"Free" land! Should I build a car wash?

[dms561]

Hello all,

My name is Seth and I hail from South Florida. First-time poster, long-time reader, etc., etc. Hoping to get some input on the following scenario:

Our company owns a self storage with a small (.5 acre) outparcel of land on a busy stretch of road (43K cars/day) near a McDonald's, Taco Bell, Walmart and Auto Zone. Our area has a lot of high density residential and multi-family homes. Mostly low-middle and middle class in the 2-3 mile radius.

Due to zoning and easement obligations, the outparcel has remained an unused parking lot. I have been talking to our attorney about the possibility of developing this land to capitalize on its great location. It is, after all, “free” land in an area where land is going for $500K-$900K an acre.

Before going too far down this path, I wanted to get some opinions on the feasibility of building a (small) car wash on this land. My research tells me that a mini-tunnel (or two?) might be an option. We have plenty of full-serve and flex-serve washes in our area and a few struggling SS/IBA's, but few express options. I’m curious if a) the size of the land would allow for this and b) if a standalone mini-tunnel (or two?) is a viable business model in the first place.

Any feedback is welcome. As are indignant remarks or creative suggestions.

Thanks,
Seth

 

[Eric H]

I’m curious if a) the size of the land would allow for this

Well, what are the dimensions of the parcel?

 

[dms561]

Well, what are the dimensions of the parcel?

Approx. 110 ft. x 200 ft.

 

[robert roman]

Is standalone mini-tunnel a viable business model?

Mini-tunnel or short conveyor is a machine not a business model.

Mini-tunnel can be installed to replace a wand-bay or in-bay automatic system at self-service location. It can also be used instead of an in-bay automatic at sites that sell gas (i.e. multiple profit centers). It can also be used as the plant for full-service, flex-serve or exterior express business models.

Would size of this land allow for mini-tunnel?

Self-service (combination wands and in-bays), exterior-only carwash (i.e. exterior express conveyor, single/dual in-bays, single/dual in-bay express), full-service (automatic conveyor, conveyor hand wash, waterless hand wash) and flex-serve (exterior express conveyor combined with express after-care) business models could be made to fit on 1/2 acre.

However, several of these models may be totally inadequate to handle the expected demand. In other words, fundamental is not to first pick investment model and go find property to match.

For example, this is most likely the reason for “a few struggling SS/IBA's”

“…..high density residential….multi-family homes…..low-middle and middle class in the 2-3 mile radius.”

In South Florida, 1/2 of these folks don’t own a car (or washable car) and 1/2 of the other one-half do not clean their cars, they wait for it to rain.

People who get stuck with carwash property are usually the ones that misjudged the deal, costs or market conditions.

For example, do you intent to hold and lease the property or operate it? If operate, who? If sell, who are potential buyer’s? How would carwash fit in with current exit strategy? And so forth.

Best practice is follow five-step process.

First is benefit risk mitigation – market research to confirm business model.

Next is select land, layout site (property width/length planning to determine equipment and building requirements) and determine viability. Next is to obtain entitlements and project planning. And so forth.

Hope this helps.

 

[Waxman]

if an acre is worth $500-900k then my advice is simple; sell the land and find a use for the money that is easier and lower risk than a car wash project. i love my car wash and enjoy running it. i also own an 8 plex apartment building. i have owned it 2 years now. it is far easier and requires alot less of my time than my car wash business. it is also worth twice what i paid for it. an apartment building in my area is far easier to sell than a car wash. just my opinion.

 

[Whale of a Wash]

Why go thru all the work and expense, for a maybe business to make money, talk another fast food chain into buying it from you for lots of money. Mr Roman just said- Half don't own a car, and the other half don't wash. Not a good business model!
Rental units are a lot like apts, and they are a lot easier to run, so that that is an option also
I would sell it and take the money and invest it wisely, or depending on your age, have fun, go travel, have fun and enjoy life!
Car washes are a lot like milk cows- they need too much attention 7 days a week.

 

[Kevin James]

I couldn’t agree more. There’s no way I’d recommend getting into the car wash business. The best thing you can do is lease the property out to another business. There’s nothing better than mail box money.

 

[Greg Pack]

Older post, but I'll put my two cents in. "Free land" is a dangerous thing. The cost of the land is usually a relatively small part of the total investment. Admittedly, despite my occasional whining the car wash business has been very good to me. It's also been good to many people here. One of the problems is that it is mostly a hands on business. Self Service is easiest of all to run, just requiring mostly a daily maintenance/cleaning visit, but honestly will not likely generate enough income to make a good ROI for new construction. Also, SS customers can be a real PITA to deal with. There are endless examples here of the car wash being used as a dumping ground or worse. Unless you are resourceful and can build your own building and buy used equipment, SS bay revenues just don't add up anymore. I rely on automatics to generate the lion's share of my company's revenue. But automatics are more maintenance intensive. It doesn't require a lot of work: but they are a lot like teenagers. Leave them alone for a few days and bad things are going to happen.

A small express tunnel can generate good, even great revenue in the right spot but it will require you to have probably three employees minimum. If you can make the site work, that would be my first pick.

 

[Knoxville]

Kevin - old post, but why did you say that there is no way you would recommend getting into the car wash business?