recos on a good independent carwash consultant in the ny/long island area ?

[critkeeper11]

ok 1st time poster so please bear with me .
I am new to the industry and I am currently looking at a wash in a fantastic location imo . No real competition around , about 45k cars passing daily and tons of business's in the immediate vacinity and traffic lights causing slow moving traffic . The wash it self has been there 30 years but is just not living nearly to its capabilities . I grew up in the area and people use it solely now out of convienence not quality . Needs extensive cosmetic renovations and bettter signage but the place has enourmous potentiol i feel . Its a hand wash so not to much equipment in the tunnel . Intend on leaving it a hand wash . Heres the issue the owner has absolutly no records what so ever to back up his sales,revenue and expense data . Wont give up a single thing . So i look at it as i am buying the location and redoing the image , experiance and business model of the place . Not buying his business . I truely believe in the location and the plans i have but how the hell would you come up with a valuation other than maybe utility bills ( but wit a reclaim system how accurate are they ? ) and sitting there counting cars . I intended on offering about .40 on the dollar of his asking price to start . Its biz only , no land . I also found out by the dot of an extensive 2 year renovation project getting ready to start virtually any day in that location . Another huge factor in my bid ofcourse . So any imput on this situation would be gladly appreciated and please any recos on an expert consultant in the area would be greatly appreciated as well . Thanks alot guys .........

 

[Whale of a Wash]

Pictures would help alot. But as you already know offering 40% may be really insulting, and he might be done talking to you. I am sure you probably have a
reasonable figure in your head for what it will sell for. It is probably paid for
and if you were buying from a bank -(a closed wash 40% seems more in line.)
If your house was for sale and I offered you an extremely low amount how would you feel. You may also find with all the road work, you will spend alot of money on rehab and the like and put yourself out of business. The current owner probably can survive a road project. I think i have went through one at all 5 of my locations. Is it worth wasting 2 yrs on a maybe??

 

[critkeeper11]

Thanks for the feedback . I am not sure if you saw why i would offer so low . It was because the current owner can and will not show any info as far as financials what so ever . This guy cant show me 1 day of revenue or income . I was asking for 3 years tax returns from any wash i looked into . But this cant cant show me any gross sales , revenue or cash flow at all . So i am supposed to just take his word on what he says the wash makes ? Not . That being the case that i have to buy this place due diligence on financials free i am not buying his business i am just buying the location . Thats why i an offering so low and asked the question how would i possibly place a value on this wash ? The location is A1 , that i feel 100% about and the traffic work after speaking to the DOT seems very bearable . To me it wont inhibit business but will be an enourmous bargining chip for me in the negotiating phase . So putting money into this place is a must as it desperatly needs it as well as an active owner with good business and marketing skills . But again howw would you possibly place a value on this business and i need referrals of good independent car wash engineers to do a full evaluation on the business . I am in the NY area . Thanks again in advance for any help given here ....

 

[Earl Weiss]

If it's business only, no land and you are going to sink $ into cosmetics I assume you have seen the long term lease with acceptable terms?

 

[critkeeper11]

I want to make my offer contingent on a acceptable lease negotiation , an experts evaluation of the biz , machinery , no liens or loans against the biz , and no state or enviornmental issues to worry about . I just want to start the ball rolling on te negootiation phase while offering myself as much protection as possible . I am already buying into a biz that cannot back up any of its stated financials . Again how do i value a biz that will not give you a stitch of financial data in terms of revenue and net cash flow ? Also i need referrals of good evaluators in my area so i can accuratly access this biz as much as i can . Thanks ............

 

[pitzerwm]

You might consider having someone else, do the low ball offer, if he gets insulted, it won't be with you. If he accepts show up with the paperwork.

 

[critkeeper11]

interesting suggestion

 

[Mr. Clean]

We, too, were just discussing the other day the merits of machine washing after a hydraulic leak. Upon closer inspection, the cloth is starting to feel soft and slimy, but doesn't look dirty.

At what point is it time to replace mitter cloth? I know count is relevant, but condition can be a bit subjective, so when is it time?

Thanks.

MC

 

[robert roman]

Arriving at a market value for carwash is all about income verification and market potential.

If the owner is operating the business out of a cigar box, he should have no qualms about receiving a fair offer based on the volume level the buyer needs to attain for loan pay-off and recovery of equity (the buyer’s).

So, you are wise to engage a professional who understands the business and is familiar with preparing opinion of value.

 

[Earl Weiss]

...... Again how do i value a biz that will not give you a stitch of financial data in terms of revenue and net cash flow ? .......

Well, in my case I did it based upon what I projected the potential was based upon my other locations.

In most cases the business value as far as good will was $0.00. So, I was just valuing location and equipment after factoring fixed costs and what I would need to sink into the location both immediately to get everyting working and presentable, and over time as the volume increased.

 

[critkeeper11]

The location needs $ in upgrades in all areas . The tunnel has very little as far as machinery due to the fact its a hand wash and once again he(the current owner) will not show any data on the business except for that day . Crazy huh ? Obviously there is a reason he is selling under these conditions of secrecy . Possible IRS or divorce catalysts ? Just speculating . He is asking almost $800k for the wash as is and has had it listed for over a year originally asking just over a mill . But due to the fact he will not show any data no one is willing to take the risk . Everyone has backed out in the past the broker has told me when they find this out . I know i have to dump $ into the place figuring maybe $150k . He states the wash does just under $600k in rev a year and nets just under $300k . He also states he does about 33k cars a year . But again you have no way of verifying this claims what so ever . So i figure if i got the place for around $400k since my offer is a cash deal and willing to close immediately with no due diligence into his sales and revenue claims i am his only option to selling this place . I also figure that if im into this wash for close to $600k in all , with this location i could realisticlly break even in maybe 2 - 3 years with my biz plan and projections . Thats how i am coming to my offer . Honestly its a complete do over job and i am only interested in the location . The wash looks like **** and he has to be the worst , unfriendly owner i have ever seen at any biz ! I have a strong sales backround , have no problem getting dirty and working my ass off and am a people person 100% . I feel i can make this place do fantastic . So my #s are based on that stratagy and plan . Does anyone feel i am approaching this the right way or am i missing something ? Thanks for any help here .

 

[dogwasher]

It sure is strange that he's not giving you much information.

 

[robert roman]

Carwash, like most industries, has its fair share of unscrupulous people.

For example, some years ago, I was engaged to evaluate a wash near West Point Military Academy. The wash was being sold as cash business without real estate, $400,000 down.

The wash was advertised as mostly new equipment. On inspection, the only thing new was a couple of spray arches. For example, when I tested side brush by pushing it away from center line, it did not return to rest position. The rest of the wash was in similar condition.

My advice was run, don’t walk. Later, I was informed the investor bought the wash. Subsequently, I discovered the guy was out of the wash after one year.

Of course, he probably lost most of his $400,000 and the owner takes back the wash to sell again. I call this the rope-a-dope approach to making money.

Years ago, in areas like Queens and Brooklyn, washes were often sold without real estate. Here, the “ask” was usually equivalent to a multiple of 1 times gross sales.

In most cases, the only thing the seller would provide was an unaudited sales report to substantiate level of gross sales. Take it or leave it.

In cases without history, an alternative method to value is extraction. Here, you would make an estimate of market segmentation and total potential sales in trade area.

This information is then used with other techniques to discern the property’s potential site yield as in looking at the property as undeveloped.

Next, apply a revenue factor to site yield to determine gross sales. Next, apply an expense factor to gross sales to determine net operating income (NOI or EBITDA).

Next, you would apply different capitalization rates to NOI to determine “offer” price that corresponds to volume levels needed for loan pay-off and recovery of investor’s equity at the expected or desired rate of return on investment.

 

[critkeeper11]

to bad your down south , i would have been interested in possibly hiring you to evaluate this wash . Can you refer me to anyone good up here in the LI area ?

 

[robert roman]

Why use someone else, when you can get the best?

 

[1carwash1]

Have you actually seen what the DOT has planned for the area? I’m surprised nobody has commented on this. Some things to consider would be:
Will ingress or egress be impacted?
Will a median be installed?
Will frontage be taken? If frontage is taken, will it impact required setbacks?
Have you factored in the potential loss of business that could occur during the DOT construction process?

As far as valuation is concerned, I do not pay for “potential”. Why should I pay somebody for unrealized future profit.

 

[critkeeper11]

Excellent points . I will adresses them now . I have a full report from the DOT ofcourse . There will be a temporary easement of 5 - 7 feet ( depending on certain areas ) from the street . No permant easements on this property , so i get all my land back and regraaded and repaved entrance when done . It eats into the wash property slightly . The main entrance is actually in the rear of the wash on a street that is fine and runs parrallel to the main roadway . It is also gets heavy traffic daily as well . There is a front entrance to but not really the desirable way in . They will leave the front entrance open and if they do have to close it (for grading and sewer work ) it will be for a day or so topps i was told and will be done after bussiness hours as well at night . There is a median in the roadway as is , so nothing changing there . It is a 3 lane raodway in each direction north and south . Not only do i have a front entrance but i have 2 immediate turns onto the back street right after the wash to get to the back entrance easily . Right now there is not even a front sign mentioning the rear entrance and i plan on installing that as well to direct flow to the rear entrance .
As far as biz lost i dont think there will be much since i will have easy access for customers still . It is a main roadway that doesnt have an alternate route and the roads are filled with business's , stores and office buildings . The roadway is also a main way getting onto the parkways and expressways there as well so people are forced to still travel on this raod . And with no competition around i feel biz should be ok . To me it is just a bargining chip to get this place even cheaper .

 

[critkeeper11]

Why use someone else, when you can get the best?

I would consider you but you are in Florida . I want someone local that can do this visually since financial records are not available what so ever . Move to NY and you got the job lol . Still anyone know anyone around here that they could reccomend ?

 

[robert roman]

“As far as valuation is concerned, I do not pay for “potential”. Why should I pay somebody for unrealized future profit. (?)”

When someone plans a new wash and borrows money to build it, it is commonplace for the lender to have an appraiser express opinion on market value of the fee simple interest in the real estate subject to certain criteria.

In the ideal situation, the appraiser would find the value, without history of operations, say, $1.8 million whereas, the opinion, if at a stabilized level of operation with history, is $2.3 million.

This is the same as saying the wash has gained $500,000 in value before launched.

Likewise, if you plan to buy a wash without history (substantiated income), on what basis does one infer fair value from (dilemma)?

If the wash is under performing (as in crummy management, customer service, etc.) but the seller knows more business is possible, he/she will ponder a price that is closer to potential than actual to maximize return.

On the other hand, the buyer will want a price closer to actual performance.

If the parties cannot negotiate an acceptable price, no market is made and no sale occurs.

So, the outcome would depend on how bad the seller wants to sell and how bad the buyer wants to buy.

 

[critkeeper11]

I know supposidly he wants out and i want the place . So "To Be Continued" lol .....
Anyone have any remarks about Ryko's evaluation service ? Was just in touch with them as they seem to do what i am looking for and have people locally by me . Any imput ? Thanks .