I'm looking at building a wash with 2 touchless automatics and 3 self serve bays along with 4 vacuums. It's on a four lane road plus a center turn lane. Traffic study shows 16,145/day. Must travel south to get to city with several subdivisions growing to the north. Total cost is $1.5 million. Conveyor brush wash 1.5 miles south. No touchless. Good or bad idea?
Good investment?
- Thread starter Ulookn2
- Start date
PEI
Active member
Just based on what you have told us so far, i would say bad idea. However, it would be nice to have more information. What is the speed on the road? How hard is it to turn across traffic into the lot? What is around the lot (ie. restaurants, grocery stores,c-store, etc.)? What is the household income of the homes around the location? What is the average age of those living in the immediate area? What is the ethnic breakdown of the immediate area?
Touchless has been relegated to a niche market. You will never be able to compete with the tunnels through put, so you have to rely solely on those customers that insist on a touchless wash or that want to do it themselves. There are markets where touchless is still preferred, but they are becoming fewer and fewer.
I hope this helps.
Touchless has been relegated to a niche market. You will never be able to compete with the tunnels through put, so you have to rely solely on those customers that insist on a touchless wash or that want to do it themselves. There are markets where touchless is still preferred, but they are becoming fewer and fewer.
I hope this helps.
Earl Weiss
Well-known member
- Joined
- Aug 31, 2007
- Messages
- 6,390
- Reaction score
- 949
- Points
- 113
Some industry surveys have averages at $1500 / mo/ ss and $4500/ mo IBA so that would be $13,500 x 12 = $162,000 / year Gross. Wha are projected fixed costs - Rent, Debt Service, real estate taxes, Insurance, labor, scavenger, etc. Projected operating expenses, - Utilities, Maintenance, Solutions, pit pumping? At averages, seems like not a lot of meat on the bone. - If anything.
robert roman
Bob Roman
Good or bad idea can be judged with sanity test.
Based on loan-to-value 75 percent and standard conditions and terms, debt service would be $96,000 plus $15,000 property tax (WAG) equal $110,000 fixed cost.
($1,400 / month / wand-bay X 3 bays X 12 months) X 60% = $30,000 gross net
$110,000 - $30,000 = $80,000
Cars per year = $80,000 / $8.00 average price - $2.00 unit variable cost (net site)
Cars per year = 13,333
So, after accounting for wands, in-bay needs to wash 13,333 cars to break even.
Traffic 16,145 is capture rate of 0.27 percent. Benchmark is 0.29.
26,666 cars (capture 0.53), would generate profit of $80,000 (13,333 X $6.00).
$80,000 on $375,000 equity is return 21 percent, 36 percent or more is typical.
So, sanity test becomes is site location characteristics strong enough to capture twice what the benchmark captures?
Based on loan-to-value 75 percent and standard conditions and terms, debt service would be $96,000 plus $15,000 property tax (WAG) equal $110,000 fixed cost.
($1,400 / month / wand-bay X 3 bays X 12 months) X 60% = $30,000 gross net
$110,000 - $30,000 = $80,000
Cars per year = $80,000 / $8.00 average price - $2.00 unit variable cost (net site)
Cars per year = 13,333
So, after accounting for wands, in-bay needs to wash 13,333 cars to break even.
Traffic 16,145 is capture rate of 0.27 percent. Benchmark is 0.29.
26,666 cars (capture 0.53), would generate profit of $80,000 (13,333 X $6.00).
$80,000 on $375,000 equity is return 21 percent, 36 percent or more is typical.
So, sanity test becomes is site location characteristics strong enough to capture twice what the benchmark captures?
Math is a great thing...but now apply it to the real world...a single IBA doing almost 27k cars a year?? Highly unlikely, especially with a tunnel a mile and a half away.
Greg Pack
Wash Weenie
1.5 million for a 3/2? Bad idea.....
MEP001
Well-known member
It can be very doable, but not one that you can just start up and walk away. I've seen a few twin touchless locations with preppers that have lines all day.
robert roman
Bob Roman
“Math is a great thing...but now apply it to the real world...”
I did. Applied mathematics is using math to work on practical problems.
“….single IBA doing almost 27k cars a year….Highly unlikely….”
“Highly” refers to degree or quantity (math) but “unlikely” refers to probability (statistics).
My problem solving (sanity test) did not involve statistics.
Carwash is planned pregnancy not accident.
So, the 27K cars a year are used to discuss development, investment ownership and business operating risks (financial engineering).
Also, “almost 27K” was referring to volume from two in-bays (3 + 2).
As for likelihood of single in-bay doing 27K, I have file folder full in high 20’s.
I even know someone who used to come to this site with such a wash that is attached to a tunnel.
I did. Applied mathematics is using math to work on practical problems.
“….single IBA doing almost 27k cars a year….Highly unlikely….”
“Highly” refers to degree or quantity (math) but “unlikely” refers to probability (statistics).
My problem solving (sanity test) did not involve statistics.
Carwash is planned pregnancy not accident.
So, the 27K cars a year are used to discuss development, investment ownership and business operating risks (financial engineering).
Also, “almost 27K” was referring to volume from two in-bays (3 + 2).
As for likelihood of single in-bay doing 27K, I have file folder full in high 20’s.
I even know someone who used to come to this site with such a wash that is attached to a tunnel.
getnbusy
Active member
I don't know anything about Illinois but you have to ask yourself what else you can do with 1.5 mil. I mean...you are talking about spending a lot of money on something that has no income from the get go. Not to mention months and months of construction with zero income. You might look around for a bit and find a nice income property for waay less that is already existing and you can start cash flowing on the very first month after purchase. If dead set on a carwash, I would give serious thought to a different model. My poor southern boy 2 cents worth is this is not a bad idea. It's terrible
I guess it all depends on ones experience and perspective. I owned some income property with my father-in-law. I thought it was a great investment with good cash flow. WRONG. Tenants skipping out without paying. Almost daily calls for repairs. Cleaning up apartments after tenants leave usually trashing the place. Not to mention handling complaint calls and scrambling to keep the place fully occupied. There was cash flow but not what I had hoped for due to many other expenses involved. We were lucky in the end because when we tried to sell it the market for income property was way down and we would have been lucky to get what we had paid for it but a developer had selected the area for a massive project and we at least got a decent deal and our money back plus a little extra.
If Ulookn2 wants to get into the car wash business I would do as many have suggested on this forum. Do your due diligence. Get to know the industry by attending a trade show or two. Work at a wash for while. Talk to experienced operators. It is not something to jump into just because you think it is a good investment or something you want to do. Owning a car wash is not something for everyone but it can be very rewarding if you work at it.
Operating a successful car wash is not easy so it depends on what you want to do in the little time you have to do it. If you take care of it and make sure customers get what they pay for it you can develop a good base. There can be a lot of personal satisfaction and a real sense of accomplishment. In the end you have something to sell - a viable business and property.
If Ulookn2 wants to get into the car wash business I would do as many have suggested on this forum. Do your due diligence. Get to know the industry by attending a trade show or two. Work at a wash for while. Talk to experienced operators. It is not something to jump into just because you think it is a good investment or something you want to do. Owning a car wash is not something for everyone but it can be very rewarding if you work at it.
Operating a successful car wash is not easy so it depends on what you want to do in the little time you have to do it. If you take care of it and make sure customers get what they pay for it you can develop a good base. There can be a lot of personal satisfaction and a real sense of accomplishment. In the end you have something to sell - a viable business and property.
My costs are 410 for equipment, 700 for the building, and 350 for the property. I've talked with a few owners around and they think it's a great location. The housing around there is growing tremendously and it's on the main road. It's also a corner lot. The speed limit is 45 but has a center turn lane to cross traffic and a dedicated turn lane to come in. The few I've talked to who know this area and business feel it would pull 250,000 minimum in gross it's first year.
robert roman
Bob Roman
Question
“Good or bad idea?”
Answers
“i would say bad idea. However, it would be nice to have more information.”
“seems like not a lot of meat on the bone. - If anything.”
“Good or bad idea can be judged with sanity test.”
“Bad idea....”
“this is not a bad idea. It's terrible”
“would do as many have suggested on this forum. Do your due diligence.”
Response
“I've talked with a few owners around and they think it's a great location….and feel it would pull 250,000 minimum in gross it's first year.”
My question is any of these owners you talked to trying to sell you the equipment?
“Different model?”
Perhaps the most telling question. You don’t need to understand what a business model is to succeed in business but it sure helps.
For example, if built for $1.5 mil. based on expectation of $250K gross, what happens if the wash only generates half this much?
Answer, return on cash negative. Then bank sends dunning letters. Next could be foreclosure, short sell, bankruptcy and maybe lose the house.
Only potentially good part out of all this is maybe wife files for divorce. LOL
“Good or bad idea?”
Answers
“i would say bad idea. However, it would be nice to have more information.”
“seems like not a lot of meat on the bone. - If anything.”
“Good or bad idea can be judged with sanity test.”
“Bad idea....”
“this is not a bad idea. It's terrible”
“would do as many have suggested on this forum. Do your due diligence.”
Response
“I've talked with a few owners around and they think it's a great location….and feel it would pull 250,000 minimum in gross it's first year.”
My question is any of these owners you talked to trying to sell you the equipment?
“Different model?”
Perhaps the most telling question. You don’t need to understand what a business model is to succeed in business but it sure helps.
For example, if built for $1.5 mil. based on expectation of $250K gross, what happens if the wash only generates half this much?
Answer, return on cash negative. Then bank sends dunning letters. Next could be foreclosure, short sell, bankruptcy and maybe lose the house.
Only potentially good part out of all this is maybe wife files for divorce. LOL
aca carwash 2
Member
Are you able to service your own equipment? If not your dead in the water. Do you have 60 hours to spend there a week? If not your dead in the water? Do you have a surplus of extra cash? If not your dead in the water. Why two touchless ? Consider a friction, less utility and chemical costs.
Waxman
Super Moderator
i borrowed just under $400k for a 2/1 on a 10,000 cpd lot in a town of 8000 10 years ago. 2 lane road, 40mph speed limit. 1 1/2 competitors at the time, more now.
1.5M sounds way too high to service the debt. just a gut feeling. competing with a good and established conveyorized wash??? no thanks!
1.5M sounds way too high to service the debt. just a gut feeling. competing with a good and established conveyorized wash??? no thanks!
getnbusy
Active member
By different model I mean consider an express exterior instead of a self serve with automatics. You can wash more cars with a higher per car average. Prolly be similar in cost to build. I should say that i dont own one of these. However Ive been in the carwash business over 20 years and I'll say rarely do you see a new build with automatics and self serve bays anymore. In my humble opinion, the return just isnt there. To build new bays i would say is a total wasted investment. That segment of the market is and has been way undervalued by the consumer for many years. With the low vend price, you just cant generate enough revenue. The automatics will prolly do ok, but again my opinion is the express exterior model would be the way to go with a new build. WIth an express exterior, the cars are loaded on a converyor system and the cars can be washed back to back, versus one at a time. In addition, the WOW effect is far greater.
OUR MAJOR INDUSTRY TRADE SHOW IS NEXT MONTH IN NASHVILLE TENNESSEE. I SAY THAT IT IS AN ABSOLUTE MUST THAT YOU GET ON A PLANE AND GO THERE WITH YOUR IPAD AND NOTEBOOK. IT IS A HUGE EYE OPENER IF YOU'VE NEVER BEEN TO ONE OF THESE.
google ICA carwash tradeshow in nashville tenn. you should be able to find all the info there. Or im sure someone else on this site can provide a link.
Go to the show. Dont spend a dime without going to the show. Did i say go to the show
robert roman
Bob Roman
Getnbusy gave you good advice especially about the ICA exhibition.
However, exterior express name defines type of conveyor carwash (wash format) but not business model.
Business model is profit engine of business.
Model has several elements – value proposition, segment, value chain, revenue/margins, position and competitive advantage.
For example, compare and contrast self-serve and exterior express models.
Value proposition is same for all car washes – clean, shine and protect customer’s vehicles.
Segment – combination self-service targets DIY (wands) and DIFM (IBA). Problem DIY is shrinking segment. Express blurs distinction between segments via convenience (faster process), image (better quality, low price) and value (free vacuums).
Revenue/margins – Typical return on cash (ROC) for self-service maybe 35 percent. Typical ROC for express is between 85 percent and 135 percent.
Self-service cost maybe $1.2 million, express about $2.5 million. So, cash flow difference is huge.
Value chain (i.e.) – self-serve charges for vacuums, express vacuums are free.
Competitive advantage – self-serve attempts advantage by means of cost (low price) and niche (exterior only) whereas express also competes on basis of cost (low price) and niche (exterior only)
Problem - self-serve has lost price advantage, in-bay has lost on speed and quality.
However, exterior express name defines type of conveyor carwash (wash format) but not business model.
Business model is profit engine of business.
Model has several elements – value proposition, segment, value chain, revenue/margins, position and competitive advantage.
For example, compare and contrast self-serve and exterior express models.
Value proposition is same for all car washes – clean, shine and protect customer’s vehicles.
Segment – combination self-service targets DIY (wands) and DIFM (IBA). Problem DIY is shrinking segment. Express blurs distinction between segments via convenience (faster process), image (better quality, low price) and value (free vacuums).
Revenue/margins – Typical return on cash (ROC) for self-service maybe 35 percent. Typical ROC for express is between 85 percent and 135 percent.
Self-service cost maybe $1.2 million, express about $2.5 million. So, cash flow difference is huge.
Value chain (i.e.) – self-serve charges for vacuums, express vacuums are free.
Competitive advantage – self-serve attempts advantage by means of cost (low price) and niche (exterior only) whereas express also competes on basis of cost (low price) and niche (exterior only)
Problem - self-serve has lost price advantage, in-bay has lost on speed and quality.
getnbusy
Active member
Robert I am not that smart. I reckon thats why I'm still counting durn quarters after all these years.
I'll go on record and say that I enjoy your posts. You always say what you think knowing others are going to take a swing at ya. You offer a deeper look at things than most, although I do think you are over the top sometimes. I like it because your posts cause me to think harder (even tho it hurts my brain)lol. I thought I offered a good decription of what i meant by model, and figured everybody would know what i meant.
Regardless of what its called, I think 1.5mil on a 3/2 is a terrible idea. 1.5, 2.5 or whatever, I cant comprehend big numbers like that. I just believe he'll be working his tail off to pay that back with a couple of automatics. In my opinion the bays aint even beer money. Even if I could come up with that kind of money, I sure as heck wouldnt spend it on a carwash. IMHO, if a man can put his hands on that kinda bread, he ought to consider what else he can do with it.
for what its worth, I have a friend that came into a couple million cash. He has been loaning his money to different small time investors for 10% interest. anything from 10k-1/2 a mil. Each guy would invest in a project, get it goin, then go to the bank and refinance. usually a 24 month loan. always with a deed of trust. He is just an alternative for cash purchases. I dont remember all the details but he has made a killing doing this the last few years. There is a certain amount of risk, but he hasnt "worked" a single day in many years. And he still has all his money, plus ALOT more.
Not saying thats what everybody should do with their money. I have just seen enough carwashes here in the southeast and elsewhere that have failed and I'm scared for anybody to invest that kind of money in some bays and some automatics. Particularly a newbie. Im making an assumption that ulookin2 is a newb. Some people have no fear. good for them. I might get a good deal on some gently used equipment again. Ive have done that many times. Virginia, NC, Georgia, Tenn, Kentucky, Florida, Texas, Oklahoma, Colorado, Iowa and probly more but thats off the top of my head. I do know that the antidote for fear is education. I reckon thats where you come in.
my pawpaw called it pecan pie. Meemama called it pecon pie. She must not have known what he was talking about either cause she always made apple pie. Dang farmers
I'll go on record and say that I enjoy your posts. You always say what you think knowing others are going to take a swing at ya. You offer a deeper look at things than most, although I do think you are over the top sometimes. I like it because your posts cause me to think harder (even tho it hurts my brain)lol. I thought I offered a good decription of what i meant by model, and figured everybody would know what i meant.
Regardless of what its called, I think 1.5mil on a 3/2 is a terrible idea. 1.5, 2.5 or whatever, I cant comprehend big numbers like that. I just believe he'll be working his tail off to pay that back with a couple of automatics. In my opinion the bays aint even beer money. Even if I could come up with that kind of money, I sure as heck wouldnt spend it on a carwash. IMHO, if a man can put his hands on that kinda bread, he ought to consider what else he can do with it.
for what its worth, I have a friend that came into a couple million cash. He has been loaning his money to different small time investors for 10% interest. anything from 10k-1/2 a mil. Each guy would invest in a project, get it goin, then go to the bank and refinance. usually a 24 month loan. always with a deed of trust. He is just an alternative for cash purchases. I dont remember all the details but he has made a killing doing this the last few years. There is a certain amount of risk, but he hasnt "worked" a single day in many years. And he still has all his money, plus ALOT more.
Not saying thats what everybody should do with their money. I have just seen enough carwashes here in the southeast and elsewhere that have failed and I'm scared for anybody to invest that kind of money in some bays and some automatics. Particularly a newbie. Im making an assumption that ulookin2 is a newb. Some people have no fear. good for them. I might get a good deal on some gently used equipment again. Ive have done that many times. Virginia, NC, Georgia, Tenn, Kentucky, Florida, Texas, Oklahoma, Colorado, Iowa and probly more but thats off the top of my head. I do know that the antidote for fear is education. I reckon thats where you come in.
my pawpaw called it pecan pie. Meemama called it pecon pie. She must not have known what he was talking about either cause she always made apple pie. Dang farmers
robert roman
Bob Roman
“Robert I am not that smart.”
Baloney.
“I thought I offered a good description of what i meant by model, and figured everybody would know what i meant.”
Excellent description.
I elaborated or went over the top somewhat to help educate Newbie as well as “knowing others are going to take a swing at ya.”
“I'm scared for anybody to invest that kind of money in some bays and some automatics.”
Agree.
“if a man can put his hands on that kinda bread, he ought to consider what else he can do with it.”
Absolutely.
“He has been loaning his money to different small time investors for 10% interest.”
Great business concept (or value proposition) – using personal funds as hard money or bridge loan for investors that do not yet qualify for traditional financing.
Segment - anything from $10,000 to 1/2 million
Value chain – “Each guy would invest in a project, get it goin, then go to the bank and refinance. usually a 24 month loan. always with a deed of trust.”
Revenue/margins – ROC 10 percent
Position – less stringent loan criteria, no overhead (no land, building or equip required)
Advantage – niche strategy
Your friend is pretty smart too.
Baloney.
“I thought I offered a good description of what i meant by model, and figured everybody would know what i meant.”
Excellent description.
I elaborated or went over the top somewhat to help educate Newbie as well as “knowing others are going to take a swing at ya.”
“I'm scared for anybody to invest that kind of money in some bays and some automatics.”
Agree.
“if a man can put his hands on that kinda bread, he ought to consider what else he can do with it.”
Absolutely.
“He has been loaning his money to different small time investors for 10% interest.”
Great business concept (or value proposition) – using personal funds as hard money or bridge loan for investors that do not yet qualify for traditional financing.
Segment - anything from $10,000 to 1/2 million
Value chain – “Each guy would invest in a project, get it goin, then go to the bank and refinance. usually a 24 month loan. always with a deed of trust.”
Revenue/margins – ROC 10 percent
Position – less stringent loan criteria, no overhead (no land, building or equip required)
Advantage – niche strategy
Your friend is pretty smart too.
