Lease a car wash

[dmmurray34]

Hi I am looking at leasing a car wash. It was recently closed down. The old operator become ill and no longer was able to take care of property. Lease would be $1500 a month plus the owner wants leasee to pay property taxes around $200 per month. It is a 4 Bay SS. According to the owner all of the equipment was taken out so it needs a whole new system. I already reached out to a vendor to determine how much to put an entire system in. He said around 100K. Would this be worth the investment on a leased property?

 

[Eric H]

Unless it is a lease to own program, in all likelihood NO.
making a guess on terms for the equipment loan at 7% for 60 months with $10,000 down puts the payment at +/- $1700. Plus the $1500 lease and $200 property tax you’re at about $3400/month before water, sewer, soaps, maintenance, and insurance. Most people fall over when they find out how much insurance costs.
Most of us here discourage leasing a Carwash.
You’ll need to do a detailed ProForma with traffic count to make a guess on gross income.

 

[eckert16]

Is it really a carwash that you are leasing, or are you wanting to lease property that 'used to be' a SS carwash: "According to the owner all of the equipment was taken out so it needs a whole new system."... and you want to lease the property from the owner and pay the owner monthly fee... and put in a new carwash system for the owner... and you are going to pay the property taxes for the owner...(it seems as if you are implying that are also planning do the maintenance on the property and paying the utilities?)

Sounds like a great deal for the current owner. If you are willing to do this everywhere... quite a few owners would like to seek the service you are providing....you are paying for everything to be installed,... doing all the work, ...paying all the bills, ... improving the owners property,... giving the owner quite a monthly paycheck, .... and in exchange for all that, you are getting ... what exactly in this 'deal'?

 

[washnshine]

Both posts above have all great points. Also - how long is this lease for? Can the owner break it at a specified time? Like was already said, you could potentially be paying for the rehab of someone else’s wash.

 

[Dan kamsickas]

Nope. Nada. No way. For all the reasons already posted.

In addition:
1) I have trouble believing the only reason the owner was no longer able to take care of the property was illness. The fact that they sold off all the equipment leads me to believe there were probably financial and operational issues also.
2) 100k for equipment for a 4 bay? What does that include? What about installation costs? Who owns the equipment at the termination of the lease?
3) What do tax returns say they were doing for business before he shut it down?
4) You're essentially going to do a complete rehab on his business and pay him for the opportunity to do so.

At this point the owner really doesn't have much leverage, if any. He has a specific use building on some land. Explain that to him, make him a fair offer on the land, and if he says no......walk away.