Buddy of mine is looking to open an express car wash. He has a potential location targeted and is working with a consultant and has all estimated costs, revenue, etc. The plan would be to buy the land and build the car wash, operate it for a few years and then split the land from the business and probably sell the car wash (and probably keep the land and ground lease). Possibly rinse, repeat.

I'm considering investing.

Does anyone have any experience with these kinds of deals? Positives, negatives, etc?

Thanks for your input. Where are you located, if you don't mind saying?

Edit to say - I tend to diagree with them being a fad (just my mostly uneducated opinion) - but market saturation/competition is a definite issue.

Car washes can have a very bad environmental impact. If the plan is to separate the land from the small piece the wash is on, you might want to consider doing that before the wash goes in. I don't know how much proof that the separate land is clean the buyers will want. Might not be more than a few samples around the wash, might be more. And, if they look for something, what of they find something? Car wash or not, if they find it, it is your problem.

A friend of mine sold land to one of these car wash businesses and he wanted me to figure his tax consequences on the sale and help him with the basis determination. So I know what the car wash folks paid for the land. I have no idea what it cost to put in the improvements, equipment, etc. but I am sure it was a pile.

They offered free car washes for about two or three weeks and had a line 70 to 100 cars long. Now, they seem to always have customers, but not many at a time. The closest similar car wash is about 20 miles away but I would not doubt someone builds one a good bit closer.

Yeah the environmental issue was something I had questions about. Thanks for the input.

If he is splitting the land from the building, how are you going to be compensated for that?

Because if you are buying into a land / building and then all the sudden just getting compensated for a building (going concern / business) sale I see that as extremely complicated.

I'd be in on the whole deal. Land and all.

Might be an impossible question but what does the facility for one of these cost not counting land? The chain I have a membership with has the wash tunnel, auto plate reading entry stations and then 20 or so vacuum stations. It seems it would be pretty staggering.

I just bought a new car and the dealer gives free car washes for life, so don't build in SW Ft Worth, they sell a ton of cars.

Yeah it's a significant capital investment - almost 2 x the land, which isn't cheap. Currently looking at a prime location in a well established suburb.

The just opened a Club Car Wash right next to my house.....I pay $30/month for unlimited washes and its great. Self service vacuums and rags to wipe down. But they always seem to have a staff of 3-4 working which seems weird, don't need 3 people spraying my truck before it goes in the car wash.

But the flip side is this is the 2nd similar style car wash open in last 18 months and the two older ones a few miles away seem to have no business now. So go big or go home.

I pay $21/month and every time i pull in I can't figure how they make money.

Unintended emoji there

jja79 said:

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I pay $21/month and every time i pull in I can't figure how they make money.

Unintended emoji there

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A lot of us wonder, but when you really pencil it out, but once you make all the capital investments, their true marginal cost is probably $1.00 - $1.50 per vehicle cleaned. Typical high volume/high margin business that's very capital intensive. There's a sweet spot, and the "annuity stream" of those monthly subscriptions that don't fully utilize their benefits probably fund the rest.

I don't like the zero "moat" competitive situation, high capital requirements, and likely high-friction and hands-on labor situation, but other than that, might be a good business for a while.

Land (Ground lease or purchase) plus around $5mm-$6mm for improvements.

MAS444 said:

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Buddy of mine is looking to open an express car wash. He has a potential location targeted and is working with a consultant and has all estimated costs, revenue, etc. The plan would be to buy the land and build the car wash, operate it for a few years and then split the land from the business and probably sell the car wash (and probably keep the land and ground lease). Possibly rinse, repeat.

I'm considering investing.

Does anyone have any experience with these kinds of deals? Positives, negatives, etc?

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Biz partner has developed many car washes in his career and still has 2 in his portfolio. Car Washes are a real estate play that provides cash flow.
Buy land, build & develop car wash - ok.
Operate for a few - ok.
But, splitting out the land will make the whole opportunity less attractive to anybody in the future and greatly hinder your chances of selling it to someone else. So I would not recommend that path.

However, if that was the route you all take, i would think you need to make the pad the car wash is on its own lot from a platting standpoint. So, initially you all would own the two lots, and then you eventually lease the one lot the car wash sits on. I just don't see someone signing up for owning and operating a car wash facility without being able to participate in the upside of the real estate and/or having the real estate asset behind them to serve not only as a value-add to the opportunity, but also a hedge.

Google "car wash private equity" to understand more about what's going on in the carwash boom.

About a month ago, Drew's at TowerPoint screwed up the wife's vehicle. In the course of conversation with the jackass manager, he said they ran 574 cars that day. And declined to fix the vehicle. Small taters, but they will be losing 3x monthly subscriptions at the end of this month.

Rexter said:

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About a month ago, Drew's at TowerPoint screwed up the wife's vehicle. In the course of conversation with the jackass manager, he said they ran 574 cars that day. And declined to fix the vehicle. Small taters, but they will be losing 3x monthly subscriptions at the end of this month.

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. _________What happened to your wife's car? I use Drew's at TP.

The top brush pulled off the chrome trim on the roof rail. It broke all 5 clips. The attendant indicated that they would repair it since the vehicle is post '18. The mgr said they wouldn't.

would escalate to owner. had to go to war with a guy whose wash tore up one of the wheels on my 911. they'll give in eventually, especially if you threaten to take it to social media.

The Silverback said:

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The just opened a Club Car Wash right next to my house.....I pay $30/month for unlimited washes and its great. Self service vacuums and rags to wipe down. But they always seem to have a staff of 3-4 working which seems weird, don't need 3 people spraying my truck before it goes in the car wash.

But the flip side is this is the 2nd similar style car wash open in last 18 months and the two older ones a few miles away seem to have no business now. So go big or go home.

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You just reminded me to cancel my membership at the older car wash I used to use. I always wished they would spray my car down for bugs before I went in, but they dont. New place just opened and they do just that, they now have my business.