Car Wash!

[M5]

My wife and I may have the opportunity to purchase a local car wash in roughly 3-4 years. The purchase price would probably be around $1M, but we would most likely only have about $150k to put down at that point. Any suggestions on how to encourage the seller to finance a larger portion of the sale or other ways to make it happen?

[scantee]

You might want to spend some time on a car wash forum to get a feel for what owning one is like. Here's one: http://www.autocareforum.com/ .

There are several different types of car washes (self-serve multiple bays, automated tunnel, full service, etc.) and the profitability goes up with the more resource-intensive options (full service), but of course those are more work for you as well. The self-serve and tunnel washes are about as profitable as a Subway franchise (~ $70k/yr). You won't get rich off it, but it would be a nice FIRE side business to bring in a regular income for not a ton of work.

$1MM for a car wash seems like a lot to me and leads me to believe the one you're considering full service. As a reference point, when I was considering buying a car wash, it was $200k for an automated tunnel. Do you want your new job to be a car wash business owner? Because you will be, if you own a full service wash. You'll have to employ a fairly large staff that turns over regularly and you'll either need to hire a site manager or do the management yourself. At least in the beginning, you'll need to become fully immersed in the car wash business. Is that how you want to spend a few years of your life? After time and once you've matured as a business owner, it will probably be something you can do part-time, but expect that it will take you a few years to get there.

One last thing: location. This is absolutely the most important factor that will make or break your car wash. It must be in a heavily trafficked area, off of a main thoroughfare. This is the factor you'll really need to consider over the next few years to determine whether buying this business makes sense. Car wash owners at the forum I listed will be able to give you advice on how to determine whether your location is suitable (and whether the current owners profits justify the $1MM purchase price).

[M5]

Thanks for the reply. No, it is not full-service. I have zero desire to own a business that requires that many employees and that much overhead. It has 8-10 self-service bays and 1 auto bay.

As for the high valuation, I know the county has assessed the real estate alone at about $750k. And I can guess the annual revenue is somewhere around $150k.

I will definitely read up on the link you shared. I also have a friend who owns a small car wash and I pick their brains quite a bit.

Bottom line, my concern here is more about the best way to secure financing with less than 25% down than whether I should or shouldn't buy one.

[M5]

No I haven't.