Tommy Dobczyk explains why car-wash properties need a 9-12% cap rate instead of the typical 6%, citing unverified income, weak leases, and environmental risks. A 12% cap rate values a property at $2.1M versus $2.5M at 10%, and he recommends rewriting your LOI to reflect these higher-risk adjustments.
Chapters
All right. And now ask it, ready for this? Go ahead. All right. So we want to know what the, what the cap rate is on a commercial property that is a car wash. What, what should a car wash cap rate at? Unverified NOI, weak lease proof, environmental and equipment risks to where we're at now. Oh, I see that. Young operator, limited financial disclosure, specialty use risk. Cap rate's gotta be at 9 minimum. So let's go see if we can find Dr. Her— let's go see that one. And again, like the 2% annual increase is not That's not strong at all. No. What does it say? My cap rate opinion. What does it give us? Fair risk, 8.5 to 10, right? And so the value at a 10 is 2.5, right? And so with a 12, go down a little bit more. At a 12 cap, it's 2.1, right? So we can tell them that's why. And so rewrite, ready? Do it one more time. Rewrite the LOI and point out that the reason why there's a 12%, a 12% cap rate is because it's risk-adjusted cap rate for everything else. The 6 cap would be if it was a national credit, AAA-rated credit rating car wash provider. And this is not, this is somebody who started in 2021. They've, they, there's no proof of their NOI. There's no proof of it being able to scale or expand. And we know that the facility is outdated and if the current provider was to, or the current tenant was to vacate, we would have to reconstruct or repurpose the entire property. So make this why our offer is at 2.1% and 12%. And so there, there's your LOI. Let's go ahead and prompt it again. I would also like to, I would also like to start looking for Dr. Fernando Acosta of First Choice Realty to assist us on putting together a purchase sales agreement for the guy. So please provide us with a way to contact Dr. Acosta. So I think let's see what it's— yeah.
