Leasing a Wash Facility

[washregal]

A local operator is looking to allow for a lease - this facility will never be a purchase - it is 5 bay ss +2 IBA touchless systems with brand new touchless units.

Current operator has a ton of other investments and does not have the time for the operation - this facility sits on a larger plot of land that holds a high value - the wash came with the land so to speak.

The facility does need TLC - of course time and attention - my question is there a fair structure for a lease program that might start out low and increase gradually based on an incentive to the growth of the business - Year (1) at the very least will take time - energy and effort to gain and recapture old / new customers.

A big downside to this opportunity is that if and when the owner does get a fair dollar number for the entire land lot - I am sure they will sell - Has anyone come into a situation like this in the past - any advice / suggestion?

 

[MEP001]

You can create a lease for anything with any terms. If the owner is willing there's no reason he couldn't lease it to you at a monthly or yearly increasing cost to you, you can word in guaranteed renewal, and you can include a clause that will maintain your lease if he does sell it. You could even add a right of first refusal clause where if he does sell he has to offer it to you at that amount first.

 

[dukeofsuds]

I agree with MEP001. While this is fraught with risks, all risks can have clauses to reduce them.

I would look beyond the lot. For example, what about the equipment. Those 2 touchless IBA's aren't going to be brand new for long. So, are you leasing them, or buying them? I think that's where things could easily get sticky. The last thing you want is that if there's a catastrophic failure and the owner is required to fix? Say something happens because the machine wasn't greased. Was that his fault as the owner, or yours as the operator? That would likely be downtime. Everything will be based on your personal relationship with the lessor. The owner may not care or give you the attention you need otherwise.

The key is to think through every possible scenario and who has responsibility for what, AND making sure there's agreement on action to resolve. That's why leasing is so looked down upon. It's hard enough to run a car wash at 100% uptime. A lease just adds another level of complexity for each part you lease. If you ever have to take your lessor to court, you're going to be out of business with the contention area for a while and the contract is never tight enough for all situations.

But there's money to be made, and deals can be struck, even for a lease. I might suggest that you offer him that you'd be a turn-key manager role for say 6 months. That's a win/win. Both parties can see how the relationship works. The manager deal would have a full-out after 6 months. Use the time to understand the opportunity better as well as write a draft lease based on your experiences. You can also use that time to figure out your marketing plans will be if you go for the full lease. And if you do, then go and execute your plan.

Good luck.

 

[mjwalsh]

Not sure if this is a fair comparison but there is lot of leasing done in the laundromat ownership arena in parts of the country. Normally, what happens there I believe ... the lease is just for the land & building category items & not for the equipment that tends to be replaced from time to time.

 

[tdlconceptsllc]

I leased my wash for the past 6 years and just purchased this year. I can tell you all you want to know about leasing a site. Normally the tenant is responsible for all equipment new or current all repairs and any improvements. As well as providing own insurance and pay the property taxes and all expenses. Simply you are just renting the building and land at a wash and normally benefits the land owner at a carwash unless you get a good solid lease thats set for 10 years at X amount and doesn't increase and you have a first right of refusal with option to purchase for X amount. If you want to know more PM me. My situation I already ran the wash for a while even before leasing is only reason I done it. Leasing is very tough in this business I think unless you get a very good price