New to real estate investing, contemplating carwash/storage property.

[Trey Schwilling]

The property has four self-serve bays and one automatic. There are 51 storage units on the same property. Carwash income in reportedly 11,900 monthly. All storage units are rented and monthly income is 2,225. Seller reports NOI: 108,101, Gross carwash income: 149,546, Cap Rate: 11.5%. I've not invested in real estate before so I don't know what financing would look like for this endeavor. I'm open to any feedback or ideas on this.

[Chris Mason]

A cap rate that high sounds good, but is often considered a beige flag. 

I threw @Jameson Sullivan a softball pitch about what to watch out for when the cap rate is that good, and he knocked it out of the park. Thread here: https://www.biggerpockets.com/forums/32/topics/1199673-i-am-...

In this particular case, however, it might NOT be too good to be true, since (it appears that) you will be running that business yourself. So be it, that NOI and cap rate might be real. That $108k is both what you need to pay your own salary with AND the mortgage payment if there is one. Reminder that the mom-n-pop restaurant where the mom and the pop each work 70 hours a week, and at the end of the day the net profit they pay themselves from is $80k in total. That means 70 hours per week to earn $40k. That's less than minimum wage, and that's why THAT business has no value. In this case it's not $40k it's $108k, and in this case you might not need to put 70 hours a week into it. And you get the real estate to boot, so this property+business has some actual & real value that our hypothetical restaurant does not. I might be tempted to walk my butt into the owner's office -- does that LOOK like a place the owner spends 70 hours a week (lots of personal items on the walls? Half-full trash can b/c he's eating lunch at the desk every day?), or does it LOOK like an office that he's only in for 5 hours a week (few personal items, just a place he pops into 1-2 days a week, in this case the keyboard being dusty might be a good thing... empty trash can, no random papers floating around...)? That's an imperfect measure, but we really need to get a sense for what you have to do in order to GET that $108k that it currently brings in.

Not giving you the yes/no on if it's a good deal or not, just giving you some ways to think about it.