Can anybody tell me how to determine if this is worth moving forward? Asking price$899,900 has 4 selfserves and 1 auto-drive through.GOI for 2008 $103,629,OE $43,599,NOI $60,030. Loc.is
good high traffic volume. The car wash is located in a beach and retirement area of Florida.According to agent info it has a cap rate of 10.00% That I think is up to interpitation.Don't know what else to give I have lot of numbers.Any help would be appreciated.Thanks in advance and have a great wk!! P S I'll have one to post tomorrow a 15 unit once I get the financials.Thanks!!
If debt is already included in the expense calculation then you'd have to hold that property for at least 5 years to make a decent return. That's a long time to have $200k+ tied up for such small returns.
If debt is not calculated yet in that expense list, then you'd have to hold this alot longer just to get into positive return areas. That's way to long to tie up money in my opinion.
at PP of $900k, the cap rate is 6.67%, not 10%, and that's not something open to interpretation. It's just a formula, and numbers don't lie.
A carwash should trade closer to the 10% cap rate, which means this property should be priced closer to $600k.
hope that helps.
I agree with Craig for the most part however I would say that a car wash should be up near a 15% CAP since you are buying more of a business than just a real estate investment. Given that fact your risk is increased and therefore the return should reflect that higher risk. It is the same with hotels, generally since they are sold as business rather than "leased" properties their CAP rates are higher.
Thanks guys for the responces I really appreciate your thoughts.Not sure what I'll due yet I will give it some thought.Thanks again and have a great wk!!