Foreclosed Wash

[robert roman]

Common Bill, this guy potentially has everything to lose regardless if he cashes out or borrows. Carwash or whatever works best when it serves the needs of the community.

Can the needs of a community with only 2,500 people with two existing washes be so strong that it would justify re-establishing a wash that has gone into foreclosure? Tough call based on speculation alone. Again, he should dig "very" deep so he avoids tripping over a quarter to pick up a dime. Moreover, even if the land is worth the liquidation price, useful for another purpose, he will most likely need to re-visit zoning, blow the building away and then build something new.

As for experts, some are also right. Case in point. I recently completed a retail market study of a community in Florida. The party who engaged me was interested in buying an existing self-service and redeveloping it as an express exterior. The study area has over 90,000 people and over a dozen carwashes. Over half of these washes are now listed for sale with brokers and most are not worth spit as compared to the asking price. I know for a fact that most of these washes were not reviewed by an independent analyst. Each one was, build it and they will come.

Are any of these washes a diamond in the rough? Maybe. However, Florida now ranks dead last in the U.S. in terms of employment, personal income growth, foreclosures and real gross product (state). Making the right decision in this environment requires more than an un-educated guess.

 

[Baywash]

How could a $1M carwash make it in a town of 2000?

Please explain your logic. Thanks.

Also, as far as determining what income and expense were at this location, why not ask the bank that owns the place? Most banks require annual financial statement from carwashes they finance, so see if they'll play ball and give you the p&l's!

One of my washes is in a similar situation and has always operated in the black. My town's population is around 2000, but I also draw from the surrounding county which is a customer base of around 30k. I located across from the Super Center and Murphy USA just off the Highway. I have very little compitition and I run a first class operation. It is possible to operate a $1m wash in a town of 2000 and make money.

 

[Patrick H. Crowe]

Here's my analogy: You see a full sized Chevy advertised in Sunday's paper. You go look because it's on your way to one of your washes. It's an 89, 4 door. It shows 209,000 miles, bald tires, no air, lots of rust, torn & worn upholestery and the seller admits it's hard to start. Then he adds that the car sold new for almost 25 grand and points out he'll take 30% of what it cost.

Some posters would tell you to look "deep". Some would say get more info. Why waste the time? Even to a rookie car buyer like me, there is no possibility this car is worth evan a small fraction of the asking price. Look at others.

This wash lacks the population to support even itself let alone the competition; it is not even close. The potential buyer thinks that fact it is priced at 30% of original cost means it MUST be worth exploring.

I looked at almost every wash that was for sale in my area for more than 40 years. There were many to look at. I had to have a quick & dirty way to reject those that were priced way beyond Fair Market Value.

Incidentially fair market value has nothing at all to do with the age of the buyer (or seller) nor anthing to do with whether the sale is cash or involves a loan, i.e. I agree with RR and disagree with BP on this point though I disagee with much of RR's info.

This is clearly a walk away - - waste no more time. Any wash that has been foreclosed is apt to be troublesome, very high risk. To believe a person can somehow make this work is silly when the price is 30% of original cost. Buy the Chevy, the loss will be less.

Patrick H. Crowe

 

[Hoosier Daddy]

Many thanks

I am overwhelmed with the amount of information suggested! Since it is/was a brainstorming type question, there are no bad answers. Many thanks for weighing in.

I'll nose around a little more as some things have been hard to research as the whole property is buried under a ton of snow at the moment.

There are appears to be some issues that may be unresolvable due to a less than stellar loan officer who allowed the deal to go through with some covenants that probably nix the deal for us.

 

[mac]

"Any wash that has been foreclosed is apt to be troublesome, very high risk" While the very wise Mr Crow does make an occasional good point, I think this statement paints all foreclosed properties with the same brush. A few years ago I bought a wash from a bank. Fixed it up and put it right on the market. A year later I walked away with just shy of 100K. A local foreclosed wash was just sold on a highly traveled main road for basically the price of the dirt. There can be some real good deals out there. This one in particular is hard to say without seeing it.

 

[ScottV]

Waxman,

If I had a banker that ever tried to "put me in my place," I'd be finding a new banker.

Maybe I've been lucky, but I've never been talked down to by my banker. I consider him a business partner, and I use him to bounce ideas off, both good and bad.
We've always had a honest and open relationship, and over the last 10 years I have made him and his bank a lot of money. 18 rental property purchases, building a car wash, and 6 expansions at my mini storage site. With 2 more car wash acquisitions in the coming months, he knows where his bread is buttered.

ScottV

 

[Waxman]

Well, maybe I blew it out of proportion. What he said was:'Dave,........................you're not a licensed commercial appraiser.'

I also think it's important to feel that my banker is a business partner of sorts. However, it seems like a classic push/pull, capitalist relationship. I'm trying to secure the best rates, so I can grow my business, improve cash flow and prosper. The banker is trying to make secure deals and get the best rate of return for his bank. We both want something and those wants are somewhat opposed. But just how opposed is crucial! A lower interest rate makes a more secure loan for the bank (easier to pay) but less return is possible over the life of the loan. A high interest rate or variable or balloon makes more $$ for the bank, but makes the loans far riskier, as we have seen plenty of examples of lately!

 

[Patrick H. Crowe]

Mac:

When I told the man that :"A foreclosed wash is apt to be troublesome, very high risk." I meant that exactly. To me it does not paint all foreclosed washes with the same brush. Like you I have made tons of money on run down, worn out washes which I rehabbed.

Here are some examples of the troubles: Borrowing was far more difficult than on an operation, state of the art wash. I had six banks turn me down including the one that held the existing mortgage and that's despite decades in the business, excellent credit and previous such projects.
RISKY & TROUBLESOME!

In most cases it is difficult to determine what the wash did over the last few years, especially so if the previous owner is gone and/or records encomplete or missing. (RISKY & TROUBLESOME)

If the wash has been allowed to freeze then the damage is apt to be serious.
(UNKNOWN? RISK & TROUBLE)

The utility deposits I had to put up were unusuALLY HIGH. (TROUBLING).

Still, if the price is right and a psrson can stand the trouble & risk then it's a go. Unfortunately I rarely found the price was even close to right.

Patrick H. Crowe

 

[Indiana Wash]

Carmichael Car wash overnight shutting down a busy roadway for several hours.It happened at the Splash And used cars wash in the 6500 block of Fair Oaks Boulevard.Right now firefighters won't call it suspicious until detectives search through the debris.

Would some admin please bar this obvious spammer?