Location: El Paso, TX
For Sale Website:
This car wash is located in El Paso, Texas. It is a self-service car wash with five bays, two of which are dedicated to trucks. It has been around for 32 years and is located on one acre of property. The closest competing car wash is located three miles away.
The financial forecast that we performed is extended 15 years into the future. The asking price is $239,000. After performing a financial forecast, the business should be asking for $410,000. This means that we are saving money. Using the $410,000 valuation price, startup capital to purchase the car wash will be raised through 50% equity and 50% debt. Upon review, however, the company can be bought through 80% equity and 20% debt. We found (using 50/50) that the WACC is computed to equal 7.09% with an internal rate of return of 7.12%.
Our assumptions are:
-Each car wash takes 15 minutes on average to complete.
-The car wash will average 100 washes per day.
-Variable expenses are directly tied to revenue. This is due to the fact that with revenue growth or decline, variable expenses will grow/decline in direct relation to revenue.
-The mortgage rate will be 6%. This rate was gathered from Steel Head Capital. This rate was based on a multi-family commercial mortgage rate.
-Our financial forecasts are based off of the research done by University of Texas at El Paso, “The Economic Feasibility of a Car Wash.”
This car wash is a good investment because it has the ability to cover expenses, pay a return to investors, and make a profit.