Getting Tempted

[1carwash1]

There seem to be a lot of SS for sale here in the Southeast. This week a bank offered me some washes priced from $60,000 to the low 100s. Some of these washes sold for around half a million bucks in the mid 2000s. The deals are tempting, however, I'm concerned if these washes can ever become profitable again. I'm not sure if it is economics or the impact of express washes. I hate to buy a white elephant and would hate to look back thinking I overlooked a great opportunity. Even though I equate SS with payphones, these deals seem too good to pass off without a second thought. Any Ideas or thoughts?

 

[Whale of a Wash]

Why even consider buying it, if you think it is like a payphone. Not sure of the connection, as my ss washes stay fairly busy, and i see things every hour that a tunnel can't do. Snowmobiles,ATV's, lawn mowers, boats, rv's, patio furniture, cars, H2 limos, dualies, classic cars, convertibles. The list would be twice as long if i spent more time at it. The prices sound pretty good, but in our area the poor economy hasn't affected us, so business is still good.
At those prices almost any income should make some money.

 

[rph9168]

Try to get some idea why these washes have failed. I live in the Southeast and many washes that are available aren't worth it at any cost. Some were built in bad locations and others were put out of business by express exteriors.

 

[mac]

There may be some roses among the thorns, but you will need an educated eye to determine that. If you like send me a PM and I may be able to offer some insight. See my earlier posting about new blood in the business.

 

[Earl Weiss]

i see things every hour that a tunnel can't do. Snowmobiles,ATV's, lawn mowers, boats, rv's, patio furniture, cars, H2 limos, dualies, classic cars, convertibles. .

Tunnels can't do H2 Limos, classic cars & convertibles?

 

[Waxman]

Tunnels can't do snowmobiles?

 

[Whale of a Wash]

Sorry about the generalization on limos, but the few tunnels we have, have sharp turns after you enter the building, and the long vehicles can't make the turns, and i guess the wider wheels have problems with the guide rails. Not sure what property is priced at around the country, but my smallest 5 SS bay is on the taxes in minnesota for $300k land only- not building. So 60-100 seems like a super bargain for me-- even if i tore it down and put up an apt building. I guess with overbuilding and a rough economy-- maybe any price is too much if there is no profit from any use of the property.

 

[Indiana Wash]

Why even consider buying it, if you think it is like a payphone. Not sure of the connection, as my ss washes stay fairly busy, and i see things every hour that a tunnel can't do. Snowmobiles,ATV's, lawn mowers, boats, rv's, patio furniture, cars, H2 limos, dualies, classic cars, convertibles. The list would be twice as long if i spent more time at it. The prices sound pretty good, but in our area the poor economy hasn't affected us, so business is still good.
At those prices almost any income should make some money.

Man, if I had $5 for every "Snowmobiles,ATV's, lawn mowers, boats, rv's, patio furniture, cars, H2 limos, dualies, classic cars, convertibles" that came through my wash that my IBA's can't wash?!?

I would probably have like $50 a month! Woot!

 

[Waxman]

How would you really know it WOULD BE only $50/mo.? My wash does alot more than that (little 2SS/1TouchfreeIBA) in lawnmowers, dirt bikes, atv's, boats, dump trucks, plow trucks, community transit buses,U-haul trucks, horse trailers, and even trash pumps, rooter snakes,wood splitters and chippers, car rims and parts, new/used refrigerators/washers. I'm telling you; the list is endless what people will wash in SS!!!

So, while it is easy to assume you know your customer well, I bet you'd be surprised at how plentiful a market segment exists in many areas for a self-serve carwash.

 

[I.B. Washincars]

Your market will most likely determine what types of oddball things that will get washed in a SS wash. A metro area is probably not going to draw many log splitters, tractors, or whatnot. My washes are in more rural areas and we have had everything from a rootwad to a helicopter being washed.

 

[PaulLovesJamie]

Watched a guy wash a toilet once. Since he had is set up on the grate, I had to ask - was he planning to use it once it was clean?

 

[Indiana Wash]

Actually, even the harleys use the IBA not the self serve. I stopped by once and there were 4 Harleys getting washed in one IBA. LOL

 

[MudMoney]

I had a animal transport company hose down a black bear and a grizzley bear that was in a horse trailer,just used the spot free rinse.

 

[dogwasher]

My SS bays get used all the time for crazy stuff. I have many contractors come in with bobcats ect....we just scoop the mud away when there done its worth it, some of them ask for the shovel and do it for us. People wash house screens, electronic air cleaners, Ive seen pig roasters, street cleaners, they have even washed there dogs(with a fine spray of coarse).

 

[Waxman]

Yeah, I am sure there is a big SS demand even in cities. After all, there are few garden hoses in NYC except for washing the sidewalk!

 

[Greg Pack]

I have looked at some closed down washes and some others that might as well be closed down. Some of these washes, even if purchase at a low multiple, have limited income opportunity operated the way they are. I recently looked at a wash that sold for 900K back in 2005. It currently has a 50K gross. The bank wanted around 260K for. Upon crunching the numbers it got ugly if revenue didn't drastically improve: 7K property tax bill, 3K insurance, 8K electrical, 8K water/sewer, and 10K labor. Don't forget your variable expenses of chemicals, supplies, and repairs. If I paid cash and had no note at existing numbers I could net maybe 1000 per month for my efforts. It would not cash flow if financed. That doesn't exactly scream "deal of the decade". There might be some upside opportunity, but with express five minutes away in either direction I don't anticipate the businesses to do much better than they are now without some serious revamping and a lot of patience.

Here in my metro area, expresses abound and for good reason. Once a customer becomes accustomed to that format: the speed, quality,value and low hassle there is little reason for them to come back to a SS. Here, it's cold in the winter and hot in the Summer. Plus, it cost more than a express tunnel to wash here. Sure, there are some niche items that can't be washed in a tunnel but that never comprised a large percentage of my business and is often the crap that isn't as profitable and I really don't want to deal with. I admit I might be leaving a little money on the table but I don't think it's enough to make a radical change in my bottom line.

The market to sell SSs in the future will be restricted. Bay revenues in my area are flat or going down and expenses are rising, reducing margins. New investors are almost exclusively looking at express washes here in the hopes that they will strike gold if they get lucky. Hopefully the property value of my SSs will exceed the cost of what i purchased the business for one day.

I guess for anyone looking to purchase they should ask themselves if they think the business is a healthy business model with anticipation of growth. Many of you guys, especially the ones is rural areas, seem to still be doing well. The best performing self serves I know of right now are not in metro areas, but small towns with limited competition. If these SS are in small towns they may still have some income generating ability left.

 

[robert roman]

I would equate self-service wands with a vending machine more than a payphone.

As for distressed self-service in the S.E., there appears to be no shortage and property values appear to have bottomed.

A local distributor in my neck of the woods recently purchased a nice looking 5 + 1 for roughly $375K. Eight years ago, this wash had an enterprise value of about $900K.

If you are new-to-the-industry and shopping bargain prices, I suggest you first separate out the trash.

Many markets in the S.E. are simply overbuilt with self-service. So if you plan to buy low with the hope of making a little money now and waiting for things to get better, you may be waiting for an extraordinarily long time.

Instead, I might consider looking for self-service properties having potential upside.

For example, I’ve seen some distressed self-service that would make a good location for a convenience store, an industry that is still growing.

I also see distressed self-service properties that would make good candidates for conversion such as POP (pay-one-price), exterior express, etc. Consider that a bargain price may lower the tear-down equation by 33 percent or more.

Hope this helps.

 

[rph9168]

It would also be worthwhile to check on the zoning of the wash. It might allow you to build another type of wash without having to go through the permitting process and deal with zoning issues. In my area an operator purchased an older self service/automatic wash and converted the wash to a tunnel with great success.