Please talk me out of offering on a car wash in a sketchy area

27 Replies

Hey all, I have a chance to purchase a car wash for about $.30 on the dollar. It’s in a bad area. The McDonald’s next door has closed because it was robbed several times in the past year. Cash flow according to the past 3 years of tax returns would be an ROI of around 45-50%. Please talk me out of it. Thanks, DJ
Originally posted by @DJ Cummins :
Hey all,

I have a chance to purchase a car wash for about $.30 on the dollar. It's in a bad area. The McDonald's next door has closed because it was robbed several times in the past year. Cash flow according to the past 3 years of tax returns would be an ROI of around 45-50%. Please talk me out of it.

Thanks, DJ

 Just read the above comment. If that doesn't talk  you out of it, than I don't know what will. 

@James Masotti I agree with you on that.

But if that is not convincing enough then consider this: the McDonald’s closed because of was robbed several times. If this business is bought, the same thing will happen to it. The thieves have just found a new target

So you expect people go there get robbed while the cars are enjoying a wash? Or people wash blood off cars at your place and leaving off evidence w/o paying you....

location, location, location

Doesn't even sound like that great of a deal. If I were to buy out some given business, I'd generally expect 20-25% ROI when paying 100% of its value. 30 cents on the dollar should mean you should be expecting an ROI of at least 70% or so. At least that's how I see it. 40-45% wouldn't be worth it to me given the circumstances you described.

Sounds like the work of the Hamburgler...

@DJ Cummins Being a good investor sometimes means doing things others won’t do and seeing things others can’t see ! I wouldn’t be afraid if you got three years proof of good cash flow and you put cameras In . So what if the local McDonald’s failed maybe they had a bad management team that used bad security measures for the area . One thing about the hood is people like shiny trinkets and fancy cars as soon as they get two nickels to rub together. well those custom painted cars with the chrome wheels need cleaned daIly in order to show off ,that where you come In.

I'm with Dennis. If Bigger Pockets has taught me nothing else, it's taught me that broke people have all kinds of deep-seated passions about their cars. Get the car wash and a security consultant to tell you how to secure it.

@Jim K. Why is that lol? Why do people who can’t afford nice cars always have nice cars? My car is literally one step above a piece of sh*t lol

Originally posted by @Caleb Heimsoth :

Jim K. Why is that lol? Why do people who can’t afford nice cars always have nice cars? My car is literally one step above a piece of sh*t lol

 The need to feel wealthy instead of actually be wealthy?

@Caleb Heimsoth - With giant freakin' rims!

Then again...I'm a car guy myself and look forward to the day when real estate throws off enough cash flow for me to start having a garage like @Mark Ferguson ...then I'll need to buy a car wash :-)

Originally posted by @James Masotti :

@Caleb Heimsoth - With giant freakin' rims!

Then again...I'm a car guy myself and look forward to the day when real estate throws off enough cash flow for me to start having a garage like @Mark Ferguson...then I'll need to buy a car wash :-)

 Hmmmm that is a good reason to have a carwash lol. Did you see my latest? 

I remember riding the bus on the coast road in Athens back in the early 2000s and staring out the window in heavy traffic down at a young guy driving a convertible. He had a big keychain dangling out of the ignition with some kind of plastic picture frame on it. So I looked closer, and the dude actually had a picture of himself on his own keychain.

Originally posted by @Mark Ferguson :
Originally posted by @James Masotti:

@Caleb Heimsoth - With giant freakin' rims!

Then again...I'm a car guy myself and look forward to the day when real estate throws off enough cash flow for me to start having a garage like @Mark Ferguson...then I'll need to buy a car wash :-)

 Hmmmm that is a good reason to have a carwash lol. Did you see my latest? 

Looks like a good time for those nice summer days!

Originally posted by @Caleb Heimsoth :

Jim K. Why is that lol? Why do people who can’t afford nice cars always have nice cars? My car is literally one step above a piece of sh*t lol

 It's a life style choice.... only so many things you can do w/ cash. Easy come, easy go...

Originally posted by @Caleb Heimsoth :

@Matt K. it’s very easy go when you have s giant car payment 

 depending on the source of your cash income, a car payment might not be the worst thing in the world.... might help get rid of that pesky cash...

Do it! The sketchy parts of town always need money laundered as well. Cash on cash return. Literally.

@DJ Cummins if a McDonald’s closed down that’s pretty scary. They spend more money on market research than you’ll make in 10 lifetimes, and the restaurant still didn’t survive. How many McDonald’s have gone bust? It can’t be very many. The owner is selling it at .30 on the dollar because he/she wants out of there.

It could be a good opportunity, just find out why they are REALLY selling. Is it a self service car wash? If so put some cages around the coin machines so the crackheads don’t take crowbars to them every night lol.

With buy/hold rental property, I do my best to make money without having a job.  In this case, I think you are buying yourself a job.  If that's what you want, I can't help you evaluate the deal.  Just beware that you are signing up for work to manage this asset. 

Thank god all people are not the same. Stop bashing those who live broke or whatever. 

Can you say Not Korea. The goal there is to be the least starving.

I can assure you, unless this car wash is in the perfect location and is able to charge $15 per wash you may want to reconsider. They have large maintenance costs and the tax benefits on them are not that great. 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here