Buying car wash - need advice on confirmatory diligence

[Roz]

I read somewhere that SS average income per bay is $1500/month. That being said I have no idea how they came up with that number as there are way too many variables to be able to say that the number is reliable.

I know many owners who are lower than that number and a few that are higher. I think if you build a good experience for the customer your business will do fine.

tax returns as mentioned many times here are the only reliable numbers.

 

[Greg Pack]

The GIM multiplier works for me as a quick sanity check. But it is more complex than that. In my mind higher grossing washes are worth a higher multiple up to a point. Id rather pay 1,000,000 for a wash grossing 250K than I would pay 180K for a wash grossing 60K. Alternately, when the GIM number greatly exceeds cost of new construction it gets worrisome for me.

I also won't pay a premium based on a wink and a second set of books. I got screwed pretty badly by a person I thought I could trust many years ago-lesson learned.

 

[CashFlow]

@Joswhaha


Hello. Is that 3 - 5x of gross for the business alone or for the real estate as well? I assume it's just for the business? Thanks in advance.

 

[Roz]

@Joswhaha


Hello. Is that 3 - 5x of gross for the business alone or for the real estate as well? I assume it's just for the business? Thanks in advance.

That’s for real estate and business.

 

[CashFlow]

@Joswhaha Thank you. Is there a rule of thumb for only the business?

 

[Roz]

@Joswhaha Thank you. Is there a rule of thumb for only the business?

2-3x earnings or owners free cash flow. Number can vary based on the equipment however be careful as few people ever purchase a carwash without the real estate. You cannot easily take equipment with you and it will be hard to sell the business in the future. Equipment has a limited or defined life expectancy too.

I suppose the only exception may be a location with a long term lease and options to renew. Get a good contract attorney if you plan to purchase just a car wash biz without the real estate.

 

[Randy]

Up here in the PNW the 3 or 5x gross multiplier is out the window. I know of 2 car washes that just sold for 8x gross and they are both in need a lot of TLC.

 

[traveler17]

Up here in the PNW the 3 or 5x gross multiplier is out the window. I know of 2 car washes that just sold for 8x gross and they are both in need a lot of TLC.

Send’em my way way Randy. 8x my gross I’m out

 

[Roz]

The cost of everything in the PNW is out of control and reality. Nice area for the outdoors but prices have escalated as people leave Northern CA.

 

[Randy]

Send’em my way way Randy. 8x my gross I’m out

Most of them are no longer car washes. A friend of mine is under contract to sell his broken down ratty 6 bay for $850,000 to be used as a used car lot.

 

[jubalr]

Regarding the 'books', taxes and winks & nods for the income of a business, I assume the issue pertains only to the SS business? For IBAs Don't most teller machines give income reports? I can input a time frame and it will show me car counts, cash, credit, etc..