Land Costs

Guys,
I am new to the industry, I have done research on a flex operation for almost three years, being real cautious due to the large amount of money to get in, I was wondering If anybody could share some of their land costs? I am looking at a site on the southside of Atlanta with a 30k traffic count at the bottom of an Interstate off-ramp. The site has an asking price of 1.25 million and I am a little apprehensive about the numbers working. Any thoughts????

I forgot to mention that the area is on the forefront of development. New Wal-mart coming, High growth county..

Bottom of an off-ramp does not sound good. You want local traffic, not commuter traffic.

$1.25M for a site only 30K vehicles sounds a little high, even as I'm used to CA prices. How much land does this include?

axxlrod,

The site is about 1.78 acres, the set backs don't allow for me to build more than just the wash. I have been told that ideally you would like to have an acre. The site is at the bottom of the off-ramp which would lend yourself to believe that the commuter traffic would be high. The town has most destination places within 1 mile of the area so the local trffic would be high in the area as well. I also have been told numerous times that the ideal site is on the return home for most folks rather than the way out. How much weight do you lean toward that?

Thanks for all your help on this guys, I am sure you all know of the sleepness nights associated with starting an operation like this..

Is there gold in that land ? haha
I would be sick to my stomach if I thought about getting a piece of property that costly. Ive aquired a 155FT X 250FT for 100k. At the stop light, with a car count well over 40,000. Population in the city is about 3/4 of a million. Maybe im just cheap but 1.25 million ? Yikes..

What City?

Baton Rouge which is a semi large city for the south. I have also been looking at 3 more locations although not located in Baton Rouge. This new wash would nearly be the max conveyors I think should be in Baton Rouge.

I don't know where all you guy's are from, but where i'm from you can pay 1.25 million for a good site especially if it's almost 2 acres. I'm not saying that it's a good site, there's alot of other factor's, but those type's of site are at every corner in the northeast. Fiberton as far as you saying your paying 100K for a lot at an intersection with 40K, i actually find that hard to believe even in Baton Rouge. I speak with carwash people out there and that's a very light number. I would say if you can be at a set of light's with 40K a day for 100K i would build, just sounds a little shady to me.

Well it comes down to negotiation techniques. When negotiating I devalue their property for various reasons. Paul Bourgeois ( really smart guy )at Benny`s who is helping us build this wash said the same thing as in saying they would have paid much more for the property. The property is worth between 350-400kish. The kicker is that it has concrete on nearly the whole lot. It is Flat and to our amazement nearly no cracks. I will have to concrete a 45FT x 155FT area at the rear. It use to be a parking lot that has not been used for more than 20 years. It was hidden behind some brush that grew up in front of it. When I negotiated I was like this " I have to tear up all parking blocks and remove all the concrete. I will have to remove all the brush and chop down all the trees that have been growing in that 45FT by 155FT area as well. I will have to get this whole lot re-shot for a new plat because the city says its 155 x 260 and you say its 155 x 250. I will have to put concrete on the whole lot. Now sir I will already be in this thing for 200+k before I even place a building on it. " So I told him 100K would be my offer and he sat there for a minute putting all the numbers together in his head as I sat quietly saying nothing. When negotiating just sit and wait him out. Most people cave in on a deal when they are bedazzled with " improvements " you will need to do.

Value is always negotiable. Making a deal is not about being fair. Making a deal is about getting the best deal for yourself. You can bet they are trying to get the best deal for themselves as well. I never pay retail :)

That's just good typical negotiations, but i will tell you this it wouldn't work in my market. I just worked not to long ago on a polluted site that was 2 acre's the owner wanted 800K. My cost to clean the floating oil field lol was 400K so we offered 350K a little room for cushion he laughed. We then went up to 450K he still laughed, so after that we walked. We waited 15 month's for him to cave in it never happened. I drove by the site the other day there's a brand new Pep Boys being built on it. I called the owner i said you cleaned it huh, he said hell no, Pep Boys said if build the building they will lease it from me the site is beautiful. Basically he's using his own money not the bank's so the site doesn't have to be clean. The point of this long winded post is if the site is as good as you make it sound you got lucky at 100K.

It all depends on your market. The piece of land the original poster asked about costs $16 per square foot. Which wouldn't scare me at all. Here in my area of CA, I paid $43 per sq. ft. for the land I'm about to build on, and I've looked at several other pieces recently where prices were from $65 - $90 per sq. ft. I lost out on them because they were snatched up by other developers to build shopping centers and/or other commercial buildings. You guys buying land for a couple hundred grand don't know how good you have it.

Here that would have been an easy fix. An anonymous call to the local city government saying you were walking around and seen dead animals a while back and wondered why so many were dieing around there. Sneaky yes, but here they would have had someone go out and find all that hazardous material problems over there. I am sure they would have forced him to do the clean up because of the local health hazard. He would have called you real quick :) Sometimes people just need a little motivation.

Three good things come out of it. The environmental impact by that waste is cleaned up, you get the property you want and the owner gets a piece of the action for selling it. Everyone is happy.

Maybe it is a state to state thing, but we just fell out of contract on a piece of property due to it being polluted. Here in Colorado it is the sellers responsibility for all cleanup even if the pollution is discovered after the sale.

As for the 1.25M for 1.75Acre in a new development center, with only 30K traffic. Well if it is anything like our 1.3M 1Acre site with 32K traffic... I would take it. We ended up doing over 240k@8+ per car despite every ones doubts, including ours.

As I have been told by my Father "you only pay one time for a good site"

Well Fiberton it doesn't work like that up here. This parcel was already registered with our DEP. If you savy you can keep it poluted for a long time in Boston. What you have to do every year is pay the state a penalty, or show every year you our making progress. This guy has certain part's of the site vented and it's been like that for year's. The state come's once a year and say's it's getting better and this guy's hasn't pulled out a lick of dirt and brought in fresh product. We tried your suggestion the state really wasn't concerened. That is a state to state issue M2 when we tried to buy the land we were going to be taking all responsability for the enviromental issue's but we had to sign some state paperwork. 240K @8+ per car all i can say is great work that's a hell of a wash keep up the good work.

I can only thank a gentleman by the name of Bob for seeing the potential and having the tenacity while pursuing that site. I was just very fortunate to be able to be a part of it at the right time. After building three washes with him I still do not know exactly what the magic numbers are for a site to work. Yet I am learning from watching others that you do get what you pay for when buying real estate. I just payed $750k for an acre and happy to say it is a B- at best.

GatorHodges, while being close to an on-ramp do you still have access from both sides of the main road? What kind of visibility will you have after all of the setbacks/landscaping?

I will still have great visibility from the ramp and surface street. This is a bedroom communtiy to Atlanta so the traffic on the off ramp would probably 60% locals on the way home after leaving Atlanta. This land amount is scary still though. I know when ground is broken on this wal-mart the price will probably go up another 200k. It will be around 1/4 mile away. I just can't seem to do enough due diligence to confirm my thought that this is a good sight. Almost feels like you have to roll the dice...

As anybody else tried that risky approach?

Everyday in this business is a gamble. I get no thrill from gambling at Vegas(etc) because of the hundreds of thousands I've risked over the years.

You're gambling on a new site, a contractor, could be a high investment rehab, a well paid manager, on the equipment you've bought and on the weather everyday. Hard work and diligence is the best remedy for reducing risk.

I wouldn't be as concerned about the price(or traffic count) as much as the level of visibility the site will have to the traffic flow. Believe it or not, land is just as expensive in the panhandle of FL. ($1million/acre for #1 sites)

Pull the trigger...roll the dice...step up to the plate....

Too much $$$ for this site in my humble opinion.

I'm curious to know, who is doing well at an off ramp site. I managed one once and it was no home-run. less than a block from a Target, across the street from the largest mall in the area, home bound if you will, Of course it may have been the management.lol I've just always been discouraged from these types of sites due to one-way traffic and speed of access. Flying off the highway to a scretching halt. Believe it or not the Christmas Holidays were not near as produtive for us as other area washes due to the traffic jams caused by people going to the mall. That corner in Baton Rouge sounds great.