Car Wash Loans - What Is The Best Type Car Wash To Buy Or Build

By:


If you are looking to buy or build a standalone car wash, here are some things to consider. First of all, 65% of all car wash facilities are at gas stations and convenience stores. Approximately 25% of all petroleum sites have one and most oil companies now will not build a new store without a carwash. The majority of them are the rollover type washes that you either get a free wash or a reduced price wash after a fill up of your fuel.

When referring to building or buying or refinancing a carwash, for all intents and purposes, we are referring to tunnel washes, whether they are full service or exterior tunnel washes. There are approximately 20,000 tunnel washes in the country. The obvious difference would be the average labor costs at an exterior car wash compared to a full service facility. The average "full service" car wash has 14 employees as opposed to an exterior car wash which has four employees. The full service will enjoy in general higher revenues and obvious higher labor costs. At the full service tunnel washes, you can also have auto detailing which usually has very good profit margins. The average tunnel wash costs $2,000,000 to build (excluding land costs) so you need to be spinning off some good revenues to service the debt on this.

Many of the "rollover" or "In-bay Automatic" auto washes are at gas stations and convenience stores, although you do see isolated standalone rollover car washes. There are more In-Bay / Rollover car washes than there are tunnel wash and self-serve washes put together.

Many of the tunnel washes are being done SBA 504 and SBA 7(a). The reasons are obvious. Although conventional financing does have its benefits (typically lower origination costs and loan approvals can be quicker) the SBA loan will frequently be a higher advance because of the good will that can be financed in addition to working capital and inventory. It is hard to argue with the fixed rates available with a SBA 504 loan. Add financing soft costs to your project and it makes it difficult to beat.

From a financing point of view, many of the same criteria apply to financing (existing or ground-up construction) of a auto wash facility. If you are well capitalized and have sufficient equity into the transaction, have industry experience, have acceptable credit and the site cash flows or the potential site has a market there, your chances are good that you will obtain financing. As with all loans, PACKAGING IS HALF THE BATTLE. Looking at a package with a good business plan, with realistic projections and accurate assumptions will go a long way. Underwriters do not like to have to figure things out. They like to have it laid out in a well thought out presentation. The less questions an underwriter has, the more likely your deal will be approved.

About the Author:
Harold Jaynes has been since 1999 specializing in car wash loans, gas station and convenience store loans and has closed loans nationwide. If you are looking for car wash financing contact PetroMAC at http://www.carwashloansinfo.com for more information.



Article Originally Published On: http://www.articlesnatch.com


Tags: , ,

|

Loading...
Related....
Videos...

Recent Real-Estate Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.