What's a good deal in Self Serve?

[agonzalez]

Hello, I'm pretty much brand new to this community, but I'm eager to learn and hopefully buy a car wash this or next year. I believe self serve is the best way to get started since the equipment is less complex. But, I'm not sure what a good deal is. I have a W2 and I have about 15 rentals on the side, mostly single families and small multi family (2-4 units). My rentals don't take a whole lot of my time, I try to get everything fixed before a tenant moves in.

There's a self serve car wash for sale that I've been looking at. It's a 1 hour drive from me each way. I'm thinking I'd definitely need an attendant that can handle most of the day to day stuff while I can work on it during the weekends. But, I'm not sure that this is worth it. Is it out of line to think attendants can handle most of the operations if they fairly compensated and skilled?

They're asking for $1.7M for the car wash, it has 8 self serve bays and 12 vacuums, cc readers, in bay blow dryers, etc. The building and equipment looks well, painted, good signage, etc. No IBA or anything like that. One bay is large enough for RV or motor homes. This includes the land and everything on it.

They claim it grosses $220k/year and $145k/year profit. They already have an attendant that works a few hours each day.

There are already a few express car washes around and some self serves with IBAs. One of the self serve ones looks rundown / out of service. I was thinking maybe it's best to reach out to whoever owns it and try to get a better deal. But, I'd have to figure out how to get it up and running.

They are willing to seller finance the thing @ 50% down payment, which is crazy, who has 800k laying around?
Would this be a decent deal @ 1.4M with traditional financing?

 

[Waxman]

One rule of thumb is 3 to 5 times gross revenue equals sales price. This is just a rough range to begin with. So it looks like your sale price is high based on that. The other thing is that you have zero experience which is going to make it difficult to run the business not to mention get a loan.The third obstacle you're facing is the wash being an hour away. This is not good because you will be less than motivated to go there on a regular basis. my wash is 41 minutes away from where I live and traveling there six days a week for the last 15 years or so and seven days a week before that really gets to you after a while. I think you need to do a lot more research and try to find a way to get some hands-on experience.

 

[agonzalez]

One rule of thumb is 3 to 5 times gross revenue equals sales price. This is just a rough range to begin with. So it looks like your sale price is high based on that. The other thing is that you have zero experience which is going to make it difficult to run the business not to mention get a loan.The third obstacle you're facing is the wash being an hour away. This is not good because you will be less than motivated to go there on a regular basis. my wash is 41 minutes away from where I live and traveling there six days a week for the last 15 years or so and seven days a week before that really gets to you after a while. I think you need to do a lot more research and try to find a way to get some hands-on experience.

What's a good way to get hands on experience? should I apply to work weekends at some car washes?

Is it impossible to make any money if you rely on attendants for most of the day to day stuff? I don't want to be completely hands off. but, maybe only drop by 3-4 a week for a few hours.

One important thing to call out is this is in California, so prices are on the higher side. The land itself is worth 300k according the county assessor. I really doubt I would even try to redevelop this.

 

[OurTown]

Have you explored commercial car wash lender offerings? You might be shocked to hear the down payment requirements and interest rates if they are even interested in lending to you.

 

[agonzalez]

Have you explored commercial car wash lender offerings? You might be shocked to hear the down payment requirements and interest rates if they are even interested in lending to you.

What terms have you previously gotten? I wouldn't mind putting 400k down on a wash. It's almost 30% down payment if I get them down to 1.4M

It doesn't sound too crazy to me. The debt service is 70k/yr (7-8%, not sure if I should expect higher interest rates, this is what I get on rentals right now) on 150k/noi according to the seller. That's a strong ability to fullfil the debt obligations. I have strong credit and over 1M in equity on my rentals. I also have strong income from my rentals and W2. I obviously don't check a very important box, the experience.

I can always try to resort to seller financing if no lender would work with me.

What's a less risky way for me to get started? Find a rundown or closed car wash and try to get it from the owner dirt cheap or lease with option to buy? How much would it be to let's say get a 4 bay self-serve car wash up and running assuming all the equipment has to be replaced? Getting it up and running again could be a fun experience and see if I can really run a business like this long term. No IBAs, just self-serve.

 

[OurTown]

25 years max and most likely above 10% right now with a variable rate. Banks consider car washes high risk. In good times they might deal on a down as low as 25% or even less but I think that ship has sailed for now. If you have big equity in your properties you can pledge them for collateral. Everyone's situation is different so I suggest you talk to some banks. Probably going SBA 7a is the likely path if it pencils out.

 

[Greg Pack]

If you can verify gross and net it's possible that it's worth 1.1. or a little more. 1.7M on a 220K gross is approaching bubble prices of the early-mid 2000s. ideally you want a return higher than 10%-closer to 15%. This is a business, a special purpose property with a higher risk of failure than residential or most commercial rentals. Your land isn't worth a lot in relation to the total cost of the so I wouldn't offer a premium based on that either. Good luck.

 

[Dan kamsickas]

Verify numbers with tax returns. Just because I claim to be young, skinny, and agile doesn't make it true.

What is the state of the building, lot, and equipment? I've seen more times than I prefer where someone has gotten out of the business instead of having to do the expensive reinvestment they need to.