Want more on cashflowing from car washes? We’re doing a deep dive playbook this month on car wash acquisition deals where we're covering sourcing deals, doing deals, financing, and more with exclusive interviews from subject matter experts. Check it out before it goes live!
I spent the first 10 years of my career making millions for firms.
I spent the next 5 making millions for investors.
Sure, those 15 years would make for some interesting reading in my biography. But if I could do it all again, would I?
Honestly, not quite. Given a second chance, I wouldn’t follow the fine print.
If I could turn back the clock and give 20-year-old Codie some advice, it’d be this.
“Put your own skin in the game. Make millions for you.”
If I was in my early 20s right now, I’d go learn investments. I’d worry less about accolades for my resume & more about assets for my portfolio.
I’d tell 20-year-old Codie to start measuring her ROI to her company and to herself often. There’s no greater valuable lesson than learning, so I’d do more of that. Then I’d take that money I earned and put it to work.
Learn, Earn, Cashflow.
So many young adults obsess on salary and title. Those are fine, but it’s way better to optimize for learning first. Then earning, and then finally having people just pay you more. When you take your earnings and invest them, you become your own salary.
This week’s highlight is all about a woman who did just that. She didn’t have an ego, just the grit to do the boring, dirty work, and now it shows.
Okay, onto the money...
How many cars do you think are actively used in the USA?
The DMV reported it registered 276 million vehicles in 2019 alone. We are a population of 328 million.
Here’s another question...
How many car washes do you think are out there to service these cars?
So 60k car washes against almost 300 million vehicles...I’m feeling a wee opportunity, ‘eh?.
Even if we assumed all economic factors were equal and that only one-quarter of those 276 million vehicles were regular cars for us regular folk (you know, sedans, minivans, hatchbacks), there’d still be 1,150 cars for each car wash.
At $15 per wash, you’d be raking in a cool $17,250. And even if your local car owners only washed their cars once every quarter, that’d still translate as $69,000 in ARR.
Maybe that’s why Shaq has a ton of these.
But enough with the hypothetical scenarios. Let’s talk about hard numbers.
Enter Hannah Ingram
From college dropout to part-time realtor and TikToker...This week, we’re pointing the spotlight on a certain Gen Z’er from Tennessee. Her cash flow business of choice? Car washes.
Bought for $140k, Cash flows $7,400 a month.
Long before she started thundering down the freeway in her Maserati, Hannah had always found the concept of passive income alluring.
Being a realtor herself, Hannah had a good idea of what the average car wash would cost. So when she had saved up just enough to cover a percentage of the cost, she set out to buy one. Here’s what she ended up with.
Car wash with commercial land
6 self-serve bays
5 vending machines
2 bill collectors
For a $140k price tag, that’s not shabby at all. But what about revenue? Did the property generate any or are car washes just all hype?
Hannah’s TikTok does more than answer that question.
After her typical 2-week cycle, we see Hannah scoop $1,238.50 in coins into three buckets and another $960.25 into another two. Add the $1,957 she earns in dollar bills and that brings her fortnightly cash flow to $3,795.75.
How did she find this property?
You may be thinking…
"Girl buys a car wash at 22? Yep, that’s definitely daddy’s money."
Not this time.
Hannah comes from a middle-class family, one that’s reasonably averse to risky ventures like buying a $140k property at 22. In fact, two years before COVID hit, she was working 12-hour shifts as a factory worker.
So, if she didn’t have daddy’s network to draw on, and he didn’t bankroll this operation, how did she pull it off?
The answer might surprise you.
Just like LinkedIn, everyone points fingers and makes fun of cold-calling. But after all the jokes and memes are done, the truth is this. Cold calling works...if you do it right.
And that’s what Hannah did.
She picked up her phone and called car washes until she found one that was up for sale. But even that doesn’t explain how a recent college dropout suddenly got deep enough pockets to buy this asset. That’s because she didn’t.
Thanks to seller financing, Hannah was able to take the reins on the mortgage the previous owners had already taken out.
She was able to skip putting 20% down, taking out a bank loan, and even having her credit score take a hit. In return, she became fully responsible for paying off the car wash and all its expenses. But, she also got to pocket all its revenue too.
That’s the power of a good deal.
How Can You Replicate
1. Pick Up The Phone
I imagine a lot of skeptics will read this and immediately go on the offensive. ‘If car washes are such great cash cows, why would anyone want to sell them?’
Well, the same reasons as always.
Behind on taxes.
Relocating to another state.
The list goes on and on. But as long as you choose not to look, you’ll never find these deals ripe for the taking.
If you’re like me and you’re already juggling a dozen other businesses, that’s where the power of delegation comes in.Outsource your cold-calling. And in this day and age, it’s never been easier.
Spending as little as a half-hour searching on Twitter, Google, or Fiverr can turn up dozens of agencies with a proven track record in cold-calling. These contractors don’t even have to close your deals. They only have to find car wash owners that are willing to sell. It’s like I always say…
Or you can try Loopnet. Think of it as Zillow, except for all things commercial real estate. With a good old-fashioned Search & Scroll,you might just stumble across a golden goose. And of course BizBuySell
2. Learn Seller Financing
While everyone might be telling you to brush up on NFTs and crypto, which you probably should, it wouldn’t hurt to add seller financing to the list.
For one thing, it makes buying a business a lot cheaper. With a background knowledge of your seller, some Southern charm, and killer negotiator skills, you can knock off 3-4 zeros off any asking price at purchase.
3. Get A Lawyer
Like with every other property acquisition, seller financing can get technical. That’s why it’s critical to hire a legal expert to hash out the finer details of your contract. Even when you have the basics down.
For Hannah, drawing up the paperwork cost her $400. Yours might cost more but it’s worth it to ensure you don’t take over someone else’s business on unfriendly terms.
Here’s some more opportunity...differentiate your car wash with amenities. As it turns out, not only vending machines stocked with Cheetos and Red Bull print money. Car wash vending machines cash flow too!
Stocking only five car care products, Hannah attributes a good portion of her weekly turnover to her vending machines.
Her air fresheners, which she buys for $0.20 apiece and resells for $1.25 are by far her bestsellers. That’s a 500% markup.
As a realtor, Hannah is trained to milk every penny out of a piece of real estate. That’s why she’s currently pushing to build self-storage units on the unused land around her car wash. We call this value add, how can you add other amenities to continue diversifying your cashflow.
5. Mergers & Acquisitions/Rollups
The car wash industry is one of the few where there are few big players. Even the largest chains don’t have a market share greater than 5%.
Translation? Disaggregation means opportunity
A horizontal merger is one way to expand while safeguarding your cash flow against seasonal fluctuations. By acquiring car washes up North where there’s higher customer volume during winter and some more down South where the boom typically comes in summer, you could keep your overall revenue more even annually.
Of course, you could also decide to branch out vertically. At $160 per detail and $12B+ in revenue, car detailing is one related boring business that should set off your spidey senses.
Side Note: How to offset taxes. Four weeks ago, we had Mitchell give us his best tips on how to short your taxes. It turns out Hannah's was way ahead of the curve.
By exploiting the Hummer Loophole our CPA friend talked about, Hannah was able to buy a Chevrolet Silverado 100% tax-deductible.
Her use for it? Transporting chemicals to and from her car wash.
Stack cash and get sudsy,
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