Find Clients at the Carwash
Brokers looking for a property-type specialty may find success with carwash financing
By Robert Roman, president, RJR Enterprises
The current recession is
forcing many real estate and mortgage professionals to get more creative to find clients and complete transactions. One way that some mortgage brokers
are finding opportunity is by specializing
in niche property types. and carwash
properties are one profitable niche that
brokers may find value in exploring.
a key to success in closing commercial
loans is knowledge of the asset. indeed,
when considering the carwash industry,
knowing the key facts can help you break
into the field and succeed.
To best help their clients find financing,
it is essential that brokers who wish to specialize in carwash properties first understand the market this niche serves. Today’s
motorists look for convenience (e.g., location and process speed), value and quality service for their auto-cleaning needs.
The recession has sensitized consumers to
price, and many are more concerned about
safety because of higher vehicle-repair and
Furthermore, some experts believe that
washing cars at home is declining because
of environmental concerns and freshwater restrictions. Carwashes are considered
a safer environmental choice than washing
at home. in fact, numerous organizations,
including the international Carwash association, have studied the environmental
impact of carwashes and their water usage
(see reports at tinyurl.com/SGcarwash).
The recession has created a mixed bag
for carwash-owners. in less-affected areas,
some carwash operators are experiencing
some of their better years. in other areas,
operators have seen volumes drop significantly because motorists have less money
in addition, tight credit markets and
tougher underwriting standards have left
many investors sitting on the sidelines. experts believe this combination of factors is
leading to pent-up consumer demand and
new opportunities for raw-land development, purchase transactions and redevelopment of existing carwash sites.
58 percent to 62 percent. as with development costs, operating costs also depend
on the type of carwash your client wishes
to purchase. For example, a full-service
wash that provides valet services will have
greater operating costs than a self-service
carwash because of the full-service facility’s need for full-time staff.
Once your clients understand the costs
to develop and operate a carwash, you can
help them determine what constitutes
a “good” carwash. Simply stated, a good
carwash investment is one that produces
sufficient volumes and revenue and that
provides the owner with an adequate return on investment. in many cases, sales
volume and return on investment depend
on the type of carwash.
When looking to finance carwash
properties, the trade area and physical
characteristics also are important factors. The most-successful carwashes are
located in areas that have plenty of homes,
adequate traffic flow and few competitors.
Surrounding development should include
complementary retail businesses that can
attracts business for the carwash.
also, a good carwash site typically
has excellent visibility, easy access from a
highway, adequate perimeter lighting, and
plenty of room for navigation, parking and
The property’s facility and grounds also
should be presentable. This means having
manicured landscaping, clean and functional bathrooms, transparent windows,
no black- or green-algae buildup on equipment or bay walls, and no pit odor.
in most cases, your clients would benefit from having the property inspected by
a qualified carwash consultant or equipment distributor to assess the building’s
integrity and the equipment’s adequacy
and working order.
carwash offers a nonessential service. as
such, the owner or operator brings much
to the table in terms of creating goodwill.
it is the carwash business’s intangible nature that dilutes the usefulness of relying
on capitalization rates to calculate the
With this in mind, a qualified carwash
consultant or specialized appraiser who
has a thorough understanding of the industry and the intricacies of individual
carwash markets is again beneficial for
Costs and characteristics
When working with a carwash-owner or
someone who wishes to purchase and develop a carwash, brokers can help their clients understand the costs involved.
The cost to develop a new carwash, including land, varies considerably and has
risen by 25 percent in the past decade and
depends on the type of carwash.
in terms of their operating expenses,
most carwashes (in particular, self-service
and exterior conveyors) have a gross net of
Robert Roman is president of RJR Enterprises, a carwash-consulting firm,
and vice president of Bubble Wash Buildings LLC. He can be reached at (727)
723-9474 or firstname.lastname@example.org. Visit www.carwashplan.com or www.
bubblewashbuildings.com for more information.
Valuing the property
Determining the value of a new carwash
often is not difficult. Professional appraisers are well-versed in the practice of using
comparable sales and industry standards
to value a carwash relative to the actual
cost of purchasing the land and equipment
and erecting a building.
One common approach is that a carwash property is worth some multiple of
average monthly gross sales plus the cost of
land and the estimated replacement cost of
the building, fixtures and equipment. another approach is that a carwash is worth
some multiple of net operating income.
Carwashes are similar to other small-balance commercial properties. Trade
boundaries are fairly small — typically a
three-mile radius — and the market requires adequate household incomes and
population. Unlike stores that sell commodities like gasoline, food or merchandise
that consumers must buy daily, however, a
another key to success with carwash properties is how brokers communicate, package
and present their clients’ deals to lenders.
Broker reports to lenders often include
traffic counts and demographic-ring studies but little or no analysis of other factors
that affect store performance. although
buyers typically must perform their own
due diligence, brokers and sellers who
make the extra effort and expense to put
the carwash in the best light possible will
have a better chance of drawing lenders
Brokers can help by preparing high-quality reports and marketing materials about the property. a professionally
prepared sales brochure or portfolio can
be a good selling tool if it contains the
Besides having nice photos of the facility and the grounds, an area map that
shows competitors’ locations, and a land
Illustration: Dennis Wunsch
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