Need help with 1st carwash purchase

[washnglow]

Hello everyone,

We are looking at a carwash business for sale with about 1 acre lot for sale and we are very interested in buying. But given we don't have any prior experience with a carwash business, looking for your valuable guidance for what should we look for in this business. We have experience in running retail businesses for past 15+ years.


Some details about the business: Please see if these are numbers are in normal range?

Been in business for over 20 years. There is some competition in the in the immediate area.

Asking price: close to 3 million
Sales: Average for last 3 years $640k/year. What is the best way to verify this other than looking at the P&L report?
Cost of materials (Soap, chemicals etc..): $50k/year
Repairs & maintenance: $12k/year
Open 24/7

2 Auto wash (Razor equipment) bays (No doors). Equipment is around 8 years old. what is typical life if the equipment is well maintained.
3 self wash bays
8 Vacuums
Building & Lot condition: Good and well maintained.


Please let us know if there is anything else we should be looking or asking for that will help us with the decision?


Thank you for all your inputs in advance!

 

[Car Wash Man]

Do you have any pictures of the lot and the equipment being used? Where is the wash located? Why is the current owner selling the business? Big factor is the condition of the equipment you would be taking ownership of. Have to verify and make sure you aren't paying a premium for some one elses used up equipment. This is a great place to get info on the wash industry so congrats on jumping on this forum.

 

[Waxman]

you use tax returns to verify income

 

[AnalyticWash]

Maintenance seems low for a wash doing 640k.


My guess is they are doing a lot of work themselves and not putting it on the books. You having no experience are probably going to spend triple that year 1.


Sent you a PM.

 

[Axxlrod]

That's a lot of money to spend on a business that you know zero about. Car washes are very hands-on and are open 7 days per week. Say goodbye to your weekends.

Also, have you talked to a bank? You will have a very difficult time getting loan in this current economic environment, especially for a business you have no experience in.

 

[washnglow]

That's a lot of money to spend on a business that you know zero about. Car washes are very hands-on and are open 7 days per week. Say goodbye to your weekends.

Also, have you talked to a bank? You will have a very difficult time getting loan in this current economic environment, especially for a business you have no experience in.

I agree, that is a lot of money and the nervousness. But I always thought it is still lot less work than any standard retail businesses I have owned which are also 7 days a week.

I did speak with couple of banks and looks like I can get the loan with 25% down.

Any idea what is the average age of washworld Razor 1 equipment? Given current ones are 8 years old.

 

[OurTown]

How many washes on the Razors? What are the rest of the expenses? Don't be in a hurry as the asking price will surely reduce the potential buying pool.

 

[washnglow]

I will have to get that information from the seller. How many washes does it typically last? Just wondering if ai should negotiate equipment replacement cost in the asking price or not.

 

[OurTown]

I will have to get that information from the seller. How many washes does it typically last? Just wondering if ai should negotiate equipment replacement cost in the asking price or not.

I don't think there's a magic number on longevity. How they were installed and maintained play into that. Theoretically they can last a really long time but after a bit they can start costing a lot in repairs. With the numbers you stated earlier I'm guessing they are there now and could be one of several reasons why they are selling the wash. Buying new machines would start the depreciation again for tax write offs, should give a few years with no major repairs, and get the latest model which could possibly give you shorter cycle times and more features to charge more for.

 

[Greg Pack]

Verify income with tax returns. Get car counts on automatics. Try to find out if an express tunnel is being planned for the area.

Your reported repair expenses are super low. I buy that much in parts and stuff easily and provide 99% of my own labor. I'd plug in 5% of gross for repair expenses.

Eight year old autos really don't concern me if they've been maintained. Look around at the general cleanliness of the property and the auto bays. Look at the bay hardware- trigger guns, hose and foam brushes. Look at the vacuum hoses and nozzles for excessive wear. If they look un-kept then it might key you in their overall operational philosophy and whether they take care of things or tend to neglect them..

In my opinion a wash doing those kind of numbers needs an attendant seven days a week, probably from 9:00-3:00 or so. Not everyone will agree but that is a pretty busy site. There is a lot of cleaning up to do and continual minor repairs. Here anyone decent is $15/hour. Plug that into your P&L.

What's the land worth?

If everything checked out and no tunnels come to the area the asking price is still priced close to perfection. It likely exceeds the cost of building a brand new wash and approaching the price of a new express wash. If an express tunnel comes close into the market could lop 30% off your gross.

And this business is not passive. Someone will need to learn the business, include the technical side of things for it to continue to succeed. It's not a full time job though.

 

[Dan kamsickas]

I always thought it is still lot less work than any standard retail businesses I have owned

It's not less work, just different. Yeah, there may be some weeks where you may only be there a couple hours a day but there will be weeks where you never leave. You MUST have someone on site daily, at least. You also need to be passable with electrical, plumbing, controls, etc or every bit of margin is going to get suck up paying someone else.

 

[Car Wash Man]

Verify income with tax returns. Get car counts on automatics. Try to find out if an express tunnel is being planned for the area.

Your reported repair expenses are super low. I buy that much in parts and stuff easily and provide 99% of my own labor. I'd plug in 5% of gross for repair expenses.

Eight year old autos really don't concern me if they've been maintained. Look around at the general cleanliness of the property and the auto bays. Look at the bay hardware- trigger guns, hose and foam brushes. Look at the vacuum hoses and nozzles for excessive wear. If they look un-kept then it might key you in their overall operational philosophy and whether they take care of things or tend to neglect them..

In my opinion a wash doing those kind of numbers needs an attendant seven days a week, probably from 9:00-3:00 or so. Not everyone will agree but that is a pretty busy site. There is a lot of cleaning up to do and continual minor repairs. Here anyone decent is $15/hour. Plug that into your P&L.

What's the land worth?

If everything checked out and no tunnels come to the area the asking price is still priced close to perfection. It likely exceeds the cost of building a brand new wash and approaching the price of a new express wash. If an express tunnel comes close into the market could lop 30% off your gross.

And this business is not passive. Someone will need to learn the business, include the technical side of things for it to continue to succeed. It's not a full time job though.

Definitely agree with Greg Pack here. Lots of people are intrigued by getting in to the carwash business because they see all the glamor of it, and think they can "pop" in once a week to collect the money when in the reality it is much more demanding then this. I second that for a wash of this size a person being on site during the day for busy hours would be recommended.

How far away is the wash from your home or place of work during the day, washnglow? My friend who owns multiple locations, actually sold off some of his locations as he said his further away washes became to much of a burden for him with drive time and maintenance.

 

[Axxlrod]

I agree, that is a lot of money and the nervousness. But I always thought it is still lot less work than any standard retail businesses I have owned which are also 7 days a week.

I did speak with couple of banks and looks like I can get the loan with 25% down.

Any idea what is the average age of washworld Razor 1 equipment? Given current ones are 8 years old.

A lot less work than retail? Ha! Car washes are a hands-on often dirty business. Think dirty, oily mechanics in a loud, wet environment.

I'm curious what state you are in? I've only seen SS car washes for $3M in CA. Otherwise the price is crazy.

 

[Greg Pack]

Washnglow I will say the rule of thumb for car washes is 3-5X gross income so it's within the realm of sanity to ask that much. . Higher grossing washes get a higher multiple because of operational efficiency. But you are buying a what is probably a top 10% earning car wash and paying probably close to costs of a constructing brand new wash on a nice piece of property worth 500K or so. If revenue records can be verified up many people would pay over 2 million for that site, maybe 2.5., heck maybe even 3, especially if owner was willing to carry some risk. But on a wash that expensive there is little room for error. Wouldn't be my first wash to get into the business but I am risk averse.

 

[water guy]

Got any pics?