6 reasons to NOT Buy a Car Wash

Are car Washes a good or bad business to own? How much do they cost and make? We explore critical data most sellers wont tell you!

1. You think A Self Serve car wash is easy to operate and a good passive business. Self serve bays are somewhat easier, these are the washes where people come in and spray their own car, but they still need repairs and upkeep, someone needs to check chemical levels etc. so are not truly 100% passive. You still need to clean up after people, and people do stupid things that will cost you money. Repairs cost a fortune as it is specialized equipment, most general plumbers or electricians wont work on car washes. If you are prepared to spend some time learning your equipment, doing some cleanup yourself you will be further ahead. You can hire someone do do this but it cuts into margins. Profits vary widely, if you are in a low traffic area you wont make much, but industry norms for a decent location are around $1500 a month gross revenue per bay, that drops a bit if you have a lot of bays. You'll need your location, and land in cities isn't cheap, equipment like a pumping unit, in bay equipment, signage and more. Start up can be around 8k-12k per bay plus real estate, property and business taxes etc. It can be easier and cheaper to find a resale wash you can find those occasionally for less than land value if the business has been neglected. You can update the location add credit card payments, a support line, website, renew the equipment and signage, all will help to build back business. Accepted industry asking prices are generally around 3-5X gross revenue for a resale. Remember, these businesses all take more time than you think - did you consider counting coins? This alone can take a couple of hours per week.

2. Your strategy is to open across the street, be better than the competition and steal their business. In other businesses this strategy can work - car washes not so much. So you see a wildly successful car wash and open a location next door, give better pricing or better service to steal their customer base. Here is the problem with car washes, best case scenario you drive the other car wash out of business. Mission accomplished right? Wrong. The bank will likely take that car wash, sell it for pennies on the dollar, and a new owner with a much smaller debt service than you opens up. A car wash is a single use property. Nobody is turning that car wash into a salon or a burger joint. Every time that car wash reopens, its usually a new owner starting a car wash and taking customers from you, and if their debt is low they may price you out of the market.

3. You think its easy and cheap to start one from scratch. Try and get a permit! It is not as easy as you think. Many cities have a negative opinion of car washes due to the environmental impact. There are greener options today but government is slow to change. What are the costs to start a car wash. You can find resale washes online from under $100k to into the millions. Obviously the lower priced locations are in most cases struggling. Opening a new self service car wash not including the land, which can be a huge investment itself, you are looking at around $40k per bay. Mobile car washing and detailing will be a lot less, basically your vehicle, your equipment and your marketing. A tunnel type wash can make a lot more money as it is automated and can do upwards of 1000 cars a day. Its also a lot more money. Your tunnel Equipment, Blowers, Conveyor, Hydraulics, Pumping Stations, Arches, Boiler around $700k. A water treatment and reclaiming system is a good idea, and may be the only way you get a permit, around $150k, your electronics, tunnel controllers, relays and various electrical around $200k. So you are already over a million and haven't even looked at a vacuum system, heating system, signage, landscaping, planning and permitting and your real estate. So these types of car washes can be a significant investment up to 5 million in some areas, and dont forget the equipment will often need repairs or replacing.
SORRY OUT OF SPACE! SEE VIDEO FOR FINAL TWO REASONS.
If you are looking at starting a mobile wash you can make extra money by servicing vehicle fleets and dealerships, not just focusing on private owners. Those are typically a contract and has a more predictable revenue stream. Some pressure wash companies will wash pretty much anything, like exteriors of homes and this can expand your customer base. There are franchise in this space whose top 10% are making over 1.8m a year. Investment $50k down $100k net worth investment around $80k all-in, give us a call if you want to take a look at franchise businesses.
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