So I did a search and see lots of "valueing" a wash type of information but I have a different issue. I am looking to sell a wash in a rural area that does well and placing a 4.5x gross or around a 15% CAP rate I thought it would get snatched up, but having real trouble finding someone to purchase it. I "sort" of tried the broker route but they seem to want to price it cheap and take a hunk of commission. Has anyone had success somehow else in selling their wash other than brokers in rural type areas? Thanks for any help or pointers.
Selling a wash
- Thread starter trentu
- Start date
If you're in a rural area you might just try word of mouth. Any local papers might work. One suggestion I have is to get your equipment room in operating room cleanliness and order. Throw out all the old junk. Make sure you have lots of shelves ( I prefer the metal open ones because they won't collect dirt.) Put in a utility sink and workbench if you don't have them.
robert roman
Bob Roman
“I am looking to sell a wash in a rural area that does well….. I thought it would get snatched up, but having real trouble finding someone to purchase it. Has anyone had success somehow else in selling their wash other than brokers in rural type areas?”
Exit strategy is a function of capital assets, industry model, potential buyers and wealth.
The self-service industry model today is between 2 and 3 times gross sales adjusted for risk associated with continued operations (buyer’s risk).
Potential buyer is a function of supply and demand and real estate values. Today, it is primarily a buyer’s market which creates downwards pressure on price.
This is especially so for self-service in rural areas as well as truck washes.
For instance, rural areas have lower population densities (thus fewer potential buyers) and there are few people interested in the truck wash business.
Consequently, while the typical carwash marketing period is 12 months, it may take a considerably longer time to sell without budging on price.
In my area, investors are buying self-service properties for 50 percent of replacement cost new.
Of course, these washes are distressed, you describe yours as not. So, there may be intrinsic value that exceeds the typical market valuation.
My advice is to hire a professional to prepare an opinion of value.
Exit strategy is a function of capital assets, industry model, potential buyers and wealth.
The self-service industry model today is between 2 and 3 times gross sales adjusted for risk associated with continued operations (buyer’s risk).
Potential buyer is a function of supply and demand and real estate values. Today, it is primarily a buyer’s market which creates downwards pressure on price.
This is especially so for self-service in rural areas as well as truck washes.
For instance, rural areas have lower population densities (thus fewer potential buyers) and there are few people interested in the truck wash business.
Consequently, while the typical carwash marketing period is 12 months, it may take a considerably longer time to sell without budging on price.
In my area, investors are buying self-service properties for 50 percent of replacement cost new.
Of course, these washes are distressed, you describe yours as not. So, there may be intrinsic value that exceeds the typical market valuation.
My advice is to hire a professional to prepare an opinion of value.
Buzzie8
Member
Where do you get your statistics for "between 2 and 3 times gross sales adjusted for risk associated with continued operations (buyer’s risk)"?
Waxman
Super Moderator
If cap rate=capture rate, as in what %age of traffic uses the wash per day, that (15%) seems awfully high to me.
I'm in a rural area as well and based projections before opening (for financing purposes) at 3/10 % or .003.
Isn't 4-5X Gross a sale price we all dream about, rather than a reality presently?
Is it possible to sidestep a broker if you possess a professionally-prepared opinion of value?
It's only partly a buyer's decision to purchase a carwash; unless the buyer pays cash, it's mainly the bank's decision, right?
I'm in a rural area as well and based projections before opening (for financing purposes) at 3/10 % or .003.
Isn't 4-5X Gross a sale price we all dream about, rather than a reality presently?
Is it possible to sidestep a broker if you possess a professionally-prepared opinion of value?
It's only partly a buyer's decision to purchase a carwash; unless the buyer pays cash, it's mainly the bank's decision, right?
Buzzie8
Member
Cap rate is actually "capitalization rate" which is a valuation method for commercial real estate "net income/cap rate = selling price". If I valued my washes using any reasonable cap rate valuation they would sell for $500k more than I can actually get. They still are not worth selling for less than 4-5x gross based on the limited work they require and the income they make. The amount of time the business requires is never mentioned in self-serve/IBA's when compared to other car wash business models and it's biggest advantage. Having said that something will probably break at my wash today requiring a bunch of my time, LOL.
robert roman
Bob Roman
I obtain my statistics from research including academic papers on special purpose properties and valuation problems and reviewing appraiser annual reports Typically, these reports discuss the intervals for multiples and cap rate as well as trend in region. I also have internal files and read the literature.
Reason being is valuation tends to change from year to year following business and real estate cycles.
Currently, it is a buyer’s market for self-service with the exception being in certain markets where self-service property has the potential for a higher and better use as a carwash site.
There are an increasing number of carwash developers that are using this strategy.
Reason being is valuation tends to change from year to year following business and real estate cycles.
Currently, it is a buyer’s market for self-service with the exception being in certain markets where self-service property has the potential for a higher and better use as a carwash site.
There are an increasing number of carwash developers that are using this strategy.
cellardale@aol.com
Member
Hey, another local operator here in Oklahoma. Let me know where you are located, I have friends thinking of getting in the business. Dale
