Seeking Advice on Valuation for Two Car Washes

[Oti]

Hello fellow car wash enthusiasts,

I hope this community can provide some valuable insights. I'm currently considering the purchase of two car wash businesses and would greatly appreciate your input on their potential valuations. Here are the details for each:

**Car Wash 1: **
- Property: 4 bays (3 covered, 1 RV open bay) on a .35-acre lot
- Annual Income (2022): $36,380.00
- Total Annual Expenses (2022): $18,568.00
- Net Profit (2022): $17,812.00
- Asking Price: $349,000
- Population Served: Approximately 3,500

**Car Wash 2: **
- Property: 2 bays, 2 vacuum stations
- Space and Parking: Very narrow and tight for parking
- Small Lot Size - charges $2/ 5 Minutes
- Gross Income (2022): $19,683.00
- Total Annual Expenses (2022): $9,212.00
- Net Profit (2022): $10,471.00
- Asking Price: $199,000
- Population Served: Approximately 3,500
- Distance from Car Wash 1: Approximately 30 minutes

Please note that the owner of Car Washes is retiring, and the income has not been verified as it operates on a coin/cash basis.

I'm seeking your expertise to assess whether the asking prices for these car washes align with their financial performance and the local market, taking into account the unique characteristics and space limitations of Car Wash 2. What would you consider a reasonable valuation for these businesses, given these considerations and uncertainties? Are there any specific factors I should be looking at to make an informed decision?

Any advice or insights you can provide would be greatly appreciated. Thank you in advance for your help!

Best regards,
Samuel Ana

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[OurTown]

Those prices seem really high to me but I'm not surprised the owner is asking that much for them. I assume the expenses do not include labor so you are basically buying a not so fun job for $550K that pays $28K/year. If he didn't report all cash on income taxes then he really screwed himself now that he's thinking of selling. Everybody's situation is different but I would never give these places a second look. Also that one wash looks like something from a third world country.

 

[eckert16]

Jamestown and San Andreas are interesting CA towns. Verify the income numbers, and the utility charges (and upcoming water use /recycling restrictions). The seller wants to sell them as a package deal, so if you are paying cash then maybe you can avoid any funding from banks and financial institutions as you know.

 

[Dan kamsickas]

Someone can ask for whatever they want when selling but 10X the gross without verifiable numbers!?!? Nope, unless the dirt is worth that but then you have dirt with a business on it that is not really best use of the land.

 

[traveler17]

Yeah I agree w Dan. He bumped his head if he’s wanting 10x gross. Is the real estate around there valuable?

 

[soonermajic]

those washes are NOT worth HALF the asking price! Not even freaking close. do NOT give over $200,000!!!! If you do, you will rue the ay, trust me!

 

[Oti]

I value the feedback, and it seems that everyone agrees that these prices are too high. I'm considering involving my brother in the deal, but that would mean splitting the income. Taking a loan would result in losing money to repay it. Is there a way to increase income after the purchase? The realtor mentioned the coin machine is down and the place is run down. Apart from maintenance, are vending machines the only option to increase income, or should I raise the current washing price of $2 for a 5-minute wash? And if so to what price. (Also no cc machine)

 

[Oti]

Jamestown and San Andreas are interesting CA towns. Verify the income numbers, and the utility charges (and upcoming water use /recycling restrictions). The seller wants to sell them as a package deal, so if you are paying cash then maybe you can avoid any funding from banks and financial institutions as you know.

I appreciate the feedback. Our plan is to pay in cash, but we'd need a significant reduction in the purchase price. I noticed you're familiar with the listing. Do you have any additional advice for a first-time buyer like me?

 

[traveler17]

I value the feedback, and it seems that everyone agrees that these prices are too high. I'm considering involving my brother in the deal, but that would mean splitting the income. Taking a loan would result in losing money to repay it. Is there a way to increase income after the purchase? The realtor mentioned the coin machine is down and the place is run down. Apart from maintenance, are vending machines the only option to increase income, or should I raise the current washing price of $2 for a 5-minute wash? And if so to what price. (Also no cc machine)

All of these things you’ve mentioned can increase revenue but remodeling and upgrading is not cheap which is why the guys prices for the place are outlandish. Take into consideration how much you’re going to have to invest after the purchase

 

[Greg Pack]

As low grossing car washes they are worth the lower side of the 3-5X gross rule of thumb. Find out what the property taxes are. with a low grosser you might find you are paying a ridiculous percentage of gross income just for that.

Even if the approach it from a land valuation approach keep in mind those are tiny parcels. You need to find out what you could build there. My local municipalities require "X" amount of space for parking park per a certain square footage of building.

 

[CleanMachine]

Not a chance 3xgross=$168,000 for both....discount that to account for the really poor condition and non-verifiable income.

Maybe $140k or 25% of what he is asking.