All Forum Posts by: Dave Carpenter

I can across a property right down the street from where I live that is interesting, but out of my area of experience. Wanted to throw it out to the community as well as get thoughts from those of you who have developed property. Here are some of the basics.

-3.4 acre lot on a small creek within a half mile of one of those cute small downtown areas. 

-Currently has an old, beat up 2000sqft house built in 1900 on part of the property. 

-Property is zoned such that you could build 5.2 houses per acre, but based on flood zone, could realistically only put a few 3-5 homes on the property.

-in a B+ or better neighborhood and in a great community with very very strong schools.

curious on ideas/interest from those of you that have development experience in Ozaukee County. 

I'd love to do something with it, but don't have the money or experience to go it alone. I live about 2 blocks away, and would be glad to have a conversation with anyone that may be more equipped for this deal. I have spoken with the selling agent and have some maps that show flood planes, etc.

Let me know what you all think!

@Aaron McCurdy i think you have gotten a healthy dose of smart and super passionate BP people. Its a great thing, but certainly can feel overwhelming. The cool part is as you move forward these same people that are on this thread now will very likely jump in and answer specific questions that you have. That, or the questions will be already addressed on another forum.

In an effort to get back to some information that might help you make the decision that you are faced with now. I would push back on the 24/7/365 aspect of either rental properties or car washes. While technically, that is true I have not seen much of that in my experiences. I have 4 duplexes and have never gotten the 2am call about a clogged toilet. The main reason for that is a decent property with decent renters. That has been a priority for me so that I don't get those calls. With regards the the car washes, very few people go through the car wash at 2am. Nearly all of my business is from sun up to sun down. Its hard for things to break if nothings moving. 

Speaking to you family life, we have a similar story with 2 young (not in school yet) kids. I have found a healthy amount of flexibility in my schedule to allow me to spend time with my family. For instance, yesterday we were all walking over to the local park for a picnic and I got a call on my cell phone (google voice number) from someone at the car wash who put quarters in the vacuum, but the vacuum didn't turn on. I apologized, got her address and told her I would send her a check for the $1.00 she put in. Its a bit clunky, but I probably only get a call with a problem every couple weeks. So, 2-3 problems I need to take a call on per month, by 12 months = at most 36 calls per year with an average 30,000 cars washed per year. Seems like an ok percentage to me. 

Shifting to the business side of things. When I got involved, I didn't know anything about car washes, but was able to work a deal with the seller (car washes sat on the market for over a year without for sale signs) to have him finance a small portion of the loan. The upside to this, is that he has a bit of incentive to see me be successful. He happens to be a great guy, which I learned while following him along at the car washes a few times while we were working on the deal. I would totally recommend working out some deal with the seller. Car washes have so many moving parts, and walking in blind would be VERY tricky. I have reached out to the seller with questions about the people to talk to for things, especially short cuts he has learned over the years. Another aspect to consider is because you don't just need to find a few tenants, you may want to buy a healthy business vs one that has gained a bad reputation over the past number of years.

In summary, I think a car wash business could meet many of the needs you are looking for, and if cashflow isn't a huge priority, you may be able to find a couple people who could do much of the day to day aspects of the business and it could become pretty passive much like a property management company can make an apartment building passive. 

@Aaron McCurdy mine is 2 auto bays at each location. 

car count for me combined is about 30,000 cars per year. one is a bit higher than the other. One location is a "suburb" of Milwaukee about 30 mins away. The other is pretty well small town. Upside to small town is lots of guys that want to keep their big trucks clean, and are willing to pay for a more premium wash. Prices vary pretty significantly by location and what the wash offers. As one data point, I average about $10 per wash.

My SBA loan went pretty smoothly after I got over the unique hurdle of conflict of interest since my seller happened to be on the board of the bank I was originally going to finance the loan with. After that got taken care of it was pretty straight forward. I used a 504 SBA loan since car washes are considered a somewhat unique property; at least compared to a small office building or small warehouse. From what I gather these SBA loans are common enough that there are banks that deal with them exclusively. Not much difference than any other governmental program. Lots of data required and plenty of forms. 

Any other questions, let me know!

Marcus, Very interesting thread. I think the strongest point in your first post is the difference between the  suburbs/downtown and the balance of the city. While things are looking great both from appreciation and demand, it sure does seem like the rest of the city is still in a bit of a slump. For me, the next question is what cities (suburbs) are worth looking at. Being up in Cedarburg, I'm partial to places like Port Washington. Just not sure where to aim and fire.

@Aaron McCurdy welcome to BP! There is a scary amount of information and smart people. I offer neither of those. I did however, just by 2 touchless (no spinning brushes) automatic (no people) car washes myself about 6 months ago, and can to some degree speak to the work and one method of purchasing that business. 

I bought an existing business using an SBA loan. The business was well run, and the maintenance was kept up on. From what I have seen and heard in the industry, that is not all that common. I have gotten into a cycle of going to the car washes 4-5 times per week, usually for a couple hours per day. Each visit entails things like emptying garbage cans and checking on the building. Weekly I am usually doing something like mowing, pulling weeds, combining partially used soap containers, etc. Mostly mindless work, but things that need to be done. 

It is not totally hands off, but does provide flexibility day to day and somewhat week to week. If I need to do something I can go to the car washes the next day or later that day. There are however problems that come up that need to be dealt with immediately. I have a couple people that live nearby that I can lean on if I am out of town. 

Happy to answer any questions on this thread, or speak directly if thats helpful. BP as of now is a little light on the Car wash info. 

Josh, If I were in your neighborhood i'd be thinking about businesses that are accessible. I'm guessing most people don't drive into Milwaukee from Cedar Grove for work. I would guess however that there is some commuting to Port Washington and Sheboygan. Having said that, what businesses will be around and strong for the next 30 years. I quickly think of companies like Ethan Allen, Acuity, Kohler (and all the other businesses that grow out of that). I would think those few companies would likely be around for another 30 years. Next for me would be about the specific neighborhood and proximity to grocery stores and the like. I would agree that the look of the building is not so important provided much of the neighborhood is like that. I have a few duplexes that are about 100 years old. Most of that neighborhood was build 100 years ago, so while they are very old buildings they are totally normal for the area.

I wish you the best!

@Ty Johnson Clearly I missed the welcome wagon... How has the quest for knowledge been going these past 4 months. This thread is the whose-who in the Milwaukee area!!

Michael, it sounds like you did a lot right by having them both on the lease as well as parents cosiging. From a legal standpoint (not a lawyer) it seems like you are in decent shape. I like the idea of giving the tenant who is staying the opportunity to find a new roommate, who I'm assuming you would run a background/credit check on. I think I would recommend emailing (have it in writing) both tenants and parents with what the next steps are. Something like with Suzy wanting to move out and Betsy staying, both are financially responsible for the length of the lease. If however, a new tenant is found that everyone is ok with, then you could writer up anew lease releasing Suzy and parents from the current lease. This will show that you are trying to work with everyone. I think the thing to make clear is that first and foremost they are still responsible and you get final say on the new tenant. Communication in writing is probably a good thing at this point so that everyone is on the same page. Good luck!

Is this at all common in Milwaukee? I'm not sure if tenants would catch that cost at lease signing, but I've got to imagine $100 or more added ok to their costs will make them think more about moving to the next place where there not responsible for water. I see the upside in the long term, but not sure how tenants would respond in a market (Milwaukee) where it doesn't seem common, I just wrote my checks the other day and pay about $100 per month per duplex. $50 per unit per month.

From a dollars standpoint, it seems like a solid deal. Having said that, I would verify that $600 per unit is a comparative rental rate. If the market only supports $450 per unit, and you will have to put $50k of work in then that deal quickly changes. Another thing to consider is that lots and lots of rental properties will be rehabbed because of the hurricane. That means that while you may have a nice looking unit for rent, everyone else will too. Just some food for thought from a guy that has no experience with hurricanes!