What do you think about these financials?

[Kevin James]

They are asking $225,000. Its assessed for over $300,000. The land is maybe worth $150,000, but it would be a long time before anybody paid that to redevelop it.

I suppose it would be too much to ask you to post the town and the address of this carwash or is it one of those national security issues.

 

[JMMUSTANG]

I'd think about cutting my own grass.
Why did the phone bill increase (x2)?
Is it because they needed internet for the credit cards?
Was the credit cards installed recently?
Why do you only have 1 year P & I? You should get 3 years at least.
Are the automatics touchless or touch?
If both are touchless I would immediately think about replacing one of them with a touch automatic and include the cost including installation in your loan package.
Do the bay accept bills or just coin?
I would make sure that you can accept bills in all the bays along with the credit cards. Revamp your pricing to include "Bonus Time".
Post a banner on the facia facing the street saying "We Now Accept Credit cards".

 

[danj2]

Not to nitpick, but there is a small mistake somewhere. The total in N31 is not equal to the income minus expense for that column. Don't have time to search for the problem, but it's minor.

The credit card cost did not make into the "Total" column. As such, I wondered why there was just one entry for the year's expense.

 

[robert roman]

My suggestion is to push capture rate, demography, P & L line items and equipment issues to the side for the time being and focus on the fundamentals of the business.

You said the “ask” is $225,000, assessed for + $300,000. The land is maybe worth $150,000.

Using standard criteria, the financials you presented would support maximum allowable monthly payment of $2,200.

$2,200 translates into loan amount of about $250,000 based on standard conditions and terms.

If the land is $150,000, this would leave $100,000 for improvements assuming bank will accept and finance bid price of $150,000 for property.

If the bank requires loan-to-value of 60 percent, the equity injection to acquire property would be $100,000 ($250,000 * 0.4).

Gross $65,000 less operating expense ratio (benchmark) equals $39,000 (EBITDA or NOI).

$39,000 less property taxes (assume $8,000) and debt service $26,400 ($2,200 * 12) equals $4,600 earnings before taxes and depreciation (EBTD)

$4,600 / $100,000 = 4.6 percent return on cash (ROC)

ROC for typical “new-to-industry” self-service, prior to real estate melt down, was 35.6 percent.

ROC of 35.6 would require EBTD of $35,600 ($100,000 * 0.356).

EBTD $35,600 + 26,400 (debt) + 8,000 (property tax) = $70,000 EBITDA or NOI.

$70,000 EBITDA / 0.4 (expense ratio) = $175,000 gross sales

$175,000 - $65,000 = $110,000

$110,000 would be increase in sales needed to achieve ROC of 35.6 percent.

$175,000 / $65,000 = 2.69

Can you deliver a business plan capable of growing current sales by a factor of 2.69?

As a general rule of thumb, start-ups should not plan to capture more than 25 percent market share.

$175,000 / 0.25 = $700,000

So, the first sanity check would be to determine if the trade area has total potential sales of $700,000.

And so forth. Hope this helps.

 

[Jimmy Buffett]

Those automatics should do in a month what they are doing in a year. There is something wrong there somewhere. Why in the worl would a wash have 2 autos if they were only doing 17k/year in auto business?

 

[levijean]

Excluding any value the land or improvements may have, what should a person pay for this cash flow & chance for increasing revenues? At this point I'm thinking it would hardly be worth my time even if I paid $0 for it. Seems like a ton of work to try to squeeze out a steady $20 - $40k/year NOI.

 

[Jimmy Buffett]

I would have to agree with that assessment. Not to mention the considerable risk involved.