Does This Sound Normal To Anyone ???? Feedback desperatly needed !

[critkeeper11]

I am currently in negotiations to buy a wash that i feel is in a great location , with 41,500 adtv , no competition around for a while and relativly slow moving traffic . The wash is a complete turn around play that needs lots of $ and TLC . I have reached a deal with the owner on price but i am trying to pre negotiate a lease with the landlord so i know i would be worry free in that dept for a min of 20 years with options . Anyway the wash only has 7 years left on its current lease thats why i am speaking to the landlord 1st . He says he cannot sign or cut any side deal untill i am the owner . I understand that . We have reached a tentative agreement that we said we would both consider . It involves a new lease of 20 years but not only do i have to pay my rent with 10% increases every 3 years but he wants me to buy the years upfront for an additional fee . He wanted close to $300k just to give me those 20 years . I offered him $100k . Long story short after 1 1/2 hrs on the phone wiith him we reached an agreement to more or less meet in the middle .
Anyway my questions are these :

1) Does this sound normal to anyone charging for years in addition to the rent , never heard of something like that ever ?

2) How can i secure our deal so he sticks to his wword on our terms prior to me signing a lease with him ? I was thinking maybe a promissory note , as i asked an atty about this and waiting for the reply still . My fear is i buy this wash and spend alot of $ then go to sign a lease and now the landlord changes his terms and prices . Cause then im screwed , i own the wash alreayd and i would be at his mercy which i will not let happen . Anyone have any ideas about how i can secure these terms pre & post wash purchase that he would be legally obligated to stick too ? Any information is appreciated here guys . Thank you so much ...

 

[mac]

That does sound odd. Wish I could give you some advice that would help you sort it out. The only real advice I can give is if it doesn't "feel" right, walk away. I suspect that there may be something else going on that you are not aware of. If this wash is in a good, not great-just good, location, it seems someone would have made a go of it.

 

[critkeeper11]

That does sound odd. Wish I could give you some advice that would help you sort it out. The only real advice I can give is if it doesn't "feel" right, walk away. I suspect that there may be something else going on that you are not aware of. If this wash is in a good, not great-just good, location, it seems someone would have made a go of it.

The kicker is that the owner of the wash will not provide any financial data what so ever . I only can view for a month and get an engeneers report on equipment , I am fine with that since its a turn around play and his #s arent relavent to me as i plan on changing evverything . It once was a very successful wash at one time but when it changed hands 13 years ago it has been dramaticlly let go . I know if has all the qualities to be a good wash if cosmeticlly redone and run the right way . Many of people have tried to buy this wash over the past few years when he was asking more than double . But with no financials there were no takers . Now the landlord is asking him for $200k + for a 10 year extension and i dont think the owner has the money nor does he wanna pay it . So now the wash is selling still with no financials and only 7 years on the lease which is why i am trying to strike a deal with the landlord 1st , to secure a good lease . I just never in my life heard of someone having to buy years upfront in addition to the rent . The washs owner is trying to get me to buy the wash at a much higher price saying he can get me the 10 year extension . I need 20 minimum and i can get that much cheaper by going directly to the landlord myself . Which is what i am trying to do . I just need to know how can i lock the landlord into our agrred price before i buy the wash .

 

[robert roman]

Unfortunately, as in all business sectors, there are always some unscrupulous owners, landlords and brokers who take advantage of buyers using what I call the “rope-a-dope” technique.

Here, a NNN property is sold under pretense of opportunity (upside potential) with conditions and terms as well as undiscovered factors that eventually lead to failure and return of business to seller.

The absolutely worst thing a buyer can do when facing these circumstances is to allow their desire (emotion) to get into business subordinate common sense in making a decision.

Since buyers cannot make an intelligent decision based on appearances alone, I always recommend buyers obtain opinion of value from qualified carwash consultant or carwash broker to use as a sanity test before proceeding forward.

 

[Earl Weiss]

The wash purchase contract and the lease should have cross contingencies. Each being contingent on closing the other deal.

I would not under any circumstances give the landlord a huge chunk of $ up front. If he is foreclosed on or goes BK or both you could be SOL.

If he wants to be assured of getting paid arrange to edcrow the money with annual disbursements so long as your tenancy remains undisturbed.

 

[buda]

Robert is absolutely correct in what he is telling you.

Do not allow your emotion to dictate your decision to purchase this wash.

If you are buying or building a car wash, especially if you have to rebuild the the ailing wash then you have to have at least a 20 year lease so you have security for yourself in operating the wash and moreso so that you have something to sell should you decide the car wash business is not for you.

Sounds like you are dealing with a bunch of unscrupulous people.

First the operator who wlll not give you any information. No doubt because he has possibily not declared the proper income from the car wash to the IRS. Which means if he will cheat the IRS, why would he not cheat you.

And the landlord sounds like a man from hell. Sounds like he sees you emotionally involved in the purchase of this wash and is going to wring every possible penny out of you, and is not someone you want to be in business with now or in the future.

Personally, from a businessman's point of view and from my experience in the car wash industry for years, I would walk away from the deal completely and let the car wash owner and the landlord come to you, if they want to be reasonable.

It is bad enough to buy an aililng car wash and take a chance you can bring it back, but to have to go through those kinds of hoops to get a legitimate 20 year lease on the property is far too much to deal with.

There are plenty of good locations around, find one and deal with better people.

Just some well intentioned thoughts.

Regards and Good Luck,

Bud Abraham

 

[rph9168]

Way too many red flags. Run, don't walk away.

 

[Waxman]

No financials?

And you're considering giving him $100k just like that on a wash you've got to pour time and money into?

This is a bad idea for you and you have gotten prudent free advice I strongly suggest you take.

Run from this deal.

 

[critkeeper11]

Thank you so much for all the feed back guys , it is definitly appreciated and making me think even more about this now .

 

[pgrzes]

Run Forest Run!!!

 

[Kevin Reilly]

You have been given EXCELLENT advice from operators who have been in the business a long time. Hopefully you'll get rid of the emotional end of buying a business and look at it realistically and find out you're getting screwed from both parties! (If you allow it!!)

 

[Whale of a Wash]

7yrs left on lease, and wants to sell it for half price.. No financials--One always imagines he has semi's full of cash. Just the opposite- you are at a FIRE sale- The potential buyers of the wash at full price-- should be fighting you for the chance to buy it at half price!!

Here's another idea- not a great idea --just an idea. Can you buy from owner, and continue on current lease for the 7 yrs and with minimal investment make a profit as is. Might be easier on the pocket.

Your idea
Buy wash
Put lots of money into the wash.
Pay more for lease plus the extra $200k
Still not own the land.
Maybe make more than as is- because of the big investments- maybe not
If you end a commercial lease early--you still owe owner money till the end of the contract.
Traffic patterns will change in 20yrs- Up or Down
Guaranteed a summer of road const. in 20yrs--They don't last forever. No$$ for half a yr. I have went thru rd constr on 5 washes-- it hurts.

 

[mmurra]

I think you should stay in the game but back off on your interest. You are a legitimate buyer. There are not many if any others. Do a car count. Do your projections & run the numbers conservatively. Let them come to you. Mark

 

[gsgriffin]

I agree with the other posters on here. Lots and lots of red flags. You could certainly do the deal with contingencies on the lease and on purchasing the buisiness to give yourself outs if either falls through. Also, talk to a real estate broker or real estate attorney in regards to what the landlord is wanting. The very limited business I have done in NY is vastly different than how we do things in Texas, but even so, these items dont sound right.

Maybe lock up an exclusive period to review the car wash operations and equipment, and to negotiate a lease suitable to you, and if either you arent happy with the business numbers, equipment, or the lease agreements that can be met, give yourself a method to walk away.

I have never lost sleep over business I did not get, but I have lost sleep over business I did get, and shouldn't have.

Griffin

 

[dogwasher]

This clown should have some sort of info if not forget it!

 

[robert roman]

Although Upstate New York may be similar to other carwash markets, NYC is a city that doesn’t sleep and there are conveyor facilities that wash cars 24-hours a day.

In places like Queens, Brooklyn, etc. real estate is very dear and most washes are typically sold as NNN properties based on 1:1 ratio. In other words, if gross sales equal $1.0 million, asking price for business-only is $1.0 million.

Of the six NNN washes I have evaluated in NYC, none of the owners presented more than basics like gross sales, rent and, property tax, insurance and indicated cap rate – no profit loss, income tax statements, car counts, etc.

These owners expect buyer to perform due diligence and determine sanity of deal.

In other words, you take the offer or leave it.

 

[Earl Weiss]

I get unsolicited inquiries all the time. I shoot a price at them and they ask for financials. I decline to provide them basicaly telling them it's proprietary. For all I know they want to compete with me. They either need to do their own due diligence based on what they should know about the business, or to heck with them.

 

[mac]

You can get a somewhat idea of his volume by getting as many years of his water bills that are available. If you can compare those gallons to another wash it may give you some insight. I like what the others are saying, go home, kiss the wife, and have a nice drink, and see if they come back to you.