Purchasing foreclosed car washes

[1carwash1]

What would be the best approach on purchasing a foreclosed car wash from the bank? Also, what would be the process if the car wash had an SBA loan. Is the selling price solely up to the bank or must the bank and SBA approve the sale of a foreclosure?
There seem to be a number of choices popping up in the South East.

 

[Buzzie8]

I bought a car wash out of foreclosure that went to auction last summer. I would contact the bank who owns the property and see what their process is. While the SBA guarantees part of the loan to the bank I am not sure what their involvement would be in the sale of the foreclosed property. One thing you should be aware of is that most banks will try to become "whole" on the property or cut their losses as much as they can. With this said, you might be thinking your getting a great deal but after you own it you will realize why the previous owner went bankrupt. You need to treat the purchase as a viable business deal that makes sense. All the due dilligence that you would do any purchase should also be done on this purchase, including any financial information you can get from the bank about the previous owners revenues, expenses and anything else you can find. I was able to talk to the old owner and the owner prior to him to see what I was buying. Don't buy it because you think your getting a good deal because it is a foreclosure.

 

[Earl Weiss]

Points to consider:
1. Foreclosures require a public sale. Typicaly the bank is the high bidder because the loan amount exceeds the value. This sale process will wipe out junior liens but not liens such as real estate taxes. If you ten buy from te bank make sure the deal requires them to eliminate all prior liens and pay usual Seller closing costs.
2. If the bank arranged for the borrower to deed the property to them ad they will sell to you, junior liens are not wiped out. Make sure the contract requires this as well as unrecorded liens such as building violations.
3. The cost of acquisition is only part of the issue. How much and how long will it cost to get the place up and running as well as overcoming the bad reputation from the prior owner.
4. Prior owner went belly up so any info you get from them will be meaningless. How much did they forget to report. How much should they have spent on marketing and maintenance. How much business should the place have donme if run properly. IS it possible for the place to make $ due to external factors such as location, location, location, overhead.

 

[robert roman]

I would suggest the following approach.

1) Determine if the location is economically desirable and suitable as a carwash site
2) Inspect the facility and determine what costs are necessary to bring the wash to a commercially viable state
3) Determine if the wash is commercially viable by testing for market, economic and financial, technical, management, business model and exit strategy feasibility
4) Get an opinion of value from a qualified third party
5) Determine if the deal makes sense based on the proposed conditions and terms of purchase