New buyer - 6 self serve bays and one IBA

[Graceland]

Hi all,

I have always wanted to own a self service car wash. Mostly because my other business is highly reliant on specialized talent and has become more about managing people than managing a business. I’m looking for a business with little employees.

I found a car wash for sale in my hometown that has 6 bays, and 1 IBA tunnel. It is in a good location, grosses $400k / yr, and cash flows $200k / yr. The sellers said the real estate was valued at $500k (I think may be high) and they are asking $1.2 million. Again this seems a little high. If real estate is $500k and 2.5x cash flow it should be closer to $1mil?

Since I’m new to this I’m not sure how to make sure this is a good deal and do my due diligence before drafting an LOI. My biggest concern is from what I can see there are terrible reviews saying the automatic doesn’t clean good at all, it’s over priced and the bay is too short of time for the price.

According to the records, it seems the money keeps coming in but as a first timer here, how much do you all set aside for capital expenses? Once I get the date of the IBA, how often do those need to be replaced? How can I gather how much it would cost to get the machine in a more acceptable working order? Or should I plan to replace if I find out it is quite old? I would love to add a self serve dog wash in one of the bays, add new lighting to the building, create a website, Facebook page, etc to drive even more revenue. Anyone else done that and found success?

Any advice is greatly appreciated!

 

[TMoliver]

First You need provable income before considering purchasing. Since you are new to car washing, I recommend you talk to other operators in the area and have them tell you which local carwash / service distributor company can help you. You will need to know the condition and age of the equipment. That is the only way to know what the wash is worth and what it will cost to get the wash up to standards.

 

[Graceland]

Thank you! I have requested details on the model, condition and age of the IBA!

 

[Graceland]

I did hear back that the IBA is a D&S 5000 installed in 2006.

 

[Roz]

3x Gross Revenue is fairly standard and reasonable. New equipment can cost you $200K but maybe the equipment just needs a good service call and to be programmed better than today. The Ask is in the ballpark and if the place is grossing $400K it is a good or solid location. With a new approach and some marketing to back up the changes you can make the revenue grow.

 

[Graceland]

Thank you, Roz!!

 

[TMoliver]

DS5000 is obsoleted and very few new parts are available however you can find used parts around. I would be looking at replacing the DS5000 with something newer and easier to maintain. At the ICA show there were touchless IBA showed 150
k-180K ranged and even with new entry stations included.

 

[I.B. Washincars]

Those are good numbers for a SS/IBA wash. No doubt the tunnel guys already see it doing well and it will soon have one in its lap. I’m not saying it might happen…it will happen.

 

[rlloyd]

DS5000 is obsoleted and very few new parts are available however you can find used parts around. I would be looking at replacing the DS5000 with something newer and easier to maintain. At the ICA show there were touchless IBA showed 150
k-180K ranged and even with new entry stations included.

What would you sugges replacing equipment wih on a 4 bay car wash I need to replace equipment but have no idea what is good..

 

[Car_Wash_Guy]

Go down to city planning and see if any tunnels are coming in

 

[TMoliver]

Without being there it would be hard to say what is good. So try to make friends with other operators in your area. Good competitors are good operators will be glad to help you. Ask them who they use for those repairs that they are not able to do. Hopefully there are several services companies in your area so you and get different options. A good service / distributor will be glad to advise, not just sell you something. After that you will be able to make an informed decision on what kind of offer you can make. That is what I would do.

 

[Graceland]

Go down to city planning and see if any tunnels are coming in

There is a tunnel less than a mile away! It doesn’t seem to have very good reviews either. These are the only two in the downtown area but there are more around the area - 10-20 minutes away.

 

[Graceland]

Without being there it would be hard to say what is good. So try to make friends with other operators in your area. Good competitors are good operators will be glad to help you. Ask them who they use for those repairs that they are not able to do. Hopefully there are several services companies in your area so you and get different options. A good service / distributor will be glad to advise, not just sell you something. After that you will be able to make an informed decision on what kind of offer you can make. That is what I would do.

thank you! I actually did just find out a family friend owns a tunnel about 25 mins away so I am setting up a call with them!

 

[MEP001]

The D&S 5000 is a good machine, and you shouldn't have trouble finding parts for it. You should be able to coax a few more years out of it until your cash flow can pay for a more modern machine.

 

[Greg Pack]

Can't stress the tunnel warning enough. You need to educate yourself on the express tunnel concept and know exactly what you are dealing with. You need to know it well enough that you can identify key concepts of that segment and what makes a good site or poor site. The fact you just say a tunnel wash is nearby tells me that you likely need further education on the subject, and need to investigate if any are planning to build near this site. And yes, as IB said if the 5/1 is grossing 400K that is likely an area a tunnel is interested in developing.

Having said all that, if you can prove the gross is legit, that the land is included in purchase and there is no tunnel in the immediate future I'd buy at 3x gross all day long, unless the site is an absolute cosmetic dog. I wouldn't sell my site for less than probably 5X. I can't imagine a new 5/1 being built for less than about 800K plus property

Chemistry is a big part of the touch free cleaning process and might can be impoved.


Pay back that loan quick though.

 

[Graceland]

Thank you! I will dig into the tunnel and let you all know what I find!

 

[Roz]

Thank you! I will dig into the tunnel and let you all know what I find!

If the place is a touch free wash then you are not competing with a tunnel that is open 9-5, has higher operating costs than you, and is a different beast than an IBA. Also people who want to use a self service bay are not going to a tunnel. Both places can thrive in the same town.

Make decision on the financials, have confidence in your abilities, do not over analyze the opportunity or someone else will swoop in on the deal....