Summerville, SC · Member since 2018 · 588 posts · 252 votes
Hey BP members! I was toying with the idea (loosely) of investing in a car wash. There are two for sale in my vicinity. One has 5 bays, one of which is full service.
Question: does anyone have experience with a car wash? If so, what can you tell me about one - some detailed questions below:
-what constitutes a good deal? (number of bays, cost per bay) (location, obviously)
- how do you analyze one?
- what kind of monthly cashflow is considered "good" (net)?
Investor · Cedarburg, WI · Member since 2013 · 439 posts · 150 votes
8y
Dave, lots of good questions! I bought a pair of automatic car washes a little over a year ago. A few things to keep in mind:
There are lots of different types of car washes. Self serve, automatic, full service, etc. Each is in some ways a different business, so consider the type of work you are willing to do.
In my experience with buying my car washes I also bought a part time job. It would be a different job for each type of wash, but it does require at least weekly upkeep.
I would also consider the existing business in terms of cars washes per year. Is that a number that is increasing, decreasing or something that you could influence with marketing or better visibility.
I’d look up chemical/soap suppliers in the area, especially if you can figure out who the supplier is for those car washes. That rep likely could give you some insight into the business.
For me the analysis was on comparison to the type of cash flow I could get with a similarly priced apartment building. I found that the cap rate was better for the car washes that it was for the apartments I was looking at here in WI. I’m guessing that’s common, but partially because no matter what wash you are buying there is likely more regular work that with an apartment building. For me with automatic washes I’m emptying garbage every other day and checking on the washes to make sure things are working.
Maintaining the equipment is a real part of owning washes. Like with rental properties, you could “self manage” or choose to have all the work done by others. I have found that many things I am able to do myself pretty easily, and for some of the more complex tasks I have a service guy that had serviced the car washes for years. I’d ask about if there is an existing service guy and talk with him too. He may give you an idea if the washes have been well maintained or not.
Because car washes are somewhat of a unique business you may have a better shot at seller financing too. That’s what I was able to do and allowed my cash to go further. You can also consider an SBA loan as well.
Good luck and reach out with more specifics about the deal if you would like!
Investor · Cedarburg, WI · Member since 2013 · 439 posts · 150 votes
8y
@Donald S. As a car wash owner myself I have probably had a dozen people immediately jump to that show when I tell them I own car washes. They also, I think, are half wondering if I launder money through them (which I do not). I should probably watch that show sometime so I know what specifically they are thinking of me...
Investor · Raleigh, NC · Member since 2019 · 433 posts · 743 votes
5y
It should be just like any other investment - look at the T12, what's the cash flow? Are there growth/appreciation opportunities? Can you improve expenses? Can you improve the cash flow/increase the cost per service, etc.? Could you differentiate from the competition somehow? How do you know the answer to each of these questions? Why do you want to get into this business? What's your exit strategy?
I really good book on buying businesses is "Buy Then Build" by Walker Diebel. It's a great book on buying businesses and self assessing on how you can get into the buying businesses asset class.