I have a line on a community. My agent had lunch with the owner today and he says he needs to sell.
There are some aspects to it that I am not familiar with. It is a rural community on I assume well and septic which I am familiar with and not an issue for me in regards to investment. The community is located in a small rural town. The community is healthy and not dependant on population, employment or the normal markers that you would use to evaluate a community. Being that it is in Canada it is a much different business than you operate in the US.
The aspects I am not familiar with are a coin laundry and coin car wash which are part of the business but I do not know if they can be separated at this point.
Stats are as follows (these are very general at this point.
Number of homes 18 (most likely all owner occupied)
Monthly rental income $3755.00
Monthly laundry/car wash income $3000
Total annual income $81,000
Total annual expenses $34,000
Asking price $330,000
None of the actual numbers are confirmed and not really important as far as accuracy but are likely in the ball park of being correct. Confirmation will of course be necessary.
My question is who knows anything about laundry and car wash businesses. Do any of you have them in your communities and are they high maintenance, do they need attendants or at the very least someone in close proximity.
You need more info on type of car wash. It’s probably just a small shack with a couple wands on each side. You need someone to refil the soap and check maintain the pumps and empty coin deposit.
My father owned a car wash for 5 years, and I had the pleasure of “helping” him from time to time when I was younger.
Car washes are extremely maintenance intensive businesses. You have people break the spray wands, dump garbage, try to break into the coin room (had to replace the door twice due to crowbar damage), replacing pumps, re-supply soap and finishing product, empty vacuum bins, etc. Every couple months you have to “dig the pits” - that’s the drain areas in the car wash bays. People fill these up with sand and debris power washed off their car and it’s about a 750 gallon hole in the ground half full of sludge and junk, not quite as bad as cleaning out a lift station. We would get in there with shovels and haul it off to the dump.
He literally had someone go out and check on the place for at least 30 minutes per day to make sure all the bays were operating as expected, make any repairs, and would weekly collect money. Money collection day was always a fun one - would arrive during off-peak hours with a friend and a Colt .45 for security to carry $400 of quarters out of there.
Success of this business is solely whether you have a good maintenance man - my dad’s uncle did it, he liked fixing stuff and had all the time in the world which is the only reason it worked. If you hire professional outside help I suspect would eat heavily into your take home.
I would look to lease it as a contingency to close, or sell it via fire sale.
I just had a look at it with google street and it appears to be a cinderblock garage, one bay as car wash and a Laundromat in the back half. Not much to look at and doubt it is worth the trouble.
I would prefer to consider the purchase without including any value for the carwash or laundry.
Car wash could be closed not sure about the laundry. Probably used mainly by residents and probably a real headache to maintain. Maybe I could lease it to someone to operate.
Most of the homes look OK, couple of older domed top but the majority with peeked roofs.
Couple of home owners not very tidy which I would need to deal with right off.
It is not my quality of community but it has possibilities. For the right price I may see if my son is interested in buying (with my assistance).
Comes with 78 acres of bush so maybe a possibility to sell for a few bucks, who know.
It’s located 15 minutes from my community so I guess I’ll take a look this weekend.
Based on price and condition once listed it will sell quickly in this area.
I had a conversation with an old timer park owner in Lynchburg, VA a few years back who also happened to actively be in the business of buying local car washes. His diligence processes for car washes came up in conversation and there were two things that stuck with me from that conversation. The first is scale. He basically said it wasn’t worth doing unless you could scale in a particular market and get a competent team together to shoulder the burdens of running them. For him, his two maintenance guys in the parks also acted as the maintenance men for the car washes. He lived locally so he personally went around each week and collected the money.
The second thing had to do with the nozzles on the sprayers. He said that in diligence, he’ll check the flow rate on the nozzle with the average time per wash. What he calculates is Revenue / (gallons per wash * rate). His goal is really to find a range of customers who use the facility each month. He uses this number to evaluate the upside. As for his upside, he typically swaps out the nozzle head with a lower flow head to cut water expense, decreases the time per quarter, or both.
As for the laundromat, you’ll really need to be sure to get a phase 1 on this. Those things are notorious for having environmental problems. I like Louivie’s idea of renting the car wash to a local car wash guy and letting him run it.
All things considered I think I will have to value the community without the laundry and car wash. Doubtful the seller will see it my way so probably not going to work.
His price is about $100,000 too high for me. Extremely doubtful he will understand my position.
I visited the park yesterday, it is a OK community but the size is a problem. Without the laundry/car wash the lot rents do not support the asking price as I suspected.
Even at a 15 cap the price is a tad high so I think I’ll try and meet with the seller and find out more info.
There may be a possibility of selling off about 70 acres and make the deal work after the fact but I still need to offer almost $100000 below ask to be able to work the deal and shut down the laundry/car wash.
There are possibly 6 empty lots (2 existing, 4 he is suppose to be setting up) so future growth is a income booster.
I’ll talk with my agent tomorrow.
Agent contacted me today saying seller dropped asking to $280,000 (from $325,000) and suggested a no condition offer at $250,000 had a good chance of being accepted.
Purchase still includes two mobile homes to be brought in. I asked agent what he would list them for once set up. I’ll wait to hear back.
I don’t think they are getting any feed back on the park and the seller may be starting to get concerned.
At this point I will get it for my price or not at all.
I also checked out laundry facilities. About 12 washers and 16 dryers, not bad condition but I think it is mainly a summer income with cottagers. There is no other laundry anywhere in the area.
I would like some feed back from owners with coin op laundry business located in their communities.
Specifically what is involved time wise to have a laundry operation. Assuming for example that a tenant was hired to open/close etc. what would be involved management wise on the owners part. I do not want to be hands off but I would like to know if I would need to be there every day once a week ???,
What generally would be required maintenance wise of the machines, is it a constant repair situation with
a 30 machine operation
I just need a general idea of the amount of time is involved.
Apartment operators deal with this all the time. Almost unanimously, this is what they do with coin operated laundry:
Meter the utilities if this hasn’t already been done. You need to know what you are paring for water, electricity, gas
Contact a company who specializes in operating these types of things. So, call up some apartment management companies, drive around the market and find some class C buildings where they have a laundry room, google search, etc. Just figure out who owns machines in that market. They usually have a name and number on the machine somewhere.
Lease the machines to them and let them deal with collecting quarters and fixing machines. Build a profit in if you can but I’d probably just be happy with recouping the utility costs and not having to worry about embezzlement from a manager.
That would be my strategy if the machines were truly a bonus for the residents and I felt I needed to keep them. If I didn’t feel like they were necessary, I’d shut them down.
I’m not sure how easy it would be to offload the operation in a small town without paying through the nose.
I’d suggest having a tenant be the Manager for it as you suggested. Ideally also an appliance repair person. They can open close perform the janitor role and check that the machines are all working daily, getting service tickets in place with whomever you have locally.
The age of the machines plays a role how often they breakdown. The numbers you mentioned earlier suggest the owner either does a lot of the work himself or the thing is pretty reliable. Do you have to deal with vending machines too?
Try to set it up so you can pick up the coin, re-stock the bill changer, and do an hour review on the janitor logs once per week when you’re already onsite for MHP items.
