Brandon built a car wash business with just $40k down on a $675k purchase, using seller financing at 3% over 20 years. He turned a profit in the first week and reinvested cash flow to build equity. Key moves: verify seller financials with tax returns, size bays to your area, add vending machines for extra revenue, and use cameras to cut theft.
Chapters
We've owned eight car washes, made millions of dollars. I myself have made a couple hundred thousand dollars on car washes. So we sat down with investment Joyce, who started with zero and is now worth more than $12 million from car washes and laundromats. To get the 10 things you need to know before you buy a car wash. If you're ever considering making money with sudsy cars, you better watch this. I love you like la la la la la la la la.
Hey guys, it's Brandon with investment Joy and I have totally caved. Bought a car wash. You need to be able to read a profit loss statement like one of these, One of these. When we bought this place, it was obvious to me they had a whole bunch of cash sinks. They were spending money too little on capex and they're spending too much on time investments. They needed to make a couple critical hires that just changed our balance sheet for the better. If I didn't understand how to read the seller's profit and loss, I would have been totally screwed on this. We bought two car washes and a storage locker facility, all for one price of 675,000. We structured it so the seller picked up most of the financing.
How much in seller financing?
95%. So it was about 635,000.
You structured that out over 20 years? Yes. At what kind of rate?
3%.
Wow, that's amazing. So 40K down on this deal, did you start making money? Yes. Yeah.
First week we were profitable and my decision was to reinvest probably 80 to 90% of the cash flow that was coming in just to make these locations better. We've already generated over a million dollars worth of equity in this business as a whole.
Most people's financials are trash. One of the biggest issues is that people lie to you. What do you do to make sure that when you look at a business, the financials are real?
I go off tax returns. I've seen some car washes claim to me that they are pocketing up to 40% of their revenue and under reporting on their taxes. And that's a huge red flag.
Men that speak a red flag.
How can I buy a business that on paper is losing money? Have conversation with seller financing. How about you let me run it for three months at minimal to low cost and I prove that you're actually making this money.
The only other thing I can say also is you can always talk to competitors. It's also pretty easy to navigate big, huge jumps if you're like, hey man, you know what do you make in another town that's sort of the same size? I'm not competing with you. I'm a town over nowhere near the same situation. But how much do you make? Is this reasonable? Why think that you are getting treasure when in fact you're getting trash?
30 degrees out here and I'm in a crop top. And she's in a crop top.
I know you were concerned about my.
Wardrobe, so I'm concerned about your health and safety.
What's important about this, this is a.
Machine that no one can fix and it's okay because we're going to wipe it out and we're going to put brand new in when we complete our second phase of remodel. But when we bought the car wash, we didn't know anything about equipment. So we brought in people who were experts that knew how to fix things.
I love that you got to make sure you got a handy guy on hand.
What is equipment worth? This is worthless. This has no value. But if I didn't do the research or know somebody that could do the research for me, I would know whether this is a zero dollar item or $3,000 item.
I get valuation reports on all of the pieces of equipment that I'm buying because I'm probably not as technical and handy as Brandon is. The important part is that when you're buying a business they're going to say my machines are fine, they're worth X, I bought them for Y. Don't buy just based on what they say. You got to know your demographics to know how many bays you have to have.
For this site with the traffic and the demographics, I should have four self serve bays and at least two automatic bays. But I have three self serves, one automatic.
But how do you figure out the demographics for your local area and how many bays do you think you should have?
The state of Ohio has really great traffic data. I know that there's 10,000 cars out there average per year. I know where my competitors are. I know that there are 10,000 households within three miles in your average car wash in rural Ohio. It's gonna pull three to five miles out.
So this is not track stop.
Yes. This is a non track. This is the smallest car wash bay that they make. We had to find a specialty company that would do this machine for a 13 foot wide bay. Flashback. And it's an honest piece of crap. Does not physically touch your car, which a lot of people really, really love. The new ones, they take out the railing here, they replace it with a LIDAR system Interesting.
This thing cost 250k?
Yes. The whole machine, all the infrastructure, they had to do. They had to upgrade electric work on it. They had to redo some plumbing.
But you do an equipment loan on it? Yeah.
Oh, yeah.
For a car wash, you can imagine you use a lot of water. What do people need to know about water before they buy a car wash?
The big thing is when it comes to water and a car wash, it's going to be a localized strategy. Here in Circleville, Ohio, our water usage policy is night and day different than if you were operating a car wash in, say, California. Our municipality, they don't care what I do with the water. You're not forced to have water reclamation. We don't even meter our sewer usage. I could go to a location four miles away that I'm actively looking at. I can drill a private well and essentially get free water on the car wash, eliminating essentially my entire water bill. One of the key aspects that I tell everybody to do is you can go in most municipalities and ask for a water report for your competitors. So this is soap we manufactured on site. My chemical supplier is right over there now. And they sell us this box of premix, and we just stick it in the drum and we stick a drywall mixer up there. Takes five minutes, and we save $200 per box. One thing you do not want is somebody to steal your money. I've seen people stuff rags into the coin acceptors. You need to have a way to vet and make sure that your help and your workers and even your business partners are accountable and trustworthy.
How do you do it?
After we've run a business like this for so long, you kind of get an ebb and flow of how much money should be in the bays. We have cameras everywhere. Our theft problem here has been very minimal.
Anytime you see something that deviates from the norm, you want to let your employees know that you see that. So you don't want to have car washes without other ancillary automated things that help your users. How much do these make you? Why do you have these?
Okay, these are Armor all spray sponges and Armor all wipes. These actual metal machines, they cost me 50 bucks to buy. We buy items for 50 cents. We resell them for a dollar. I don't stock them. I don't touch the product. My quarters end up in the mechanical room. We've got people that we can trust to empty the machines, so we're making an extra 10, $15 net per machine per week.
Moral of the story is you got to find ways to get little rivers of revenue to go to your overall ocean. We lived. You lived. This was awesome. Dude, thank you so much for doing this with us. I think that's a wrap.
