Author Topic: Car Wash  (Read 2717 times)

Proud Foot

  • Handlebar Stache
  • *****
  • Posts: 1060
Car Wash
« on: September 24, 2014, 07:48:30 AM »
I still have a long way before being able to do any investing other than just normal retirement contributions but I do enjoy browsing sites looking at commercial and residential real estate to get an idea of prices and learn more for when I am able to.

Have any of you looked at purchasing a car wash? It looks to me like if you can find one with a good location and amenities (vacuums, automatic wash) it would be a good passive income for FIRE. I have looked at several showing net income in the range of $150-200k/yr ($75-100k after debt). Obviously that is a lot more than one would need to cover their expenses and could invest the rest. The only downside would be the cash up front to purchase one (150-200k from the ones I have looked at) but it would allow you to FIRE immediately.

Have any of you thought of this as an income stream for your RE? Whether short term or long? What are some reasons you think this would/would not be a good idea?

waltworks

  • Magnum Stache
  • ******
  • Posts: 3351
Re: Car Wash
« Reply #1 on: September 24, 2014, 08:16:18 AM »
If you are right and they are returning 50+%, sure, great idea. Somehow I doubt they are that profitable, though, given the nature of capitalism and competition.

Besides, once more folks find MMM, nobody will have a car! :)

-W

Proud Foot

  • Handlebar Stache
  • *****
  • Posts: 1060
Re: Car Wash
« Reply #2 on: September 24, 2014, 08:32:45 AM »
W

I realize my details were a little vague. The 150-200k cash up front was with financing 700-900k. So they are not close to returning 50%. Most showed 10-15% as the return.
« Last Edit: September 24, 2014, 08:35:09 AM by Proud Foot »

ketchup

  • Magnum Stache
  • ******
  • Posts: 4024
  • Age: 28
Re: Car Wash
« Reply #3 on: September 24, 2014, 08:39:09 AM »
Go for it.

mooreprop

  • 5 O'Clock Shadow
  • *
  • Posts: 85
Re: Car Wash
« Reply #4 on: September 24, 2014, 11:22:07 AM »
I nearly purchased a car wash, so have investigated this in some depth.  The vast majority of your income from a car wash comes from the automatic washes if you have both manual and automatic bays.  The majority of expenses other than water and detergents also come from the automatic bays.  People do really dumb things which mess up your equipment.   If you want to do the work yourself, then this could provide great cashflow.  If not, then you need a person who is good at fixing things and a person who can be trusted with cash. 

Definitely verify the numbers you are being provided.  This cashflow sounds too high or they would not be selling it.  The best way to do this is to check the water bill.  There is a standard amount of water used per car wash and if the water usage does not equal this pretty closely, then the numbers are not accurate.  I always call the water company for this.  (Works for laundry facilities as well.)  If the water is about right, then look at the other expenses.  If all is legit, then go for it!  Good luck.

P.S.  If you buy, the water bill is a very good way to see whether your manager is skimming money.  Big risk in all-cash businesses.  The owner of the car wash that I was looking at was being robbed by his manager of 25% of his income and did not realize it. 

Distshore

  • Stubble
  • **
  • Posts: 176
  • Age: 41
  • Location: New York
Re: Car Wash
« Reply #5 on: October 02, 2014, 06:20:06 PM »
I was talking with a guy yesterday who's owned a car wash since 1989.  All automatic, no personnel, all cash or credit/debit.  He says he used to make ~45 % gross profit, but now it's a lot less.  Utilities keep going up (as does everything else), but customer pricing increments are minimum 25c per raise, which is really noticeable.  Put the user price up 25c and you suddenly get a lot fewer car washes.  I didn't get his GP figure now, but sounds like it's much less; he says he wouldn't buy one now.  He keeps this because he owns it outright.

Not saying it wouldn't work elsewhere, but just run your numbers and figure in all utilities and maintenance costs; also commercial loan costs which are significantly higher than getting a mortgage.  Also market conditions....both micro and macro.  Where's the wash, what sort of business does it do (go stalk it) and what are the wider trends for the general populace washing their cars?  eg. in Australia, all those car washes recycle the water...