i have never been in the car wash business and reading this forum has been very helpful. any feedback would be greatly appreciated. A family member of mine approached me about a wash that he had to sell on a bank short sale. it has been distressed for many years. it is about 30 years old and sits on a corner lot about 1/2 acre in size. the traffic count is about 12,000 cars a day. the guy up the road (1/2 mile away) who has the only other wash in town of around 4000 people offered to buy it and i had first option if i wanted seeing as i was a family member. the wash has one automatic bay and another self service bay that holds two vechiles stacked. their are also two vaccums on site and an attached lube that is leased. the lube seems to do well and is run well, the wash on the other hand is a mess. the automatic is closed more then open and the self service also needs a rehab. the interior needs all new paint and a lengthy cleaning process (green alage) growing all over. the mechincal room is like a bomb went off and most of the equiptment meaning boilers are all original. the rent from the lube is 1500 a month thats it no taxes or anything else just monthly rent. Their is no history of really anything for sales other then some scratchings on a yellow note pad of the last two years. when i put it all together it appears that last year the wash grossed around 20,000 maybe 22000 i really have nothing to go off of. so between the wash and lube the property is not even bringing in 40000. i had this thrown at me and a dececison had to be made within a couple of weeks. the other guys offer was 250000. i figured i would need to stick at least 105,000 in it that includes a new automatic and all the other work that needs to be done. I may have pulled the trigger but the big hang up for me was the floor heat. It started leaking 6 or 7 years ago and it hasn't been used since. the floor heat is a 30 year old system and if the leak could even be repaired i think it would be a battle with more down the line seeing as the neglect the place has seen. so if the floor system is junk then you can add another 15-18 thousand to the rehab bill which would put the total cost of the rehab project at about 120000 to 125000. looking at the market in my area i don't think the other wash does that great but the owner wants this wash for protection and is willing to pay for it. i figured i would have to almost quaddruple my sales to make any money and that seems far fetched to me, but i am not a experienced operator. the other main issue is their is a large ford/dodge dealer 8 miles up the road in a different town that has newer dual bay with laser washes. that dealer gives out washes like candy you buy a car you get washes for life, change your oil get a wash get service work get a wash. they give out tens of thousands in washes a year. my father bought a new truck and has 50 10dollar washes sitting in his truck. it is hard to compete with free washes like that. So i spent as much time as i could in the last week trying to figure this deal out and their was no time for anymore homework. i ended up passing on the deal do to the fact of not knowing the floor situation and any other things that may pop up two weeks was not enough time for me to get a good handle on what i was getting into hopefully i didn't pass up a oportunity but after looking at different valuations on this site the 3 or 4 times gross sales formula, that matches the assessed value of the property of about 150000 and he wants 250000 i just didn't see anything their other then a money pit.
missed opportunity or money pit???
- Thread starter Javis
- Start date
robert roman
Bob Roman
When a person new-to-the-industry is facing a buy/sell transaction, I always advise them to conduct a sanity test.
The first part of the test is to examine market potential or anticipated total potential sales in the defined trade area.
On a per capita basis, a town of 4,000 may have total potential sales of $250,000.
Based on maximum allowable payment (MAP), $250,000 in sales would support $350,000 in assets based on standard lease factors.
If the market is in equilibrium, $350K / 2 sites = $175,000 per site
So, $125K appraisal for this property is probably close to the true market value.
The next part of sanity test is risk assessment.
Assume you pay $125K for property and capture 1/2 the market or sales of $125,000.
Here, MAP would be $3,500. Applying standard lease factors, $3,500 would support $175,000 in assets.
$175K - $125K = $50K
$50k is the total amount of capital improvements you could afford and still make a profit “if you bought the property for $175K and had gross sales of $125K.”
So the assessment becomes;
If you can buy the property for $125K, would $50K in capital improvements be enough to raise gross sales from $40,000 to $125,000? This would be more than a threefold increase.
I don’t believe this calculation can possibly be true.
Hope this helps.
The first part of the test is to examine market potential or anticipated total potential sales in the defined trade area.
On a per capita basis, a town of 4,000 may have total potential sales of $250,000.
Based on maximum allowable payment (MAP), $250,000 in sales would support $350,000 in assets based on standard lease factors.
If the market is in equilibrium, $350K / 2 sites = $175,000 per site
So, $125K appraisal for this property is probably close to the true market value.
The next part of sanity test is risk assessment.
Assume you pay $125K for property and capture 1/2 the market or sales of $125,000.
Here, MAP would be $3,500. Applying standard lease factors, $3,500 would support $175,000 in assets.
$175K - $125K = $50K
$50k is the total amount of capital improvements you could afford and still make a profit “if you bought the property for $175K and had gross sales of $125K.”
So the assessment becomes;
If you can buy the property for $125K, would $50K in capital improvements be enough to raise gross sales from $40,000 to $125,000? This would be more than a threefold increase.
I don’t believe this calculation can possibly be true.
Hope this helps.
PaulLovesJamie
rural 5 bay SS
Based on the info you provided, IMO what you were offered was an opportunity to buy a leased lube business and a location to build a car wash business. Given the population of 4000, price is way too high for that, I would not have looked for more than a few minutes.
Of course there are other factors that could change my mind - like if the population in outlying areas is a lot higher or if your town is a destination of some sort (ie lots of non-residents there), or maybe you need to launder $...
Of course there are other factors that could change my mind - like if the population in outlying areas is a lot higher or if your town is a destination of some sort (ie lots of non-residents there), or maybe you need to launder $...
Greg Pack
Wash Weenie
Earning income is limited on such a small site. But a good auto location can bring in enough to justify.
Not sure you can get a decent new modern automatic installed for that price. What brand is there now?
The guy eight miles away is not a big concern IMO.
You're likely looking at a money pit, maybe that's a strong word. But there appears to be more risk than reward in it at this point. Pictures would be hugely beneficial though.
Not sure you can get a decent new modern automatic installed for that price. What brand is there now?
The guy eight miles away is not a big concern IMO.
You're likely looking at a money pit, maybe that's a strong word. But there appears to be more risk than reward in it at this point. Pictures would be hugely beneficial though.
Waxman
Super Moderator
The wash is basically the same as mine (2+1). I have a similar traffic count, slightly larger population.
You need proper floor heat and an automatic that will run consistently and put out a good clean car. IMO a new automatic will eat up your whole budget or close to it.
For a business venture like this to work, you have to put your all into it from an operations and management standpoint.
Sounds like a money pit/no-go to me.
You need proper floor heat and an automatic that will run consistently and put out a good clean car. IMO a new automatic will eat up your whole budget or close to it.
For a business venture like this to work, you have to put your all into it from an operations and management standpoint.
Sounds like a money pit/no-go to me.
thanks everyone for your replys the current automatic is a hydrospray and it is about 12 years old. the thing is junk everyone agrees it needs to go. putting a new laser in would have been great but the cost is just to much and would not make much sense. I was going to put in a saber wash by belanger if i were to purchase. the cost to put that in was around 90,000 but by the time you fix up the rest of the issues the total cost of the project is close to 375,000 after buying at 250000. the building and buisness has seen so much neglect that i am sure their will be some other things pop up. the floor heat is a big "if" it is 30 years old and hasnt had fluid in it for 5-7 years not a very good chance of it being salvagable also the boilers are all 30 years old and same thing i am sure if they do work they will have to be replaced shorty. the other thing is the aprons never had floor heat so that also has to be done if you want to do it right. the ford dealer up the road is in another small community and many people in our town buy their cars their. you would be amazed at the car washes that are given away my wife and i have been washing our vechiles for 4 years for free and we dont do business their. it is because the amount of free ones people get, they give away to others. if the free washes werent given out like candy i would be more confident in getting the sales up to 80 to 90 thousand but i feel at best i could get them to 50-60 thousand and them numbers plus rent i am only breaking even if i am lucky on a 375000 investment
cwguy.com
The Eric
Unless you are purchasing a used belanger I don't think you will be saving any real money?
The belanger is just like a laser but has the ability to have 2 pump stations to make it faster..... basically.
The belanger is just like a laser but has the ability to have 2 pump stations to make it faster..... basically.
sorry eric i don't understand i planned on purchasing a new belanger what do you mean i wouldn't be saving any money thanks
MEP001
Well-known member
I think they quit making the Vector. It was a good machine. The Saber is also good and it's simpler, but it doesn't size the vehicle and because of that doesn't wash as well.
Belanger's direct-to-customer service is pretty much non-existent. If you don't have a really good distributor to install and service one, you should probably avoid them.
Belanger's direct-to-customer service is pretty much non-existent. If you don't have a really good distributor to install and service one, you should probably avoid them.
cwguy.com
The Eric
I meant the vector is not going to save you any money.... I assumed that was the only reason you would consider the vector?
When mep1 says the saber does not profile the car. That is kind of bad.
cwguy.com
The Eric
This is actually the best advise anyone could give you....
The belanger people flew down someone from canada to try and fix some problems with my Dad's vectors. That isn't exactly something easy to get done.
The next mystery owner sold those bad boys first chance he had. LOL 
I just don't see this as a wise investment. Not enough traffic and an insufficient population around the wash to generate enough revenue to be profitable. The self service wash would depend more on the local population than the automatic. For self service customers it is much less of an impulse purchase because people normally dress for using a self service with "work" clothes. With an automatic or conveyor they do not have to come into contact with the products and can wash their vehicle without getting out of it. While the lube will generate some income I don't think the wash will make up the difference. If you can't negotiate a better deal I think you should pass.
If you do decide to go through with it Hydro-Spray now offers a replacement components and upgrade package that would bring the unit up to date for much less than a complete replacement.
If you do decide to go through with it Hydro-Spray now offers a replacement components and upgrade package that would bring the unit up to date for much less than a complete replacement.
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Waxman
Super Moderator
I like RPH's idea of fixing what you already have (touchfree). That could put you back in a comfortable budget for rehab.
That has been talked about but the automatic is in such poor shape and the whole place has been neglected 4 years that I think to get anyone to come back it is going to have to be really rehabbed, cleaning and trying to fix with a new ownership banner I don't feel is going to cut it the wash is barely doing 20000 a year if the numbers are even right Thanks.
Jimmy Buffett
Active member
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250k for a wash doing 20k and considering buying a new auto? Run don't walk.
Washmee
Fullservice Tunnel
Thanks I did get a good laugh what about sticking some money in the current auto if that is possible? and the wash facility not much but enough to get it where it needs to be and just lease the whole thing to the lube operator? I could get enough to cover debt payment and taxes ect... I wouldn't be making really anything just Paying debt off. Any thoughts?
cwguy.com
The Eric
QUOTE=Javis;81322]sticking some money in the current auto[/QUOTE]
I don't think anyone uses the auto that is the problem.... Don't stick your money in the entry unit! LOL.
I also don't think anyone is kidding? Or making jokes?
I think the best bet because it sounds like you can not be talked out of it. Is to sell the oil change business. Then turn around and somehow sell the ss business for 200k? Make 50-100k..... Send me some consultant money. Then everyone laughs.
I don't think anyone uses the auto that is the problem.... Don't stick your money in the entry unit! LOL.
I also don't think anyone is kidding? Or making jokes?
I think the best bet because it sounds like you can not be talked out of it. Is to sell the oil change business. Then turn around and somehow sell the ss business for 200k? Make 50-100k..... Send me some consultant money.
Then everyone laughs.
