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Advice on buying a car wash.

3 replies created 6 months ago
posted by Wsr2010 6 months ago

Hello all, my name is Adam. This is a GREAT site with lots of info! Id like some advice on buying a car wash in my area. A little background of me. Currently my main income is my trucking company (one truck) but am getting out of trucking the end of the year. Second income is renting apartments, currently have a total of 20 units averaging $11,700 per month. All the properties are under property management so my personal involvement is very little other than phone calls every day. I am currently expanding the business to 50 units within the next 2 yrs.

I have always LOVED car washes, may have something to do with keep my vehicles 100% clean, waxed, etc all the time lol. Anyway, the last 2-3 years I have been looking at car washes in my area. I know the real estate business provides me much better cash on cash returns but I have a hard time keeping all my "marbles in the same basket" come the end of the year when I dissolve the trucking business. My mind tells me to just stick with the real estate (better business returns) but my gut says to diversify with a car wash also. One reason is I will be bored with just the real estate. I would enjoy learning/improving a car wash and give me something to do everyday.

Here are some details on the car wash...
The car wash has 4 self service bays and 1 touch less bay, nice condition lot and buildings. The equipment is 11 years old. It is located in a decent city of approx 100,000 people. This is a lower income city. There are two other car washes in this city. A 6 self service wash (very run down) and a full service tunnel that washes cars for $10 and employees dry at the end of tunnel. The wash I am interested in is in the middle of both of these washes on a major artery of the city. The wash has self service starting at $3 and the touch less is $6, $7 & $8. I believe there are 3 or 4 vacuums as well. The asking price is $450k including the real estate. I drove by the wash today, and it was very busy considering on and off rain showers and a cool day for Pennsylvania.

Regarding the numbers.
2016 Gross $114,000.
Utilities $21,000 (cable, electric, gas, water, trash, security)
Supplies $13,000
Maintenance $6000 ($3000 was installing new doors to the equipment room)
Insurance $6000
Property Taxes $8000

Net $60,000

I am very motivated and would devote time and energy into learning, maintaining and expanding the wash as much as possible if I bought. I would fiance the property with debt service costing about $30k a year leaving me $30k net.

Something I should pursue to or to stick with the real estate? Thoughts/concerns?

Thanks!

Replies

reply by Robert Roman 6 months ago

Industry benchmark or same store sales for a 4 + 1 self-serve wash is $150,000.

So, $114K revenue can be viewed as light and $450K price can be viewed as high.

Gross net $30,000 and $90,000 equity is risk reward 0.3:1.

My thoughts, concerned not.

reply by Wsr2010 6 months ago

Thank you for your reply. Are you saying you are not concerned or you would be with this wash? I take it, the low revenue with higher asking price that you WOULD be concerned?

reply by cwaltpgp 3 months ago

@ Robert Roman, Where did you get your industry benchmark stats. I am planning to buy a SS wash and need more info.
Thanks

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