The Best Cash Flowing Business I've Ever Seen | Business Breakdown | Parking Lot Profitability

So a few weeks ago, I was scrolling through Twitter and I came across this tweet from my buddy John Wilson. He was asking, what's the best cash flowing business that you've ever seen? And I've been around a lot of businesses over 25 years. I've done software, coffee shops, schools, fireworks, you name it. And needless to say, there's one type of business that has cash flowed more impressively than any other one. And that business is a surface parking lot. So in this video, I'm going to break down a local parking lot, that I calculate prints over $3 million a year in free cash flow. So let me tell you about my favorite parking lot of all. Here in San Antonio, we have our airport and everybody that enters our airport, they come in basically through one of two ways. They'll drive up and they come in through this main road here and they work their way in to the terminals and get access there. And what's interesting, if you look at it, is there are basically two options if you want to drive yourself to the airport and park there. Number one is pretty straightforward. You can pay to park in any one of these lots here that is owned by the city of San Antonio. So they have garages and surface lots and all that kind of stuff. But there is option number two, and it's the only other option in the area besides those city lots to where you can park your car if you want to drive yourself to the airport. And it's right here. It involves this lot right here, this area right here, and this whole lot here as well. All of these are this parking company. So let's take it another airport, the next biggest one, uh, here close to San Antonio, and it's the airport Austin. There's something kind of different here. If you see the Austin Airport, well, first of all, it's further out of town than the San Antonio Airport is, but you see something else when you zoom in here is there are a lot of parking options. There's this parking option where you can pay to park with the city on their lot. There's this private lot. There's another private lot here. There's another private lot here. And one thing I love about all these airport parking places is just the wacky names. Fast and Secure Park, Park a Lot. I mean, this is what the names are. Uh, of course, all designed to where you feel very safe. The Parking Spot West, you feel very safe leaving your car there, but I don't know, kind of dope. Baby. But anyway, so back to San Antonio. So we go look at our airport, and unlike the Austin airport, there's only one private lot if you're not gonna park in the city lot. And it turns out it's these two properties right here. So first thing, it's pretty easy to figure out what the name of this place is. You can just like click on it, and it's called Airport Security Park. All right, so here is the website for Airport Security Park, and they tell us a couple things. So number one, what their parking rates are. So here we can click on economy rates, and you can see that they charge $7.75 a day. They also offer monthly options. Covered is $9.75. Indoor is $12 a day, and then if you are a VIP, you can spend $11 a day to have this VIP parking. So let's look at the business itself and how it got started. Uh, Airport Security Parking began as the vision of a young man named Jim Dunworth. In 1969, Jim purchased a small residential piece of property near the San Antonio airport, which became Airport Security Parking. Today, Airport Security Parking occupies over 20 acres and provides spaces for over 2,000 vehicles. So that is our first first data point to understand what's going on with this business. So first thing I'm going to do here is I'm going to model out the revenue, and the number that we just figured out here is the spaces, right? So we know that they said that they have 2,000 spaces. The prices range from $7, $7.75, $8, $9, $12, and on up. So we could just make a guess that probably the average there is around, let's say, $9 a day. What is the utilization rate of this space? How often are they full? And because there's nobody else nearby, and also because something else— I drive past this parking lot all the time— I'm going to make an assumption that these lots get used 70% of the time. So that's our utilization rate of how full it is. It means about a quarter empty every single day. So what we can do here is we can actually do our next step, which is to figure out how much revenue does this parking lot make in a given day? And the way we do that is you do 2,000 spaces times $9 on average per— times 75% means on average they are bringing in $13,500 in revenue per day. Every day of the year. And then pretty straightforward. We do the days in the year, we multiply that by 365, and we end up with an annual revenue estimate of nearly $5 million for this lot. Revenue is cool. Let's talk about how much they have to spend in order to generate that revenue. And remember, the way this particular parking lot works is they have buses that take you back and forth to the airport as part of the service. So we have to deal with all that. The other thing they have going on is they have a bunch of structures here. They have some electricity, they have gates, they have signage, they have parking lots. So all of that stuff like that requires maintenance costs and all that kind of stuff. So that's the first thing we're going to write down here. And I'm going to estimate they're spending, let's say, around $100,000 a year to do repairs. So that means new light bulbs, repainting stuff, all that kind of stuff. Even if we want to get a little bit more aggressive and say that they're spending $150,000 a year, we can go ahead and do that. And spoiler alert, it doesn't really matter. This business does so well that nobody cares. So salaries, let's talk about that. It's 2 employees, 24 hours a day for $18 per hour. So you see one person is driving the bus and one person's collecting money 24 hours a So they're spending $315,000 a year to have 2 employees on site all the time. So let's go on to the next thing. Property taxes are really expensive in the state of Texas, and basically we can tell what the property taxes are because you can go look those up in the public record. So the first thing you do is you go to this site here, and this is Bexar County. What you do here is you go here and you look up to find out what a given piece of property is paying in taxes. And I can do a map search and it pops up a beautiful map that looks like this. And I can zoom in on exactly what we're talking about here. And voilà, here is the property in question. You can click on property detail and you end up with this listing for the property. So they're paying $92,000 a year in property taxes. But remember, it is not the only tract that is here because they also have these tracts below it, cuz they're on the other side of this road as well. And here they're paying $38,000 for the remainder of their lot. So let's just do some rough math for the sake of our model here to see how profitable this business is. And we'll go ahead and put down that they're doing $120,000 a year in property taxes. People talk about Texas being a low-cost state. Yeah, not so much. All right. Okay, then let's move on to the next thing. So they're going to run these buses. So they run buses back and forth to drive to and from the airport. So how much does it cost to run a van like that? So let's make an estimation of that in particular. So what I figure is it costs $30 an hour. To run a bus, fuel, depreciation, maintenance, all that kind of stuff for the bus. So even if that's a little low, let's go ahead and make it $40 an hour and run that 24 hours a day. That's $960 a day, $1,000 a day it's costing them to run that bus. Remember, that doesn't include staff because that's included in the salaries here that we did above. So that's $350,000 a year that it's costing them for the bus. That feels a little high, but, you know, whatever. And then look, we are lazy business people. So we want to hire a GM or a CEO because I don't want to have to be showing up there when somebody doesn't show up. So we're going to hire a GM and we're going to pay them really well. And the way I would typically pay them for a business like this is a nice salary and then a bonus based on how much revenue we do as a company. So, you know, I'm going to want to hire a really good person because they can really do good things here. So let's say we pay them $120,000 a year and then there's a bunch of other crap that I will put here that let's just go ahead and put some fudge in there. There's things we're probably not thinking about, $150,000 worth of just things that we're not considering. Oh, and then we forgot one more thing, the sales taxes. So, um, we will remit those directly to the state or the county for what we're paying there. But remember, sales taxes in the city of San Antonio is like 9%, so those won't show up in our math here because we'll capture them, send them straight back in. But those are for sure something that's going to be something to consider. Okay, so let's go back to the property itself because right now things look really good here. Um, we're doing $4.9 million in revenue on $1.2 million in expenses. That's $3.7 million worth of cash flow from this business. So what's interesting is we can actually go look and see when they bought it. Here is a deed of trust when they bought it back in 1961. All right. So this dude borrowed $20,000 to buy this property back in 1961. 10% interest. Crazy. This business throws off like $3 million a year and they bought it for $20,000. Oh man, it's just crazy. So plus or minus, they paid $20,000 for this property 60 years ago. Yeah, this is, this is why millennials hate boomers. Oh God, thank God I'm a Gen X. Nobody cares about me. Let's just— let's even go crazy here. Let's say that they actually are doing $5 million in revenue. Let's say they're spending $2 million in costs. So that means if you subtract those, they are doing $3 million a year in free cash flow from this parking lot on a cost basis. Now you have to adjust that because whatever, but they paid $20,000 for the lot. So now that's not really fair because $20,000 in 1961 is not $20,000 today. Back then, cars were like $12 and, you know, you whatever, it was super cheap. So what you do have going on here is another thing that's super interesting, which is they're valuing the, the appraisal district is valuing this land at, let's say, $4 million for each thing. So they really have $8 million invested in it if you buy the valuation that the county gives it. So they have $8 million invested in this thing. And really what we need to look at is, okay, If the current value of the land today and all the improvements is $8 million, how much are we earning on that current equity that we have in the thing, not on what it cost in 1961? So you can do the math here and I'll just tell you, pretty straightforward. $3 million cash on cash return on an $8 million investment is incredible. Yeah, it's a 38% return on equity. So it's just unbelievable. Amounts of stuff. And, you know, the reality is that the value of this cash flow, doing $3 million a year in cash flow, is so valuable. They don't need to have that $8 million invested in anymore. They could easily go borrow $3, $8, $10, $15 million on that. Maybe that's a little aggressive, but they could definitely borrow big, big numbers on that and have $0 invested in this whole business with no personal guarantee. That is pretty ridiculous. So if you assume 5% inflation for the past 60 years on a $20,000 investment, that's $373,000 invested. So basically the math here is this family is making $3 million in free cash flow on a $373,000 initial investment. It gets even better for these guys because they get a thing called bonus depreciation where you can take certain stuff like parking lots, and every time you spend money on a parking lot, you get to basically like take that asphalt improvement and write it off. All right, so here's the next step. So I actually went and Googled this guy Jim Dunworth, right? So he came to San Antonio for Air Force, right, and became an entrepreneur. And this was his obituary. Died in 2014. He was a successful entrepreneur who started with nothing but became a legend in the automotive industry in San Antonio. In the teens, he started buying and selling cars, which led to a successful career in the auto trading business. In 1964, he started the National Car Rental franchise here, which he owned and operated for 41 years. In 1969, he founded Airport Security Parking, which is still the leading offsite parking facility for the San Antonio Airport. He worked hard, all that kind of stuff. Of a dedicated family man, died in, in 2014. But dude, he invested $20,000 and turned it into a business that is now producing over $3 million in cash flow, plus a bunch of other businesses too. And to me, that's one of the things that's really unique about business, is you can be wrong a lot, you just have to be really right once. And like, Jim was super right here, uh, and totally changed the trajectory of his life and everybody else around them. So super crazy. Yeah, someday I want to just retire rich. It sounds really good. So super cool. All right, so that's a video about the greatest business I've ever seen. It's a parking lot near the airport near my house, and, uh, hope you enjoyed it as much as I enjoyed talking about this one. I mean, when I see stuff like this, it just blows my mind. So if you like this, click subscribe, reply below, tell me what you thought. Um, we'll link to some of the stuff so you can see more about it, and, uh, that's it.