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wanting to buy a carwash

6 replies created over 2 years ago
posted by Glenrc88 over 2 years ago

Hello my name is Glen Cunningham i am 28 and looking to buy a carwash business in my town. I am new to this form I know there are several posts just like this just looking to get some expert advice from people who know more than I do on the subject.

The wash I am looking to buy is actually 3 seperate locations they are all 3ss bays and 1 touchless auto water wizzard 2.0. Theyall have 6 vacuums, several vending machines,

It is located in ks about 45 min sw of topeka The population is about 24,000 and all 3 are in good locations property value for all 3 locations is about 450,000 combined

My question is how much would be a reasonable offer and what would you expect the proffit to be net and gross I know it's impossible to get an exact number just looking for the average

I can get more information if I missed anything let me know looking forward to hearing your advice thank you very much.

Replies

reply by crown over 2 years ago

Hi Glen,
My initial reaction to your post is "wow". I say that because it would worry me that all three locations are being sold at one time. A $450K price seems really low for all three especially after you consider land costs for a reasonable location, cost of equipment, etc. I think you need to investigate more thoroughly the reason for selling. I would enlist the help of Robert Roman - no question. I would also have someone very knowledgable about car wash equipment look at everything to evaluate condition.. Lastly, it is no easy task to jump into a car wash with no experience and make money right out of the chute. Owning and operating a car wash takes a lot of work, technical savvy and business acumen. Contrary to opinion, money does not just roll in, but it can surely roll out. Hire someone like Roman to help you with this or to at least give you some comfort or maybe some discomfort. Hire someone with a solid background in washing to look over your shoulder - it will be money well spent.
Good luck

reply by Glenrc88 over 2 years ago

The property value of all 3 locations is 450k, they are not up for sale now but he has said he is willing to sell them but only if they all 3 go together sorry I did not specifu, I will definitely hire somebody to show me how to run and maintain thank you for you help I appreciate it

reply by crown over 2 years ago

Glen,
A few more comments. In any venture, it depends also on how much skin you in it yourself. Too often, buyers over leverage - they put the minimum down and will try to skate through. One of the major reasons for small business failure is lack of adequate funding or they under they are undercapitalized. It is of great benefit if you have technical expertise in how to diagnose and repair - mostly plumbing, minor electrical items. Calling a service person too often costs $'s, not to mention downtime and customer dissatisfaction if something does not work. Normally, a lot of hands on is needed for several months. If you have some technical savvy then that's good.

reply by Glenrc88 over 2 years ago

That is one of my main concerns is funding I have about 100k I can put in but idk if it will be enough it depends on how much the business is worth. I am thinking 900k or around there for the price of the washes but that is just a guess I would have to have an expert come and appraise everything like u said. Do you think that would be high or low. I feel I would be able to do most of the maintenance myself I have worked on things my whole life cars, motorcycles, and I build hydraulic and pneumatic clamps as a machinist. Thank you

reply by crown over 2 years ago

Glen,
I've not see the properties, nor his "reported sales", know nothing about his traffic count, how the property looks - is it inviting, need to know about his quality of wash. What I am also indicating is that I am not the person to evaluate the wash from those perspectives. I will tell you, that you are rather lean with $100K to purchase a nearly $1M venture. A little bit of street smarts here will help. You know of course you are purchasing a cash business and some may not accurately portray what a business really does. Be wary, alert and skeptical. Consider, if you are intending to eventually buy to buy on contingency. Maybe lease for 1st year or 2 to verify it does the business with option to buy, you can see how the equipment runs, etc. Don't put yourself too far into a hole where you can't reach the rim to crawl out. Personally, if I were to purchase a $1M deal I would not consider unless I have 25% down and at least 50K available right from the start in unborrowed cash for working capital and to sustain the wash for awhile - repairs, advertising, etc. or other unforeseen items.

reply by Robert Roman over 2 years ago

Some of the reasons given for investing in commercial real estate are diversification, greater transparency and greater returns.

For example, according to NATEIT, Index Series (All REITs), the average annual return on real estate investments from 2001 through 2016 was 10.75 percent.

S&P 500 annual average return for the same period was only 5 percent.

There is $100,000 available to invest and the desired investment is carwash.

Generally speaking, $100K equity can support $400,000 in capital investment.

However, $400,000 doesn’t buy very much in the way of value in the carwash industry.

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