Bank repo

[MudMoney]

My bank has asked if I would consider assisting them in keeping a 4 bay going while they try to sell it.The owner has had it on the market 2 years and business is pretty much gone.Owner has done no repairs last 2 years to speak of,won't even pull the weeds.Lot of repairs needed,RO unit,softener leaks,bubble brush unit ,pumps need rebuilding,pole sign taken down for non-payment,etc.These 2 bank officers have farming background so their not afraid to get dirty if need be.This wash can't be open in the winter due to no floor heat. It's located 1 mile from my wash and its slow demise has boosted my numbers 13.5% and 25.8 % the last 2 years.They would like to see a proposal from me fixing it up and running it till its sold. I feel I 'm in a catch 22 on this as I have a good business relationship with them. I have no interest in owning it as I feel it needs a total overhaul which I figure the business won't come back anyway. Any thoughts from other owners on options to this situation.

 

[washnvac]

I would think you may analyze what it would take to get it back up versus demolishing the building, and let them sit on the dirt. Trying to fix it back up may be putting good money after bad. With no floor heat in Montana, I would think you would loose the potential busiest months.

There is two 4-bay car washes in my area (2 iba/2s-s) that the owner owes that bank $1.2M on one, and $1.5M on the other. Condition is pretty bad on both. There is no way that would be worth fixing, because that amount of money can never be repaid on a 4-bay.

Just thinking out loud here.

 

[Waxman]

Let it go

Why is there no floor heat? Out of order or non-existent?

I'd let it close. If it had more potential I may say get involved, but it sounds pretty poor by your description, so what is your up-side to helping out besides earning some temporary money for what sounds like alot of work and an uphill push?

I say let the place die.

As far as the bank and maintaining a good relationship, simply explain that with all the hard work it takes to run a good and profitable wash, you have no extra time to bring back a poorly-performing wash while running your own busy location.

 

[Randy]

About 2 years ago I was approached with the same situation. Only difference was the car wash was 110 miles round trip from my place. They wanted me to go down see what it would take to open it back up, make a list of the things that would be required to get it opened back up. I told the bank what my hourly rate was and they agreed that it would fair. When I got there I had a wait for over an hour for the guy who had the keys to show up. When I got into the equipment room it was OMG!!! The place was a disaster. The place needed about $15K in repairs. I sent the bank a nice grocery list of what was needed along with my bill for 6 hours of my time. About a week later I get a phone call from the bank manager and he is hot. He thinks he was overcharged on the service call. He thinks that he should only be charged for the time I was actually there. It doesn’t work that way. I told him the best time they could do is sell the car wash at auction. It sat there until about 18 months and some poor fool bought it, thinking he was getting a deal on getting into the car wash business. During the 18 months it sat there someone broke and completely stripped the place clean of everything that was of any value, motors, pumps, wire and pipe etc. Today it’s gone and the land is for sale. He did get a pretty good deal on the land.
I wouldn't get involved. I'd let it die a slow death. It can only help your business.

 

[Whale of a Wash]

If you do anything-- have a signed contract with the bank. Remember banks are extremely cheap and will use you to hurt your business, so get some real money from them as they are trying to make it look good to sell it. Basically the same thing that randy experienced- you will also from the bank. I heard of someone that helped on the same scenario, got accused of overbilling, stealing parts, and cheating them. Proceed with caution!

 

[Buzzie8]

If I am reading that right, they want to pay you to get a future competitor up to snuff so they can reduce your numbers again for years to come. Doesn't make sense at all to me. I had a similar situation when I won an auction for a wash that became bank owned about a mile down the road from me. One of the better business decisions I ever made was keeping someone else out of my hair. The guy I beat in the bidding war was a known good operator and would have been a fierce competitor.

 

[Washmee]

The only way I would put that much effort into rehabbing a wash would be if I owned it. Tell the bank you will take it off their hands for a really low price and see what happens. Make an offer for what the dirt is worth. Otherwise, forget it.

 

[PaulLovesJamie]

Why on earth would you consider fixing up your competitor so that a bankster can make money?

 

[Greg Pack]

The guys are right. I don't care if the banker you are dealing with was the best man at your wedding, he is not thinking of your best interest.

Three years ago I ran a wash package for a bank. The contract was for three years but had an exit clause that allowed them to can me. They were interested in one thing only, the P&L and whether the number was positive or negative at the bottom. I busted my tail repairing, painting. pressure washing, etc. in an effort to get the businesses back presentable so the customers would come back. I figured it would take another year but the numbers should come up. One day after six months of hard work I got a call that they were cancelling the contract. They brought in a family member of a bank officer, a real estate guy that didn't own a wrench, to run it. He lived three hours away. Most of you guys know what happened next. They quickly resumed their downhill slide, and the bank still owns those properties today . In all fairness to them I did get a golden parachute of sorts and made money on the deal, but I still felt used. It was as they say a "learning experience"

Anyway, if you proceed, make sure it is worth it regardless of the outcome.

 

[madscientist]

Why on earth would you consider fixing up your competitor so that a bankster can make money?

This should be your simple response to your bank.

 

[rph9168]

There is a good reason why people don't trust banks. They can't be trusted! Don't help them out of their mess. If the situation is as you describe either no one will buy it or someone who knows little or nothing about car washing will and it will fail again.

 

[sprocket]

Swampdonkey
My bank approched me about 2 years ago about buying a wash they repoed. The price was probably fair but being dumb azz I thought no way some one will buy this thing and do anything with it. Man was I wrong! A man with a lot of money bought it dumped a lot of money in it and it has been just one more thorne in my side. I wish I would have bought it and knocked it down and sold the property. Now its there and he is ready to sell but he wants to make money on it because he isn't making it at the wash. I screwed up. I should have bought it.

 

[MudMoney]

Lots of thoughtful insight on this subject and I will take to heart the feedback.I'm leaning towards giving them 3 parts catalogs and saying too busy.Anybody else want to comment with what they would do ?

 

[Earl Weiss]

How about this. They pay you a professional management fee, plus they pay all repair expenses. Figure out what your time and expertise is worth. They also give you both an option to buy at a set price you like and a right of first refusal. If you trun it into a winner, exercise your option. If they try to sell it for less and you think you can make $ exercise the right of first refusal.

 

[JMMUSTANG]

I agree with Earl.

 

[rph9168]

If you think you might want to own it I think Earl's suggestion would be okay. I would either include the cost of floor heat and anything else needed for cold weather operation or lower the value of the wash when coming up with a figure to include the loss of business during the months you cannot operate it. Finally I would get the agreement in writing and have a lawyer go over it to make sure it is enforceable.

In my opinion based on what you have said I would go back to the bank and tell them all the problems with the wash and let them know it is only worth the value of the land or even less because it needs to be knocked down and the site cleaned up. If it is that close to your wash I would think it would be best to have it knocked down rather than spend time fixing it up even if you are compensated for it and have it potentially go to someone who might compete for your customers.

 

[mjwalsh]

Any thoughts from other owners on options to this situation.

Swampdonkey,

If you are in eastern Montana where there is new development because of the oil field frenzy ... that could be a factor in deciding that the additional car wash would add to potentially needed capacity at your existing place.

mike in neighboring north dakota

 

[MudMoney]

MJwalsh
I'm 300 miles east and lots of old gas fields,lots of talk here so far.I've been here 36 years never seen a boom yet also in 1976 there was 12,5oo residents now its 9400,not to say it won't happen just will be too old to take advantage of it.
Earl weiss
I like that idea and will do the numbers.Thanks to all that contributed !