Someone just open . express car wash. TX (south)

[suntexas]

Hi,

He put ..about 1.7m, 120ft, avw & tommy system, 4,7,10, free vac(pay carwash)

there are 4 guys working (8 to 8)now.

My q is How he can making a money? yes, Ho got the loan from sba and bank, that's it!. i know that!.

i guess that he will pay about 8000~9000 to 4guys.

is it too mush?? right!

Do you have a any ideas??

 

[Earl Weiss]

Hi,

He put ..about 1.7m, 120ft, avw & tommy system, 4,7,10, free vac(pay carwash)

there are 4 guys working (8 to 8)now.

My q is How he can making a money? yes, Ho got the loan from sba and bank, that's it!. i know that!.

i guess that he will pay about 8000~9000 to 4guys.

is it too mush?? right!

Do you have a any ideas??

Only one. He has tp wash A LOT of cars.

200K at $7.00 average. Gross = $1.4 Million. (Average could be higher or lower.)

Possible Scenario:

5% financing at $1.7 M = $850,000.00
Labor $150,000.00
Cost per car @$1.00 $200,000.00
Other fixed costs
RET, INS. Scavenger $100,000.00
Total $1.4 Million.

Whoo Hoo! After his 200,000 car he starts making $.

 

[Greg Pack]

In my area If the site is good, operators seem willing to invest about two million in an express. Another .5mil or so more if the site is really good. He is probably training his employees right now and will go down to a crew of 2.

 

[mac]

I've seen this scenario also and have asked the same question. There is a new one like that in Naples, FL that is the same. The place is huge, land is expensive, and the owner is paranoid. He kicked me off the lot when he thought I was taking pictures of his setup. (Hey, I've been kicked out of much better places.) I think washes like this are partly to blame for the banks not wanting to fund a wash.

 

[Washmee]

5% financing at $1.7 M = $850,000.00

Earl, did you really mean that he would be paying back this loan in 2.5 years?
I would think that dropping that debt service # to 85-100K per year would make things more realistic.

 

[robert roman]

He is planning to make money based on what he has been sold.

Typically, the pitch focuses on the competitive and financial advantages of express; minimal staffing, longer hours, preferred price points and greater throughput.

The cookie-cutter is a 3/4 to 1 acre "prime" lot with excellent demos, traffic, etc. and no competing express.

The plan is to capture 1.8% to 2.9% of average traffic with break-even of 0.45%.

The financial pitch is to leverage an initial capitalization of $500K to $600K to get ROC of 140% or more.

Obviously, there are a number of investors with no experience in the carwash industry that are buying into this.

 

[Earl Weiss]

Earl, did you really mean that he would be paying back this loan in 2.5 years?
I would think that dropping that debt service # to 85-100K per year would make things more realistic.

Sorry, had an extra -0- $1.7M @ is $85,000.00 as you said. Had a brain Malfunction!

So, lets say

Debt service is $85,000.00 plus $15,000 toward principle or $100,000.00
Labor $150,000.00
Cost per car @$1.00 car (Basic Wash)for 100K cars) $100,000.00
(Above is Gas, Water, Elec. Cleaning solutions)
Other Fixed costs RET, Scavenger, Ins. and Misc. $100,000.00

Total Annual Operating costs $450,000.00

At $4.50 / car and 1000,000 cars you break even.

So, to make $ you need to
1. Wash more cars and / or
2. Charge more for the basic Wash and / or
3. Make $ on the upgraded washes or ancilary items.

Adjust variables to suit yourself. Debt service could be higher. So could cost per car etc.

 

[Alan Bussey]

There are exteriors that do very well. It's the fundamentals of high population density, high local traffic flows, very good ingress and egress... It all has to be there, in addition to getting the cars clean consistently.

As far as as SBA-guaranteed loan is concerned, many times the site will be judged by the bank to be very good, but the bank many times makes the loan based upon the financial strength of the borrower and the non-car wash cash flow of the borrower. So, as long as it is apparent that the investor can pay the loan payments or eventually pay off the loan with or without the success of the car wash, of course the bank will feel safe in making the loan. This financial support in addition to the projected cash flow of the car wash is much of the reason that exteriors (or any car washes) get built. The loan isn't made just on the likelihood of success or failure of the car wash - with most lenders, the loan is based upon the borrower. We like to see when applicants will have significant cash remaining after the down payment and when applicants have significant discretionary cash flow other than from the car wash.

Alan Bussey