Any of you guys in the car wash or even laundrymat biz?

[romad]

Would like to understand valuation and profitability of a existing biz

[Rick Lee]

I'm not in it, but one of the richest PCA guys I ever knew owned a car wash in Stafford, VA. He is filthy rich, told me he can sometimes get 1000 cars through in a day and that he walks around the parking lot, picking up change to put in the register. This was about 8-9 yrs. ago and he was tracking a 993TT and later towed it with his Cayenne turbo.

[slakjaw]

When I read this it made me think of breaking bad

[romad]

Originally Posted by slakjaw

When I read this it made me think of breaking bad

My lawyer keeps pushing a laser tag/arcade on me.

[futurefun]

While going to school I managed a very nice coin-op laundromat for several years & detailed cars part time in a friends garage. Both were fun, built people skills, self discipline & fed the OCD LOL. It has been a few decades so determining market value is a bit fuzzy. Remember to do something that you like.

[scottmandue]

We have had two or three "car detailing "businesses open in my little town over the last few years. They seem to be doing well.

[Jrboulder]

For a lot of people washing a car doesn't need t be done. In an economy like ours a lot of people just aren't washing their decade-old civic much or at all. Of course in an area that gets cars a lot dirtier people will wash their car a lot more. In Phoenix you could probably wash your car every few months and have a clean car. In Colorado you can't go a week without getting it dirty (or at least I can't).

I can't comment on laundromat biz because I've never talked to the owner of one.

[p911dad]

Romad, both of these operations are know as "cash business", in other words most of the transactions come from collecting dollars from the change machines. Operations with self wash bays and automatic machines (most profitable) will mix credit card receipts with cash. Caution: It is hard to get actual income information, even from inspecting a set of books, as skimming the till is an advantage of a being in a cash business. Thus, what makes onto the spread sheet might not be an accurate account of the action (of course, the IRS knows this, too).
I suggest Googling "car wash appraisal" or "self laundry appraisal" to make yourself knowledgeable on the subject. From my years in the appraisal profession, I know that these types of businesses can be profitable to a good operator.

[speeder]

I've heard that coin car washes can be good businesses but that they want a fortune for them in decent locations. People wash their cars often and frequently in Los Angeles. There is a good hand wash operation on Melrose in Hollywood that is busier than a whore on payday.

[pavulon]

"often and frequently"! I'll take two please!!

[garmo]

Romad.

I have owned a self serve car wash that I built 7 years ago. 4 self-serve bays and 2 automatic (touch free of course) wash bays. I have been a CPA for about 2years. What are your questions?

[garmo]

That should have been a CPA for 28 years.

[on2wheels52]

Originally Posted by p911dad

Romad, both of these operations are know as "cash business"..........Caution: It is hard to get actual income information, even from inspecting a set of books, as skimming the till is an advantage of a being in a cash business. Thus, what makes onto the spread sheet might not be an accurate account of the action (of course, the IRS knows this, too)...... From my years in the appraisal profession, I know that these types of businesses can be profitable to a good operator.

I have some familiarity with operating a 'cash business'. Not sure how an appraisal guy would rate my establishment.
Jim

[jhynesrockmtn]

I had a buddy that bought two coin op laundries in Orange County. Huge disaster. Sold at a loss a few years later. Was in way over his head, required constant supervision, cleanup, kicking out of vagrants, broken equipment, the list goes on...........

[vash]

my sister the lawyer is researching a car wash..apparently they make bucks in Denver.

laundry? dont they have huge EPA type hurdles to clear? opps..coin ops..not dry clean.

i think if i had my choice, i would open a self storage joint.

[romad]

Thats funny the place I'm looking for also has some self storage units.

Garmo,

As mentioned .... how do you figure out the true cash flow. Sometimes seeing the books on a car wash doesn't seem to add up as a good ROI, but you keep seeing people build them and the others continue to operate.
Would seeing water bills be asking to much? And if I see water bills how would you convert that into numbers of wash? Also how do you factor in the land value compared to the actually value of the business? Are there any ratio?
This is a three bay with one inop outside truck bay in a small market. Also adding to the mix is about 25 self storage units. I think getting a handle on the self store should be pretty straight forward, but again evaluation of the car wash is the trick.

Thanks for any help.

[Paul_Heery]

Originally Posted by romad

Would seeing water bills be asking to much? And if I see water bills how would you convert that into numbers of wash?

This is a flashback to my MBA program. As part of a M&A course, there was a case study on the acquisition of a laundromat. In buying this type of business, you need to examine the utility bills. That should include water, electricity & gas. It is a common diligence task.

One thing that you need to be aware of is a practice called gang-billing. This happens when a owner that has multiple locations has all of their utility bills assigned to one of their sites. This is usually done to increase the amounts that are assigned to the site they want to sell.

[garmo]

Romad,

Yes, utility bills and tax returns are a good place to start. No you should not feel that is asking too much. You absolutely cannot count any under the table cash the owner says he takes. If he is gonna screw the IRS he sure as hell will screw you. I had a client buy a dry cleaning business where the seller said he was taking $50k out that was not posted to the books. I told him not to buy the business because the tax returns revealed losses. He ignored my advice, bought the business only to find out there really was no under the table cash. He lost his 6 figure investment in a very short period of time.


This happens all the time. Go by the revenue on the tax returns and the profitability they show. You then need to scrutinize the expenses to see what the guy is deducting that really is not for the business. and add that back to the bottom line.

What other car washes are close by? Many people see lots of cars washing at a car wash and think "Wow - I need to build one too" and then they pay no attention to competition, thus serving to dilute the business for everyone, which will cause a reduction in business for you. What kind of environmental restrictions are in place near the wash? Many dirt roads? Mud becomes a problem if you have a lot of dirt roads.

As far as land costs, building costs, etc - that is very dependent on the given market. Go see what a comparable piece of ground is selling for these days and that might give you an idea of the value the guy is putting on the business. Equipment - what kind is it and how old is it? What kind of maintenance procedures are in place? I have clients with self storage units too.

There are many things to consider and realistically, they are outside the scope of a discussion forum.

[Rick Lee]

Originally Posted by garmo

This happens all the time. Go by the revenue on the tax returns and the profitability they show. You then need to scrutinize the expenses to see what the guy is deducting that really is not for the business. and add that back to the bottom line.

The car wash owner I knew told me this is why he walks around the parking lot, looking for change to put in the register. I got the feeling he was pretty up and up and wanted his business to appraise very well for eventual sale.