All Forum Posts by: Dave Carpenter

Phillip, this looks like a pretty solid deal to me. Is this a single family home or duplex? Is the focus cash flow on cash flow? 

I like that you have 10% for management and capX. I think being safe with those numbers is smart. 

I saw you have $10k for repairs. That seems like a pretty round number. What repair work is needed?

Dave, lots of good questions! I bought a pair of automatic car washes a little over a year ago. A few things to keep in mind:

There are lots of different types of car washes. Self serve, automatic, full service, etc. Each is in some ways a different business, so consider the type of work you are willing to do.

In my experience with buying my car washes I also bought a part time job. It would be a different job for each type of wash, but it does require at least weekly upkeep. 

I would also consider the existing business in terms of cars washes per year. Is that a number that is increasing, decreasing or something that you could influence with marketing or better visibility. 

I’d look up chemical/soap suppliers in the area, especially if you can figure out who the supplier is for those car washes. That rep likely could give you some insight into the business. 

For me the analysis was on comparison to the type of cash flow I could get with a similarly priced apartment building. I found that the cap rate was better for the car washes that it was for the apartments I was looking at here in WI. I’m guessing that’s common, but partially because no matter what wash you are buying there is likely more regular work that with an apartment building. For me with automatic washes I’m emptying garbage every other day and checking on the washes to make sure things are working. 

Maintaining the equipment is a real part of owning washes. Like with rental properties, you could “self manage” or choose to have all the work done by others. I have found that many things I am able to do myself pretty easily, and for some of the more complex tasks I have a service guy that had serviced the car washes for years. I’d ask about if there is an existing service guy and talk with him too. He may give you an idea if the washes have been well maintained or not. 

Because car washes are somewhat of a unique business you may have a better shot at seller financing too. That’s what I was able to do and allowed my cash to go further. You can also consider an SBA loan as well. 

Good luck and reach out with more specifics about the deal if you would like!

@Dana Galindo welcome from the Wisconsin side! 

What the price range and cities/neighborhoods you are looking at in Milwaukee. There’s also a pretty active Facebook group and meetup you may want to connect with. 

pros: usually cap rates are better for car wages than similarly priced apartment buildings, especially these days. 

Business generally runs itself with likely weekly maintenance and upkeep. 

Garbage cans will probably be the most frequent part. 

No employees makes life a little easier. 

Cons: can be a dump for things like old tires, oil, etc.

Much more of a day-to-day manual business than a small multifamily. Not a passive business

Can be harder to finance since it’s a non traditional type of real estate. Bought my car wash using an SBA loan.

Location is very important. A main st vs an out of the way street can make all the difference 

Most car washes these days are pretty digital and hard to fake on the wash side. Coin ops you could probably still fake, but certainly not advisable.

@Mayi Nelson I financed it mostly using an SBA loan for 75%. The remaining was a split between equity I pulled out of some duplexes and seller financing. It is essentially 100% financed as a result. The cap rate when I was looking was stronger than most apartment buildings in suburban Milwaukee. 

It certainly does take some work. I have a great relationship with the seller so had a pretty good idea what I was getting into. Even getting to see the day to day operations I don’t think I had my head around how many little things there are. 

Today for example, someone ran into the spray arm. No big deal, but I had to run over and reset it.

One up side is that while there is the occasional exception,  most people are pretty nice if something goes wrong, since it was only about $10 out of their pocket. 

Katie, I purchased a pair of car Washes about a year ago in WI. I looked at it just like I would any investment. Cap rate, ROI, etc. I found that the cap rates were a bit stronger than a similarly priced apartment building.

One thing to consider is depending on the type of car washes they are closer to buying a business compared to a more passive rental property. For my fully automatic car washes with no employees, I am there about every other day checking on things and fixing small problems. The timing is pretty flexible, but if something breaks I have to respond. 

Hope that helps a little. Please let me know if you have other questions!

Where are you San Fran guys finding these screaming deals in Washington heights?!

Jackson, big differences between certain areas, especially in that part of Milwaukee. Generally properties east of hwy 41 are less valuable and in less demand than further west (closer to Wauwatosa). Properties north of North Ave also tend to be a bit less valuable as well.