

[Waxman]

what if the floor heat is junk? the you've gotta rip up the whole floor.

what if much of the plumbing is ruined? what if you need to scrap the auto?

buying a carwash that you cannot test? even at the auto auctions you can hear the car run.

i'd save this 'bargain' for someone who knows carwashes. i think you're asking for trouble.

 

[Greg Pack]

Six similar operation within a fifteen minute drive scares me at bit. Also, when was the wash originally built?

I would budget at least 30K to get back open. You might do it for 5K, but if you start finding proprietary equipment busted on those machines it could get very expensive.

200K is probably a good deal, any more than that and the is risk of losing on the deal increases. but with so little info it is hard to say. It might be worth 150K or 400K. Paying cash with no mortgage decreases risk substantially.

 

[Moose2424]

The wash was built in 92. The lot is approx 11k sq ft. The price will be less than 200k.

I budgeted about 50k to get things up and running. I was trying to project sales volume, but I'm finding that to be very difficlult. I read in several spots that the national monthly sales average for IBA's is $3-3.5k per bay and $1-1.5k per SS. That's seems awefully high to me...mainly becuase of the area I'm in and also due to the economy. What do you guys think? Are those good numbers for planning purposes or are they way off? If that were the case I'd be pulling in $9-12k (plus vac/vending).

Thanks again for the quick replies and giving good feedback. I'm totally new to this so please forgive the stupid questions (or not providing enough relevant info for the questions I'm asking).

Also, we do have one full service wash in town. They do great business...usually 20-30 minute wait to get in.

 

[rph9168]

Has this wash been appraised? If so, was it done by an appraiser that specializes in business appraisals? Most lenders that I am familiar with use their own appraisers whose livelihood depends to a great deal on the lender. I have seen some that were way off - usually favoring the lender. Property and business values have declined significantly in recent years so it also should be a current appraisal based on current market values.

Even with an acceptable appraisal there are way too many unknowns to feel comfortable with this deal.

 

[Greg Pack]

Are the autos original? If so that puts them at over 15 yrs old. That's old.

pictures would be helpful

 

[dogwasher]

Why won't the bank allow anyone to turn the water on?

 

[Moose2424]

The auto's are original...and yes that does make the deal even more riskier than it already is! I believe there was an appraisal done a few years ago (when the bank took over) and it came in at $500k-ish.

It's the City Water department that won't turn the water on until the existing lien is settled and the bank won't settle it until it's sold. Makes things ultra complicated...and much harder of a decision.

Thank you very much for the replies.... it's bringing me back down to reality.

Any thoughts on what kind of sales figures to expect? The neighboring washes start their IBA's at $5 and SS's at $2 / 4 min. I plan to keep that the same.

 

[MEP001]

Any thoughts on what kind of sales figures to expect? The neighboring washes start their IBA's at $5 and SS's at $2 / 4 min. I plan to keep that the same.

This would be nearly impossible to guess without knowing the income of the competition. Ideal numbers are $1,500 to $2,000 per SS bay and $4,000 to $5,000 per auto. Regional numbers could be different, and the clientèle will determine the final figures.

 

[motefam]

You're smart to be cautious. But maybe some of the local operators passed because they're not in the mood to risk their capital (or they have lost their appetite for carwash risk). Some good info. to have would be: numbers from the digital or mechanical counters on the autos and self serves, and historical water use figures from the utilility (they are usually glad to supply). The bank may be looking for an easy out, with a guy they know has cash and will make it quick and painless. Could be good! The R.O. machine is surely busted and alone will cost $5K, so you're right to budget at least $50K for startup, but add $10k - $20K for marketing plus sweat equity to get through the first few months of mechanical problems. If it feels like a home run, go for it, and maybe you'll at least get a double.

 

[washme1]

Maybe the bank can give you the name of the previous owner so you could try to determine the condition of the car wash and any other hidden problems.

 

[Moose2424]

Thank you all for your wise words.

I called an independant wash consultant (someone who knows what they're looking at) and we walked through the entire site. He said the RO, water softner, and a few other items need full replacement. The bill validators and locks have to changed out as well. Additionally there are no CC acceptors on site. He wrote up a quote for about $150k total to get up an running. He said the wash equipment itself looked to be a good shape. Earlier I mistakenly said it was about 15 years old, it's actually only about 8.

My gut is telling me that it's a pretty good deal, but I tend to be a big dreamer.

I tried uploading some pics, but couldn't figure it out. Any ideas?

I'm hoping I can get up and running for about $200k.

 

[6t7gto]

Since you can't get the water turned on, how about an air test on all the lines?

 

[rph9168]

Was that a quote or estimate? Is the consultant going to do the work? An independent consultant would do just that - consult. They should not be involved in doing the work unless they are making sure it is done right.

 

[bighead]

Let's try this from a different angle...

What is the property alone worth? If the number is close to what you are paying, it lessens the risk.

If you knocked all of the industry averages in half would you still be able to make you cash flow requirements? And at that number would it be worth your time 7 days a week to mess with it?

You could always tell the bank that you will buy it for $X, but they are on the hook for any immediate repairs to get the equipment operational. (Don't go big on upgrades at first, they might not be worth it.)

Just some thoughts...

 

[Greg Pack]

If I could get a 3/2 purchased,updated,looking good, and operating reliably for 200K l I'd be very tempted to try it. That's still a pretty good deal in my book. Only reservation would be the neighborhood.

Best was to post pics is to use a third party site like photobucket. It's worth the trouble if you want some honest opinions. But opinions from guys on the internet may not be worth very much. We may all be teenagers living in our mothers' basement.

 

[Moose2424]

The dirt itself is probably worth $70-100k. The neighborhood is not too rough it's a mix of residential (rentals and single family) and light commercial. The downtown district is about 1/2 mile away and we'd be the closest wash to that area. All in all it's really not looking to be a bad deal, even if I can't make it as an operator, I might be okay just having the dirt (I hate to even think that way).

You are right about the consultant....he's actually an independant distributor. He sells equipment for a bunch of differnent companies. He seemed pretty knowledgeable, but the quote he gave me seems awfully high. Not to mention the only things he quoted were the visible issues. Once water gets turned on there is a zero percent chance that everything else will work just fine. He quoted me almost $100k for new auto cashiers, bill acceptors, and cc machines. Whoa mama that's a lot more than I thought it would be!

Knowledge requires a lot of learning, exerience, and past failures. I have only started on this path....I've got a long ways to go and you all have helped me a ton. Regardless of where you live (haha) or how old, I will soak up your wisdom.