How much for that carwash in the window?

[dynomonkey]

I've been reading that a wash should be priced at 10 x earnings to 3.5 x earnings. Do you think that gross or net? Net would be great but that just doesn't sound quite right.

 

[diycarwash]

Gross. If you are selling go for 5X. If you are buying go for 4X.

 

[dynomonkey]

That's what I thought. I was just noticing that the expenses are high for this particular wash. On 90 the expenses are about 65. Asking 600 for the property

 

[Greg Pack]

Just bought a pretty nice modern 5/2 ( Gabled roof, tile walls, solid middle class area, great dirt) for 3.75 X 2009 Gross. Some upside revenue potential too with just a little work. Prices will continue to come down. Be patient and wait for the right pitch.

 

[Jimmy Buffett]

Why did they sell it?

 

[Greg Pack]

Manager was in charge of it and wanted to cut back to two washes. Owner does not want to fool with them.

 

[jstewart]

In and existing wash for sale what would be the best way confirm the sellers claim other than his tax returns. These are all cash business and folks claim to make a whole lot more than they show?

I get that what they claim as income is the basis for the selling price. but the reason to buy an existing wash is not to just break even .

But If a guy claim 30% more than he reported can you look at water usage or power?

 

[mac]

I would go by his tax returns. There are too many variables to water usage. For instance he could just turn on a hose and let it run to get a higher usage. Don't be in a hurry to buy.

 

[Greg Pack]

They want to have their cake and eat it, too. Nowadays,no bank will loan on a wink and a nod. If they are lying to you about the numbers the paper trail will favor them and their tax returns.

 

[Reds]

jstewart;38856In and existing wash for sale what would be the best way confirm the sellers claim other than his tax returns. These are all cash business and folks claim to make a whole lot more than they show?

I wouldn't believe a word of it. I know 2 people who listened to that b.s. and both lost their a$$ and were out of business in 2 years. There is no way to verify it. It may work to the sellers advantage during ownership, but it is to their disadvantage when they want to sell. They already "made" 30% on the unclaimed income by cheating the taxman. In addition to that you would be paying them extra (for that hidden income) and if you claimed it you would only realize 70% of it after taxes, and if you pocket it you would have paid them to take the risk yourself. I would pay some multiple of net earnings, verified by their tax returns, p&ls generated by an accountant, an audit by my accountant, some gut feel assesment, and by auditing their bank statements to verify deposits. Multiples of EBITDA (a.k.a. free cash flow) is what I have used in the past when selling/buying businesses.

 

[Earl Weiss]

Everyone mentioned the wink and nod of people claiming they made morre than reported.

You also ned to be careful about people reporting MORE than the place generated to boost th sale price. Heard of a place in the west burbs claiming crazy numbers.

If the owner has another cash income source they could be laundering more than cars or simply shifting income from another business t the wash to boost the price. You need to watch the place and see if the #s seem reasoneable. Met a law enforcement guy at a party and he said xar washes are prime candidates for laundering $. I think a local guy was arrested for it years ago, but last I heard hebeat the rap.

Anyway, if the numbers are crazy the new owner pulss there hair out rying to figure out where all the business went.