6 SS Bay for First Investment

[Msaxonii]

Looking at a 6 SS bay, 8 vacuum station car wash across the street from my house. On a 1 acre property with the car wash only taking half of it. Owner said he nets roughly 8k a year, and asking 90k and possibly coming down more for the right purchase.

He said he bought it as his retirement and is now wanting to retire completely. He hasn't done much in the way of updating, but has done the maintenance on the equipment himself. Timed wash is $1.25 and quarters only.

I think that just by adding credit card systems, it would increase the business. Additionally, I have a marketing concept of partnering with local nonprofits to be sponsored by a bay for a period of time, and receive a donation for each wash cycle. If I could tie in some donation system too, perhaps by using a tip process in some way, I would. But I think I saw CryptoPay systems could be retrofitted to existing meters which would give a quick upgrade to capture those sales while assessing other improvements.

I also think I could add outdoor storage on the undeveloped side of the property by putting up a fence and dropping reclaimed asphalt. I think this would also be a boost to get the property to go from black to green.

This would be my first ever investment. I'd be trying to fund through a SBA loan. I'm only 32, and wanted to make an investment this year. I had planned on real estate, but what do you guys think of this situation?

I think that the potential is there, and the current owner just hasn't ran it as a business. No marketing, no credit card or loyalty reward systems.

 

[Rfreeman]

Came to right place for opinions on the subejct....In the interest of time.....$8000 Income/$90,000 purchase price is 8% return on investment.....I'd walk right there. Not worth my time the stock market has proved to return almost that (7%) since its inception. Unless you know something that land location etc is about to blow up or you can get the place for $50K (and you might since he wants out) I would keep looking for a better return on your investment of capital and TIME bc car wash do take the latter.

 

[Waxman]

At $90k I don't see why you'd need SBA help. Net is low, but potential for increase is there; mainly because there's nowhere to go but up!

What is tax assessed value of property? How old is equipment? What is your competition? How about some pictures? Have you toured equipment room? Are you mechanically inclined?

The startup price is very low. Yes, adding credit cards is great and will increase sales.

Forget about your marketing concept; sorry, but you need straight advice not fluff. This business will take alot of effort and money and time to get to a decent profit for you. Don't get sidetracked with philanthropic ideas or side businesses ( storage) just yet.

Do you have 25% to put down on the loan? Do you have any working capital for improvements?

Alot of your marketing can be done cheaply on Google My Business, Facebook, etc.

The important things with making a wash successful are keeping it clean, working properly and updated. Things to add for more income; crypto-pay, air dryers in bays, air machine for tires, soda machine, car wash vending items machine (s), etc.

 

[Dan-Ark]

I bought a 4 bay with automatic in town of 2500. Added cryptopay and credit cards are about 25% of our monthly sales, but mostly in the automatic. We don't sell quarters, only tokens, and almost 60% of our cash intake is still quarters... The cryptopay system has been great. we did lower our authorization amount to the cost of out top wash in the automatic. If I didn't have that I might go even lower. Only complaints I have had is debit card holders who check their balance online 2 or 3 times a day. I have even had negative google reviews posted for overcharges that never even happened. I use count up and have maybe one out of 30 charges where they dont get stopped I have no complaints but have my max charges at 8.75. (I use an odd number so I can see identify them easily. I like that i can log on and see how many credit card transactions so I know how busy and when its time to go collect money... who am I kidding, I go when I can see the trash cans are overflowing on the cameras. If you don'[t have cameras, you will want them.

 

[OurTown]

What is the automatic car wash market like there? In the nearish future you could convert a SS bay for an auto or build another bay. It could get expensive if the utilities are not big enough but it is something to ponder.

 

[I.B. Washincars]

One thing that stands out to me is that it's across the street from his house. Is this wash in a more residential area (marginal location), or does he just happen to live adjacent to a commercial area? More about the location, ideally a street address (totally understand if not disclosed) would be helpful.

 

[Msaxonii]

One thing that stands out to me is that it's across the street from his house. Is this wash in a more residential area (marginal location), or does he just happen to live adjacent to a commercial area? More about the location, ideally a street address (totally understand if not disclosed) would be helpful.

It's on the border of a Main Street strip. 5th Avenue is mostly commercial in a block in each direction. Constitution Ave, across the tracks, is a main road, and the truck route runs by the wash from Horne Blvd to 3rd Ave. The car wash is under the Home label.

Also added a snapshot from Google Streetview.

 

[Msaxonii]

Came to right place for opinions on the subejct....In the interest of time.....$8000 Income/$90,000 purchase price is 8% return on investment.....I'd walk right there. Not worth my time the stock market has proved to return almost that (7%) since its inception. Unless you know something that land location etc is about to blow up or you can get the place for $50K (and you might since he wants out) I would keep looking for a better return on your investment of capital and TIME bc car wash do take the latter.

There's a Pennsylvania Enterprise zone two blocks down to incentivize investment and growth. The area is a recovering Rust Belt town about 45 minutes or less from Pittsburgh. Redevelopment efforts in the area have recently started and have been moving forward, with a new business incubator being led by Penn State and the larger city we're a part of purchasing the industrial park in the area.

 

[Rfreeman]

There's a Pennsylvania Enterprise zone two blocks down to incentivize investment and growth. The area is a recovering Rust Belt town about 45 minutes or less from Pittsburgh. Redevelopment efforts in the area have recently started and have been moving forward, with a new business incubator being led by Penn State and the larger city we're a part of purchasing the industrial park in the area.

Sounds like there is potential and worth looking into and I'm not opposed to buying car washes that are underperforming....both my washes were when I purchased them (1st one out of foreclosure and 2nd location owner just wanted to take the cash and didnt care about the business, property, etc) there are still a lot of factors to consider here and as much info you can share with us the better within reason we understand but as you can see we're all here to help and give our advice

 

[Msaxonii]

At $90k I don't see why you'd need SBA help. Net is low, but potential for increase is there; mainly because there's nowhere to go but up!

What is tax assessed value of property? How old is equipment? What is your competition? How about some pictures? Have you toured equipment room? Are you mechanically inclined?

The startup price is very low. Yes, adding credit cards is great and will increase sales.

Forget about your marketing concept; sorry, but you need straight advice not fluff. This business will take alot of effort and money and time to get to a decent profit for you. Don't get sidetracked with philanthropic ideas or side businesses ( storage) just yet.

Do you have 25% to put down on the loan? Do you have any working capital for improvements?

Alot of your marketing can be done cheaply on Google My Business, Facebook, etc.

The important things with making a wash successful are keeping it clean, working properly and updated. Things to add for more income; crypto-pay, air dryers in bays, air machine for tires, soda machine, car wash vending items machine (s), etc.

Tax assessed is 46k, but aren't reliable because we use a base year system and haven't had a county reassessment since the 80s. Property taxes are currently 6200, and probably going to around 7k. School board failed to raise taxes for about a decade and new school board made a request for a larger than normal increase to make up for it.

My understanding is that the owner is a retired steel worker who is of the mindset that maintained equipment is better than new equipment. I understand the risk with this and equipment would need to be updated and PM would be a priority until that is done. He also has stated that he himself doesn't see value in the wash and is selling as an acre of commercial property with a car wash instead of a car wash with an additional half acre available for expansion or alternative growth.

I grew up with my dad working a variety of trades and being able to tinker with about anything. I do think I inherited some mechanical ability and am able to work through most processes with a guide.

I'll be honest and say I don't have savings. I'm still getting established in life, but I was able to get a mortgage two years ago with less than a thousand out of pocket thanks to the VA loan. Part of my reason for going the SBA route is due to that, and my understanding is that the SBA Veterans programs work similar to the VA Home loan, going up to 150k without requiring a funding fee. Going through SBA also provides business training, real estate acquisitions can be done on a 25 year term, and I was considering the ability to roll in some upgrade costs into the loan in some way.

SBA process also requires me to develop a business plan. If I get denied, probably due to a lack of history and experience, I think it still shows the owner that I'm committed to the process and I could potentially offer a seller financing option, allowing me to make value add improvements to build my own history and revive the wash until I could get financing to finish buying him out.

I thought the nearest competition was another wash at a more commercial intersection, but after looking at Google Reviews, they're a 3.5 star out of 5 with a number of complaints about being out of soap, and appears that they drive more business towards their oil change bay with a free wash with oil change deal.

The other competition is up the hill 5 - 10 minutes away, but it's a conveyor tunnel wash with a attendant hand dry, so is that even considered competition for a SS? There are a couple gas stations with automated washes, and while I think they would be competition, I also think their distance would be a reduced impact.

I myself have been in hospital housekeeping since 2012 and a supervisor for about 3 years. I'm familiar with dealing with chemicals, machine maintenance, cleaning processes, calculating usable yield from concentrate. I think I'm on track to gross just shy of 60k this year, and know I'll be investing in the next couple years as my situation continues to improve. I just figure if I can take a risk on getting started now, why not?

 

[Msaxonii]

What is the automatic car wash market like there? In the nearish future you could convert a SS bay for an auto or build another bay. It could get expensive if the utilities are not big enough but it is something to ponder.

I would have to get out my tape measure, but I'm afraid that for me to do an automatic, I would have to add a bay because the existing ones may be too narrow. I paced them out and think they're around 12" wide.

Edit-- Scratch that. I just measured them out at 14 ft 4 inches so there should be room width wise for an IBA.

I'm not sure about feasibility for the area, but my boss has a motorcycle club that meets a few blocks away. I saw the Motowash system and considering the possibility of reworking the two bay side to a Motowash and IBA without needing to expand the current footprint.

 

[Msaxonii]

This is the bay equipment and vending in use. Not sure if it helps with dating the rest of the bay equipment.

And as I corrected myself, the bay width is 14' 3" wall to wall so there is possibility for IBA upgrade I believe.

 

[Randy]

I’d make a realistic offer on the property, $50K isn’t realistic. I don’t think $90K is a bad price. Given the depressed location you’re not going to set the car world on fire. If you do buy this car wash the first thing you need to do is raise the prices, my god $1.25! We were at that price point 25 years ago. How much are the vacuums? Don’t pay attention to Google or Yelp reviews, they are all bull$hit. Just think of it as a hobby that you have to go to everyday. With the pictures you posted I can see thousands of dollars in upgrades needed.

 

[Rfreeman]

I’d make a realistic offer on the property, $50K isn’t realistic. I don’t think $90K is a bad price.

You never know until you ask.....little downside risk.....owner could get offended by a "low ball" offer but that can be mitigated....and in the end isnt that what investing is about mitigating risk while maximizing upside potential?

First wash I purchased cost $795,000 to build in 2002....sold for $995,000 then got foreclosed.....bank started asking price $1.2 million...my first offer $500K (cash)...laughed me out of his office. 9 months later asking price was eventually reduced to $750,000 offered $250K again laughed me out...this happed 3 more times.....when I purchased it asking price was $225,000 and you better believe I low balled them with a cash offer and told the bank this is my last offer....closed 3 days later.

Just saying you never know until you ask

PS Msaxonii I was 32 yrs old too when I did this and started in this business......good luck!

 

[Msaxonii]

You never know until you ask.....little downside risk.....owner could get offended by a "low ball" offer but that can be mitigated....and in the end isnt that what investing is about mitigating risk while maximizing upside potential?

First wash I purchased cost $795,000 to build in 2002....sold for $995,000 then got foreclosed.....bank started asking price $1.2 million...my first offer $500K (cash)...laughed me out of his office. 9 months later asking price was eventually reduced to $750,000 offered $250K again laughed me out...this happed 3 more times.....when I purchased it asking price was $225,000 and you better believe I low balled them with a cash offer and told the bank this is my last offer....closed 3 days later.

Just saying you never know until you ask

PS Msaxonii I was 32 yrs old too when I did this and started in this business......good luck!

I'm a strong believer in the concept that the only value that anything has is what's agreed upon between the buyer and the seller. I have a family friend that grew up with my dad and came from nothing. He does property investment, flips, and has a house in Miami on a canal. One of his first properties he got he paid 15k for when it was pushing six figures in land value alone. He found a FSBO laying in the bushes, and the gentleman who owned it just wanted the 15k he had paid for the property 20 years prior, and was solid on his refusal to consider inflation or appreciation.

I know it's been mismanaged as a business. I think ideally I could give the owner an exit plan with a land contract amortized over 25 years, with either fixed costs or percentage share, which would give me control of the property, build a business history, and allow me focus on improving the business revenue to qualify for more conventional financing.

And the vacuums are priced at 75 cents...

 

[Randy]

You never know until you ask.....little downside risk.....owner could get offended by a "low ball" offer but that can be mitigated....and in the end isnt that what investing is about mitigating risk while maximizing upside potential?

First wash I purchased cost $795,000 to build in 2002....sold for $995,000 then got foreclosed.....bank started asking price $1.2 million...my first offer $500K (cash)...laughed me out of his office. 9 months later asking price was eventually reduced to $750,000 offered $250K again laughed me out...this happed 3 more times.....when I purchased it asking price was $225,000 and you better believe I low balled them with a cash offer and told the bank this is my last offer....closed 3 days later.

Just saying you never know until you ask

PS Msaxonii I was 32 yrs old too when I did this and started in this business......good luck!

That might all well and good in the Dallas/Ft. Worth area where car washes were over built by unscrupulous car wash distributors. When the economy tanked here in the PWN there weren’t very many car washes that were foreclosed on. The banks were pretty smart and had a trusty of the bank run the car wash washes until the economy improved to the point that they could sell the car wash as a profitable operating car wash. The 2 that I worked with got a percentage of the profits so the harder they worked the car wash the more they made. Both of them said that running a car wash was a no brainier, just a lot of hard physical work. They were both retired, one of them ran a restaurant/hotel in Nome Alaska for the bank prior to running a car wash and the other one was the CEO of a boat building company. They’d go to different areas and run these businesses that the bank had foreclosed on instead of closing the business totally. Both of them didn’t have a clue about how to run a car wash, but they asked a lot of smart questions.

 

[Randy]

[QUOTE
And the vacuums are priced at 75 cents...
[/QUOTE]
WOW!! .75 I'm in a rural area and we charge $1.75 for 3.5 minutes. I don't understand why operators don't raise there prices. Every time I've raised my prices I've never gotten a complaint and business and revenue have increased.

 

[soonermajic]

[QUOTE
And the vacuums are priced at 75 cents...

WOW!! .75 I'm in a rural area and we charge $1.75 for 3.5 minutes. I don't understand why operators don't raise there prices. Every time I've raised my prices I've never gotten a complaint and business and revenue have increased.
[/QUOTE]
$hit Randy, as you know I @ .75 for vacs & $1.25 for SS startup for 4 minutes! Thatbis AFTER RAISING prices last yr. & Im making a nice profit & make an xtra principle payment every mo. But you are correct, those are LOW prices,& I am going up again on March 1st.
Mussolini,
Lots of times when we ask for advice, we don't want advice...we want people to agree w/ us, for validation. This looks like a biz w/ very limited potential.

 

[Msaxonii]

I think I saw on public records somewhere that this facility was built in the early 90s. Based on the pictures, would you say that the equipment hasn't been updated since and is at the end of its life, or worse, on borrowed time?

Manni Wash Systems at least still has an active website, though it's as dated as the wash itself, but I do think I'll pay them a visit this week to see what they know about the installation and guesstimates on updating.

 

[Kramerwv]

If you can get sba to loan additional improvement money AND buy for less than the ask price, you can probably make it work. However, if you can’t get the place to pay for itself faster than the 25 years you’ve contemplated then move on. Don’t short yourself when it comes to valuing your own time. I’ve seen that advice many times on this forum and it’s very true because you will spend a lot of time learning.