single tunnel car wash for sale

[ajay]

A car wash next door to me is for sale! It's a single tunnel towel dry car wash. I've been watching it for approximately 3 years now - it has descent flow.

Could you tell me how I go about evaluating it?

please note: I'm currently in laundromat business where I can determine the business worth from utility and also from national averages.

I'm wondering if there's a formula or a way of determining for a car wash business as well? This is strictly a tunnel wash that has CC service that was added about a year ago.

before you say - I did do a search on the forum but I wasn't successful. Unless I'm doing it incorrectly ofcourse. In that case, please provide a link for information.

Thanks in advance

Aj

 

[Waxman]

Try the 'car wash appraisal handbook'. read through that and you'll get some good ideas.

 

[bedford]

This could be a great opportunity if you can buy it right. Laundry's and car washes go very well together. If there's room, ss, iba, tunnel, laundry, nice waiting area and you have something that will really draw.

 

[ajay]

thanks. My biggest challenge right now is how to determine "true" cash flow information. I 'm working with a equipment distributor who also is an realestate agent. Any advice will be much appreciated.

ajay

 

[galen]

Is the agent also the listing agent? If so don't hold to much truth to what he says.

 

[ajay]

no he is not. He is working as a buyer's agent. Since I've been a neighbor of his, I know he does preety well. How well, that I have to determine with the utilities -specfically water utilization. It is single conveyor and I understand it uses more water than a SS. Originally when I looked at the SS, I was basing the gross on 9gal/wash.

Do you know how much water a single car or a single run will use?

There are also 2 vacuums, which run quite a bit when it's warm.

He also has contracts with the city police and certain other organization in the area. They provide towel dry service. Cars do come out nice and clean, as I've experience, versus the laser wash.

It is also labor intensive since you'll need a person in the back as well as front.
aj

 

[Waxman]

The only way to determine income of any business is to look at the past 3 years' income tax returns. When arriving at a sales price, this is what to do.

 

[ajay]

here's what's reported:
income : 216K
COGS: 10K
labor: 20K
Water: 8K
Parts: 1500
elec/gas : 22K
Lease: 14K
RETax: 17K
sales tax:12K

lot size: 60*254
valued at 400K
water rate: 1.41 /100cf
sewer $1.57/100cf

Assuming that the owner is showing $75000 net income. What should the sales be at?

Is there a formula gross to sale or net to sales.

BTW - I did order the car wash evalaution book.

tx

 

[pitzerwm]

What I would look at assuming that the numbers are correct. One think that I use to do, to verify if a businessman/company had integrity was to call their bank, talk to the manager. Introduce yourself to him and explain that you are thinking of doing business with this man and realize that by law he can't disclose anything from his banking info, but you would like to ask him a simple question. They always say sure. I say "If money wasn't an issue and you had the opportunity to go into business with this man, would you do it". I didn't care what the answer was, only how long it took for him to give it to you.

Then if you find that the guy is a honest, assume that you will do as well as the previous owner, how many years before you get your investment back. I know people that expect their investment back in 3 years, that would be nice but rarely does that happen. I would expect in 5 years myself and certainly not more than 7. Of course we assume that we will do much better than the previous owner, but you shouldn't pay for what you will do.

 

[JMMUSTANG]

Is the lease a ground lease?
If so will it be going up in the future?

 

[ajay]

it's a purchase that includes the realestate.

 

[Greg Pack]

A few thoughts on the negative side. That is not a very high volume place. Labor cost is too low. Is he working it himself and paying part time help? . Who gets the lease payment? The lot is skinny, so I think there is limited resale value if the car wash is demolished.

Pictures might help if you can post them

 

[ajay]

you're right in your observation. It's just so happens I own the land next to it and I do have another separate opportunity to purchase 3 car garage right next to do. So, for future expansion, I'm thinking I can add SS to the location. Also, a house next to this property is also for sale - leaving more room for expansion.

But regardless of possibilities, I have to base the price on what it is today. THe owner is an older gentlemen, he only collects cash. It is solely run by employees.

It is skinny and long, at times I've seen cars backed up to back street.

The building /lot is assessed at $350k and it's for sale for $500k. In this inner city, building don't have as much value anyway but I'm attempting to base the value on business as well as the land(noting the fact that I have the potential to add on to my existing location).

Good question on the lease - I have to check on that!

aj