First wash due diligence questions.

[Slickside65crew]

I'm looking to get my first wash. I'm trying to figure out if the seller is just out of his mind or if it's a good deal. I'll run threw the details.

Town population 18,700
Average cars passing by 10,600 a day
It's on a corner of two streets.
4 SS bays 1 truck SS bay
All newly renovated. New vaccums
Newly paved lot 3 ways to access.
Land value 180k according to property shark
Asset value 100k according to property shark

Here's the kicker he wants 545k for the place and hasn't even opened it since renovations. He looks to have bought it in 2020 for 235k as run down and assuming he's just trying to flip it. So there are no fincials. There is a tunnel wash about .5 mile from it and very old looking and then about 2 miles away is another SS who I spoke to the Owner and he was valuing his place at 1.5 million. He was very upkept and alittle better part of town. Bigger homes etc.

My question is it out of line to offer him in the high 300s range? Thinking each bay does $800/1000 a month.. that's the only thing that seems to make sense... is this guy just looking for a sucker?

Side note how much does it cost to put a auto in one of the SS bays? I been reading anywhere from 60k to 300k

 

[traveler17]

It’s not out of line to offer anybody any amount. He can always say no. IMO he HAS to have financials to back his asking otherwise your not buying a business. Your buying land and a building you hope makes money. Now if there are comparable properties next to you for 500k I’d think it’d be worth it

 

[Rfreeman]

I wouldn't even look at this deal unless you know that dirt is worth at least $650K. Why the $650K, because it offers you a margin of safety (you can turn around and sell the land) in case the car wash doesn't work out.

This seller is out of their mind or looking for a sucker, maybe both. No financials how does he think a buyer is going to bank this deal? Sure a bank can look at it as a new construction project off of a proforma, but typically that would require a higher down payment. The other option would be owner financing and who know what this seller would charge considering hes trying to sell this deal without financials

I would pass on this now or look back in at least 2 to 3 years

 

[Roz]

I have renovated two carwashes, working on a third, and looking at a fourth to purchase & renovate. Depending on the renovations he could have invested $200K or more, and is looking for earn $50-$100K for his time and effort. Based on the data mentioned above it may be a good deal. Did the seller provide you with a list of the changes he made and the date of the equipment (to see if he installed new or used equipment)? Did he automate the place in any way so you can monitor the place and equipment remotely? Depends if you need a strong cash flow from day one or you can take a longer perspective.

Valuations are tricky and far from an exact science. This forum is a good place for info on a variety of things and to learn how things are done by others but at the end of the day just opinions where each poster has a different approach, risk tolerance, ability to build a business.

The challenging part for you is to figure out if a bank would lend you money for the deal given the lack of financials, or if you will self finance the deal, or if the seller will finance the deal. In general banks do not want to lend money to finance a carwash unless you have 3-5 years for tax returns - they are very hard to deal with.

I would also look at the competition for a 5 mile radius to see the potential opportunity or risks. Renovating a place takes time and some experience. The costs for new equipment have increased significantly due to whatever excuse you want to pick, and maybe he installed more than just new pumps (floors, other types of equipment). Frankly I would take a close look at such a place as a significant amount of the work has been done and the marketing & promotion is left. You do need to see how things were renovated (smartly or not) as renovations are like house renovations - one can slap a coat of paint and make minor fixes or one can do the right thing building something that lasts & prospers.

Anyhow good luck with the evaluation, you are asking good questions. If you are within 0-2 hours of Baltimore I would gladly take a drive to see the place.

 

[Slickside65crew]

Thank you all for the responses. I am going today. To check the place out. The pump room. Get a better idea what he did and didn't do. See if pump room is new and stainless. See water pipe size. Watch the traffic. Etc etc

 

[eckert16]

Responses all over this site, essentially refer to a carwash seller having no revenue financials to support the asking price, then a buyer is often recommended to just offer land value.
Land value 180k according to property shark
Asset value 100k according to property shark

And for some unknown reason, the seller is ... what...declining to place a newly renovated wash in operation? That act alone should make a thinking person ask 'what's up' in this situation.

 

[Randy]

Thank you all for the responses. I am going today. To check the place out. The pump room. Get a better idea what he did and didn't do. See if pump room is new and stainless. See water pipe size. Watch the traffic. Etc etc

Take a lot of pictures and post them here so we can evaluate the project. I'm starting to get a bad smell.

 

[Slickside65crew]

He's not 100% operational yet. He plans to open in 2-3 weeks. Waiting on some parts. He's a home builder by trade and said he knows he went to far in. He said he does plan to open if no one buys it in the next month or so. He doesn't have the time to run it himself though. He doesn't really know the equipment and he said he bought it just becuase he always wanted a car wash.

 

[Slickside65crew]

More photos

 

[Rfreeman]

Again this place or any place for that matter can look like the Taj Mahal but does it make money to justify the investment?

In your case you have $0 but all the potential in the world right.....well do you know how many deals were sold on potential only to flake out?

The wash looks great but to me it's worth land value + improvements (bldgs) and maybe equipment if I was you looking at this deal BUT no income no deal.

 

[Roz]

Do you need heated floors? Otherwise it looks like a solid renovation job.

 

[Kar B Kleen]

IMHO-350 would be fair to both parties. Would not teeter far from that.

 

[traveler17]

Again this place or any place for that matter can look like the Taj Mahal but does it make money to justify the investment?

In your case you have $0 but all the potential in the world right.....well do you know how many deals were sold on potential only to flake out?

The wash looks great but to me it's worth land value + improvements (bldgs) and maybe equipment if I was you looking at this deal BUT no income no deal.

Agreed, place looks nice but no revenue.

 

[Randy]

I found this car wash on the internet. From the pictures on street view in 2019 on the side street there is a for sale sign. The car wash looks rather rough. Out on the main street in 2021 the vacuums appear to be open but the bays are coned off. I find this to be very odd that bays aren’t open. There has to be a good reason that the car wash isn’t open, I’m not buying the BS story about the current owner not having time to open it isn’t. The self-serve equipment appears to be new. One thing I don’t see is a bill changer. Does the sale include the vacant property on the side of the car wash? I think I’d have to pass on this deal at what he wants for it, I might go $350K, if I really wanted a job. It doesn’t really pass the smell test.

 

[OurTown]

Why is there a new looking sign that has hand wash and detailing prices on it? Could he have "sold" it once already on land contract or leased it once and it fell through soon thereafter? Also he always wanted a car wash and now he doesn't?

 

[Randy]

Why is there a new looking sign that has hand wash and detailing prices on it? Could he have "sold" it once already on land contract or leased it once and it fell through soon thereafter? Also he always wanted a car wash and now he doesn't?

That's one of the reasons it didn't pass the smell test. In the picture from 2019 it looks like there is a inbay or rinse arch on the far end.

 

[eckert16]

Strata is showing about 13.7k for traffic count, that is respectable...

You state's traffic management system. org website has additional traffic count numbers by street, and can provide vehicle details as your state does have 'count stations' North and South of this wash.

I wonder if the traffic primarily between the pike/expressway has intentions of stopping nearby (is your neighborhood a destination?), or are many of those vehicle owners just passing thru, or are they employed neighbors returning to 'their' houses in your target market, and they want to arrive home with a clean car?

Examine your likley customer base, your Target market.... Do they have expendable income? Your target market looks fairly deliminated to be the houses SouthEast of that road running N/E of the property (customer target base seems to be artificially bounded in the North by the pike, and to the South by that expressway, to the East by that body of water, and to the West by the industrial park.
[[ I can be wrong, all this is just an 'assumption', I don't know your state. ]]

StreetView is handy for looking at the target market houses (pride of ownership), condition of cars (new, valued, cared for, or held together with duct tape), possible available expendable cash flow -vs- mattresses laying about the street/sidewalk. Does the neighborhood look like they'll report criminal activities to the authorities, thus helping you to protect your investment?

Type the city/state into neighborhoodscout.com and you can read about the target market (if you accept the assumption of this being the target market).

Then consider city-data.com/zips/ and get detailed info on numbers of renters vs owner occupied, incomes, etc. Do a little research to verify/deny your assumptions. Are they well paid employees, executives, salaried, wage earners, fast food employees, college grads or high school dropouts, owners or renters, bus riders or vehicle owners, etc?

You could put the address into https://www.neighborhoodscout.com/ and see what the neighborhood crime may look like. The results may show if you'll want to budget to get a good camera system installed; and/or if you should factor in the cost of converting alll equipment to 'credit cards only' to remove the 'cash theft and vandalism' that may occur (may also be why the seller never opened, maybe the new equip and vacs have already been broken into).

Possibly use your wash as a baseline using these data sets, and do the exact same research on your known 'successful' washes locations. How's it compare.

Just some thoughts and possible references to use in your quest (if financing thru a bank, knowing these data can help).

 

[DBerst]

I just purchased a 3 bay, 2 ss and 1 IQ auto bay. I live in a town of about 8000. I bought it for $750k. The building was another $350k that held the equipment. Also, attached to the building is an adjacent building that he rents out as a warehouse . I thought it was over priced until his records proved his daily car count on the auto bay. It was around 1000 cars a month. He has had a growth of about 400 cars from year to year. In a nut shell… you need hard numbers … So , now I’m a car wash owner and new to this game!!

 

[Car_Wash_Guy]

Looks nice. Wondering what the walls are in the SS side? Looks like Hardi Board with Stucco above?

 

[I.B. Washincars]

Well, the elephant in the room is the express wash. The owner may have caught wind of one snooping around town and wants to drop it in someone else's lap. I come from a town of 11K, that already had 6 IBA's and 14 SS bays. Someone bought a closed full serve and converted it to express. It barely affected my business, so I'm guessing they probably are rethinking that purchase. Express washes are being built in locations that make a lot less sense than yours, so proceed with caution.