Another newbie in TX question...

[Rfreeman]

I thought the same. Looks to be legit.

26% expense ratio is very sketchy....I've never seen one that low at the washes I've seen in the DFW area. Norm around here is 35 to 45% expenses

 

[Vince]

26% expense ratio is very sketchy....I've never seen one that low at the washes I've seen in the DFW area. Norm around here is 35 to 45% expenses

Thanks. It seemed really low to me as well. I'll really drill down on that.

 

[soonermajic]

Yep, NO WAY someone makes 75% net. NO WAY.
Id wanna buy 5x gross or LESS. If morez there's no meat left on the bone. Im prolly the least mechanically inclined guy on here. Jumped in my 1st (& bad wash 8 yrs ago), & owner did a doozie on me. Finally sold 3 yrs ago, but had bought 2 more. Got up to 4, now own 2 REAL good washes.
Im in Okla & would be skeptical of ANY wash in this State claiming $460k on 9 SS & 1IBA. You gotta be somewhere in US where they're charging $18 top pkg on IBA & $4 SS start up. Okla avg top pkg is $12 & $2 SS Startup.

 

[Vince]

Yep, NO WAY someone makes 75% net. NO WAY.
Id wanna buy 5x gross or LESS. If morez there's no meat left on the bone. Im prolly the least mechanically inclined guy on here. Jumped in my 1st (& bad wash 8 yrs ago), & owner did a doozie on me. Finally sold 3 yrs ago, but had bought 2 more. Got up to 4, now own 2 REAL good washes.
Im in Okla & would be skeptical of ANY wash in this State claiming $460k on 9 SS & 1IBA. You gotta be somewhere in US where they're charging $18 top pkg on IBA & $4 SS start up. Okla avg top pkg is $12 & $2 SS Startup.

Thanks. I agree. I got skeptical when the agent told me twice that he sold a similar car wash down the street for 3 million. I checked and it was only 2.6 million. Still not bad but it concerned me that he thought I was too stupid to look it up. At that point, I had to wonder what else he was exaggerating since the Car Wash business has a reputation for creative Income Statements.

Once I started drilling down on the Broker and asking him for references of some other buyers that he said this same guy sold to (and said they all loved the guy), I noticed a distinct change in his attitude. I was surprised as I really liked the Seller and thought he was a straight up guy. No idea why they would hesitate to provide those references if what he was telling me was true and his reputation was really that good. I put another call into the Broker but he didn't call back. I walked on the deal. Something was fishy.

His loss. I was a cash buyer.

 

[Roz]

Roz:

I found another one for sale in Oklahoma in an area that I know very well. Looks legit but not cheap per se. It has 9 SS bays and 1 Touch Free Automatic. The Gross Income is $461,000. That sounds very high to me for only 10 bays. I'm just bouncing this off of you for a back of the envelope opinion. Does that sound possible or reasonable to you?

You cannot make assumptions. I recently reviewed two 10 bay locations (each) that were 8/2 layout. Each location had documented GR of $1.2M, and I know a few other owners in the same GR range who have even fewer bays. Comes down to location, demographics, and what type of operation the owner runs as it does not grow to that level without focused/consistent effort.

 

[Vince]

You cannot make assumptions. I recently reviewed two 10 bay locations (each) that were 8/2 layout. Each location had documented GR of $1.2M, and I know a few other owners in the same GR range who have even fewer bays. Comes down to location, demographics, and what type of operation the owner runs as it does not grow to that level without focused/consistent effort.

My gut feel was that his numbers were accurate but I'm a newbie to THIS business and had nothing to compare it to. Was simply doing normal pre-DD to verify their past history and get a read on their credibility since the owner had several car washes. That's when the Broker got a bit squirrely on me acting almost insulted I would question him and ask for references. That's when all the red flags really went up. Next.