very cheap starter wash

[area123]

first time post here..

This is a 12 year old car wash with 2 enclosed self serve bays and 1 open bay with taller boom for Rv's. It has new pumps and water heater and softeners last year. It is in a small town of 10k people, but on the outskirts of town on the main highway out of town next to another small town of maybe 1k people that is building some new businesses to attract traffic past this wash. There is also a lot of rural and farm traffic. This highway has a lot of traffic and potential customers that probably don't stop because its kind of old looking and they can't see it very well. It has no sign at all. It has been in this location for 40 years (rebuilt 12 years ago from the ground up)

If it had some brighter colored trim and a sign it would be more visible and I think the sales could easily double from the paltry $9k last year. net profit was about $1500 on that sales. Of course if we could double sales we could about quadruple the profit because many of the fixed costs would not increase directly with sales. That's still only $6k profit but a 50% ROI isn't too bad.

We could buy it for $13k cash. Is it worth a shot? THere are 2 other nice car wash but about 1-2 miles away and not in a main drag like this one, they are downtown and don't see a lot of the highway traffic of commuters, etc. The place is not pretty but seems solid and could be cleaned up cheaply. We would not plan to invest in upgrades in this location I think.

One specific question I had was about liability insurance. The current operator doens't have insurance. We got a quote for $550 but that seems too high for such a small operation. What are some common rates for a very basic policy? We've had trouble getting quotes since we are new to the business.

Thanks!

 

[rph9168]

How much is the land worth? How much do you think you will have to spend to bring it into better shape? Are you mechanically inclined? I assume you have another source of income.

 

[area123]

The land is probably not worth much, maybe a few thousand at most. It's on 3 city lots in an older part of town, but right across th street is a new neighborhood with maybe 20 new homes and a nice storage complex. Good access and right on the highway in a 35mph zone.

We plan to spend very little on paint and a sign only for now, the rest of the structure is solid and equipment works pretty good, basic wash with 1 change machine and spot free rinse is the only optional feature. It's an all cash deal and we want to keep expenses low at first.

I'm pretty mechanically inclined can fix about anything with instructions. And I have family members who operate car washes so can seek their advice also if needed. As a bonus I drive right by it on my commute so could check on it daily. And yes have a very good job. In the 16 years I've been commuting I've barely noticed the place but it always has a car or two there now that I am paying attention. I still have to make myself look because nothing about it catches the eye. It's definitely a low revenue place and will probably remain somewhat so. We just hope to catch the passers by and commuters who don't go downtown to the nicer washes, and a good sign will likely increase traffic

 

[rph9168]

I am sure others on this site will have some valuable advice but one thing for sure you need to add items like tire cleaner and tri-foam which are revenue builders. You didn't mention vacs or vending. If there is none you might want to consider finding some used equipment to see how it goes. Probably not ready for it yet but eventually if this site starts to come around you might want to add an automatic. Right now I would concentrate on dressing up the site and adding those items to the bays. At this point it doesn't sound like a bad deal if it is as you described but there on others on this site that can offer their advice as well.

 

[area123]

Oh yeah, it has 1 vac and tire brushes. No foam yet. Great ideas. We thought about adding credit card readers because we really like those at SS washes. There is certainly room for an auto bay too.

There's no vending at all. Which are the most cost effective?

 

[rph9168]

Try Jim Holve at Shurvend. He has a lot of experience and good ideas and may have a rebuilt unit at a decent price. He is listed further down the forum page.

 

[robert roman]

“paltry $9k last year. net profit was about $1500 on that sales.”

Even if this wash was priced to perfection, it’s not worth $4,500.

“Of course if we could double sales….That's still only $6k profit but a 50% ROI isn't too bad.”

Considering time invested needed to operate this gem, you could make more money flipping hamburgers at a fast food drive through.

 

[area123]

Ok. I see you troll both sites. Try offering something helpful.

 

[robert roman]

"If we could double sales”

Bare minimum time to operate business is ten hours a week X 52 weeks is 5,200 hours.

$6,000 profit / 5,200 hours

= $1.15 per hour before taxes

What is it about this you don't understand?

This wash isn't an investment, its a job that pays less than minimum wage.

 

[area123]

One thing I do understand is that even at 10 hours per week (which I doubt is realistic for a small as compared with a busy wash), 10*52 is only 520 hours per year. So you are 10x too low on your hourly rate calculation. Still I understand $11 per hour may. It be worth it either. But for a small investment it might be worth a learning experience.

Either way I'm glad to have the discussion. We are still contemplating.

 

[rph9168]

After "flipping burgers" to make that much all you have is pay stubs. With the wash you still have the land and ability to continue making money or sell it.

 

[robert roman]

Pardon my honest mistake.

As for calling me a Troll, it usually takes a bottom feeder to sniff one out.

So, I'll change my advice to what you want to hear, build it and they will come.

 

[cebo]

You are talking about 13K with the dirt being worth a few thousand. If it sounds like something you would like to do give it a shot. Worst case you are out the money of a cheap used car. I just paid over 200k for a wash with tax returns showing a gross of 20k per year. My first month it did just over $500. After 90 days its over 2k /mo after a new changer (the old one was 20 yrs old and took 1's and sometime a 5) and a 2nd drive for better access. We are installing a used IBA and while it has been losing money since I bought it, I think it will have a positive cash flow within the next month or so. The purchase essentially gave me all the SS bays in a county of 45K and an acre beside Walmart. Its my 2nd wash and I have another business. Worst case for me is a paid for acre by Walmart in 10 years and a little extra income. All wash locations don't have to do 200k+ a year to be a decent investment. Besides, depending on you main gig picking up trash can be therapeutic. Also, one thing that tends to escape people is the cost of doing business is different all over the county. My existing wash that does substantially better than the one I just got has a property tax of only $1000 / yr. Sewer is only 1/2 my water bill. Heck, my city business license is only $60. If you don't like it take your marbles and go somewhere else.

 

[MudMoney]

Don't knock the advice of operators on this site ! I've owned several ss washes in small towns, I suggest you walk away and get a bubble gum vending route.

 

[area123]

Im not knocking advice. Otherwise I wouldnt be on here asking. I'm seeking sound advice. However i don't find much use for advice from so called consultants who tell me to go flip burgers. That's not very constructive.

I have had some great real world advice from this thread and others from who I think are real car wash owners running their own successful businesses. And I appreaciate it.

 

[Jeff_L]

Doesn't sound like it is, or would be a thriving business. Perhaps you just buy it for a real estate investment and get it going enough to cover the expenses (property tax, insurance, etc). How motivated is the seller? Since you have cash, lowball the price, explain what you're going to have to do to get it running. He'll say no, so leave your name and number then walk away. He'll call you back if he's motivated.

 

[area123]

I did lowball. I offered about half what he was asking! He countered with just $1000 more than I offered which was still 40% less than his asking price. Now I'm just doing some research to see if I really want it.

I know it's a long shot and the only reason I'm considering is because of some new economic development a couple miles out of this town that will likely draw a lot of traffic by. And like you said it's so cheap, it might be worth it for the real estate if I can flip it.

 

[rph9168]

A ltr depends on how much effort you are willing to put into it. One of the best life's lessons I learned was from my uncle. He always wanted to get into the car wash business. He bought an old tunnel wash back in the 50's. (It was an old log chain conveyor that I spent some time working at. My first taste of the business when I was in my teens.) He way over paid for it. When he realized what he had done he could have just folded the tent and let it go but he really wanted it to work. He and his wife worked seven day weeks for several years and often 12+ hour days. After a few years the wash ended up being very profitable and he sold it to become a successful detail and car wash supplier. While I am sure there are some on here that will say he should have given it up I learned that if you are willing to work hard to make a wash successful it is possible to make it happen. A lot depends on the site and potential. I know there are some "dogs" out there that even God couldn't save but in many cases if you are willing to work to make it work it can happen. It all depends on your commitment.

 

[Overachiever]

Just keep in mind, since you are dealing with such low sales, your expected ROI could totally be eaten up by some unexpected equipment failures or maintenance. As others have said, the price is so low you don't have much to lose. $13k is a drop in a bucket in the game of life and as long as you don't turn this into a money pit if there is no market for it (ex, spending $200k on a new IBA when you can't get anyone to come there) you should be OK. Some poor guy already took the expensive hit on building this place and is likely in the red. Make sure there aren't any liens on the property.

 

[Randy]

I would probably buy and call it a Hobby. Clean the place up, do a few cosmetic things to increase the curb appeal. I don’t know what you for your day job, but you’ll need to learn as much as you can about the systems that are in place, if you have to call some out to repair the car wash you’re be eating up all profit. There are a lot of good people here on the Forum who are willing to help you if you give them a chance.