How to sell a car wash

[SteveT]

I am considering selling one of my 2 car washes (I would like to retire). I want to keep the land. Does it make sense to lease the car wash to an operator for 20 years in addition to having them pay me an upfront payment of $100,000? I have added about $175,000 in improvements to the wash in the last year and business is pretty good. Any advice would be helpful.

 

[Sequoia]

You keeping the land provides a substantial benefit to you ... which is a detriment to the other party. I doubt that you'll find many takers who will accept such a detriment for the honor of handing you $100k. My .02 cents.

It depends on revenue, of course, so if you have stunningly good revenues that could change things.

 

[Alan Bussey]

Steve -

This is a common scenario. The 'buyer' just has to make sure that the lease payment will allow him or her to make a good amount of cash flow each month and year. Usually the higher the up-front price, the lower the monthly lease payment, and the opposite is also true.

Without buying the land or the building, but with buying the equipment and the business, the maximum loan term under the SBA program for your buyer/tenant will be 10 years. Some lenders will only provide financing in this situation with a 5-year term.

Some buyers will want an option to buy and a right of first refusal. Some will want a portion of the monthly lease payment to be applied as a discount to the eventual pre-set purchase price.