washallday
Member
I am starting to do the work on determining what is a fair asking price on my car wash. Has anyone gone through this? Any suggestion?
How do i determine the price to sell my car wash
- Thread starter washallday
- Start date
Up here in the PNW our land values are so high that car washes are selling for really big bucks. My brother was just approached to sell one of his car washes for 7 times gross, they don’t want the car wash just the land. Another friend of mine sold is his car wash for 975K, a week later it was gone. I’m on the fence if I want to sell out as the car wash business doesn’t do much for me anymore, I think they call it “Burnout”. Outside the PNW I’d figure on asking anywhere from 3 to 5 times gross for a well run profitable car wash.
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soonermajic
Well-known member
Ask 5x gross, & move down from there.
Greg Pack
Wash Weenie
Is this is a SS/IBA? The gross income multiplier of 3-5X is a good starting point but there are additional variables. Low grossing washes are in my mind worth a lower multiplier, and high grossing washes are worth on the higher end. This is due in part to fixed operating costs and variable costs that don't go up in a direct relation to volume.
washallday
Member
I did see article in SS car wash mag. I have a commercial realtor to determine what the land value is, to see if the land is worth more than wash. It is a good working car wash that makes money. I am 60 and think it might be time to sell. Interest rates are low which lets me get more for the wash. I see the costs of everything going up in the next 2 to three years which will hurt my net so now is the time.
Rfreeman
Well-known member
Personally, every situation is different and all factors that are relevant to your situation need to be taken into consideration to determine what is fair and equitable value for both you and a potential buyer. By fair and equitable, it must be something you agree to and that also works for a buyer, by that I mean financially given their situation i.e. down payment, debt structure, etc.
That being said, as Randy pointed out in some cases the land is more valuable than the wash as a going concern therefore valuation is simple because it is a matter of highest and best use. In this case run land comps to see what other parcels are selling for and take into consideration demolition and removal cost and you will have a solid idea what you could potentially get for your wash.
As a carwash and viable business, you have cost, sales, and income approaches to value that any fee appraiser will use to determine THEIR opinion of value. In relation, you have the multiple (3-5 times gross) approach which is a derivative of an income approach by this I mean you are using the income the property generates to determine a value. I have seen and purchased my car washes on both an income approach to value while at the same time considering the gross multiple approach and from my experiences operating the wash as a going concern has been feasible between 3-5 times gross.
Lastly, your personal situation needs to be taken into consideration. You mentioned your 60 how bade are you looking to sell? I am not referring to a fire sell but in your own plans how quickly do you want to get out of the business? If you have something else lined up maybe you want to sell it in the next 3 months, well price it around a 3 multiple of gross and I am sure you will attract a lot of attention. If you are interested in selling and don't have specific timeline in mind, well I would start at a 5-5.5 multiple and wait and see what kind of interest you get. Good luck and hope you sell it for what you are happy with!
That being said, as Randy pointed out in some cases the land is more valuable than the wash as a going concern therefore valuation is simple because it is a matter of highest and best use. In this case run land comps to see what other parcels are selling for and take into consideration demolition and removal cost and you will have a solid idea what you could potentially get for your wash.
As a carwash and viable business, you have cost, sales, and income approaches to value that any fee appraiser will use to determine THEIR opinion of value. In relation, you have the multiple (3-5 times gross) approach which is a derivative of an income approach by this I mean you are using the income the property generates to determine a value. I have seen and purchased my car washes on both an income approach to value while at the same time considering the gross multiple approach and from my experiences operating the wash as a going concern has been feasible between 3-5 times gross.
Lastly, your personal situation needs to be taken into consideration. You mentioned your 60 how bade are you looking to sell? I am not referring to a fire sell but in your own plans how quickly do you want to get out of the business? If you have something else lined up maybe you want to sell it in the next 3 months, well price it around a 3 multiple of gross and I am sure you will attract a lot of attention. If you are interested in selling and don't have specific timeline in mind, well I would start at a 5-5.5 multiple and wait and see what kind of interest you get. Good luck and hope you sell it for what you are happy with!
Roz
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Conversely if your wash requires a new owner to make an investment (like a new IBA or to add equipment like softener, RO, etc) then a multiple lower than 3 is probably in the future. Get the equipment room looking clean, orderly, everything working properly so it shows well - similar to when you sell your house.
washallday
Member
I would buy a good wash with self serves and at least 1 IBA at 3X and I would sell a great wash at 5X gross or land value in some cases as Randy states. As a buyer I also will deduct for every dime I that I will need to spend in the first year
Well do you have an update on what a fair asking price would be?
washallday
Member
Realtors don't have any experience with car washes. Got land value, if just selling land, but you just can't add that price to the car wash price???
So I take the Gross X 5.5, and 5.0 and 4.0 I have sale price. I take those prices minus 20 % down calculate the loan amount on those prices and it leaves me with a figure.
I substrate that figure from the net and that is what the buyer would make for the year. I need to determine if that end figure is enough that the buyer is willing to buy the wash. Any more input would be welcome
So I take the Gross X 5.5, and 5.0 and 4.0 I have sale price. I take those prices minus 20 % down calculate the loan amount on those prices and it leaves me with a figure.
I substrate that figure from the net and that is what the buyer would make for the year. I need to determine if that end figure is enough that the buyer is willing to buy the wash. Any more input would be welcome
soapy
Senior Member
If you are just looking at land value remember to add in the water and sewer fees that have already been paid. In some areas that can be worth hundreds of thousands of dollars.
soonermajic
Well-known member
Not trying to be argumentative, but how the heck can that be worth thousands?
soapy
Senior Member
Compared to land that has never been developed you do not have to pay the hookup fees again.
That's a good point Soapy. Sewer tap fee's here are around $35,000-$40,000, water tap fee's can run about the same. One of the biggest killer of the last car was project we've been involved in is street improvements. Last car wash project they wanted almost $500,000 in street improvements, sidewalks, left hand turn lane etc. it killed the project.
soapy
Senior Member
Yes Randy, most cities now require building projects pay development fees, enlarged landscape areas, storm drain holding fields etc that can kill most projects.