🚀 How to build a 9-figure empire from a side hustle

Hey Side Hustler,

Happy Thanksgiving week, one of those “lost weeks” where not much gets done. So let’s have some fun and dream a little…

Today I want to talk big picture. My partners and I talk a lot about the end game, the Big What If, The Goal.

And for the car wash side hustle it is particularly exciting. Maybe $100M exciting.

Here’s the plan:

The plan is to buy on average 2-3 car washes every year for the next 6 years or so. Here’s what that will look like:

If we can buy at an average of a 10% cap rate (so far so good), that means the net operating income will be 10/100th (1/10th for you math whizzes) of the purchase price.

Most of the stuff we are targeting has in the range of $100k to $150k net operating income when we buy it. That means the price will be $1M to $1.5M ($100k / 10% cap rate - $1M)

Let’s use a $125k NOI as an average.

Now, you’ve been on this list long enough to know we don’t just buy a car wash, we blow it up with the 3 M’s:

• Modernize: fix equipment, upgrade offerings, improve overall customer experience.

• Marketing: optimize Google maps and ratings, building customer rapport with on site attendants

• Modify: update pricing to just above market rates, install membership programs.

When we do that we know we can at least a 25% bump in NOI. It’s often much higher - we doubled the income at our first property. But let’s be conservative.

So the average NOI goes from $125k to $156k. Now each wash is worth on average $1.56M.

So we started with 2 car washes, added 12 more over the years and will have 14 total car washes by year 6.

14 car washes at an average of $156k NOI = $2,184,000 in annual NOI for the enterprise.

Now remember that is NOT cash flow. Cash flow is much lower since we will have debt service. But for our calculations this is a good number.

Then, we want to know what this enterprise is worth. It’s tempting to take $2.184M / our average cap rate of 10 percent and get a total value of $21.8M.

But that’s not how things work at scale. As the business gets bigger, the entire enterprise is more valuable. I looked at a portfolio of 17 car washes in Southern Colorado recently, the seller thought it was worth a 6-cap, which means 6%.

I think that’s aggressive, so let’s go with a 7-cap, or 7%.

So now the enterprise is worth (on paper!) about $2.184M /.07 = $31,000,000.

Whoa. Fourteen car washes, all in Colorado more or less, with full-time management in place, worth $31M?? Of course we’ll owe a big chunk of money to the bank, but that amount goes down every day as we pay down the debt and the income goes up as we grow the business.

I think it’s realistic and in line with deals I have seen recently. They all will be branded the same and share resources, making them all more efficient and profitable.

And that’s with me and my partners still running our other businesses on the side. Plus if we do it right the cash flow from the business will fund the acquisition of new washes. So our investments will remain low and practically tax free as bonus depreciation sticks around for the next few years.

But, at some point we’ll have to decide to go all in. This is rocket ship and requires a full-time CEO and someone who can accelerate the growth even further.

At that point we’ll likely institute two strategies:

1. Buying up smaller regional chains. We’ll pivot from buying single units to buying 2-6 unit mini-chains. This allows us to expand nationwide and keep our overhead low. There is plenty of value-add to be done at these smaller chains too.

2. Franchising. We will have a great infrastructure in place to help people just like you run a car wash as an investment and side hustle with minimal headaches and unknowns. That will be attractive to investors who love the franchise model.

That’s when the money gets really serious. As we scale the business the cap rates on the entire enterprise could get into that 5-6 cap range.

That means to have a $100M valuation we’d need ~$6M in NOI annually.

If our model holds up (HUGE if!) we’d need about 38 corporate locations. Add in a robust franchise program and the number only goes up from there.

That’s the simplified path to $100M company.

So, all this is pretty pie-in-the-sky, right? It will NEVER be that clean or easy. In fact at times it will be hard as hell. But I do believe it can be done - and this kind of thinking gets me FIRED UP about this business.

I can’t wait to build it and I can’t wait for you to follow along.

But if you’re more of a doer than a watcher (you like to be IN the arena) I invite you to start doing this for yourself.

Not only do you have the blueprint above to blow it up like we’re going to, but you have the blueprint to get started - right now.

It’s all in my course and this week I knocked $100 off the normal price so you can get started for less than ever.

Who knows, if you grow a little regional chain over the next few years maybe I’ll buy you out and you can get big-a$$ payday too.

Ready to change your life with a fun and ultra-lucrative side hustle? Go here:

TaxFreeCashCow.com 

Feel free to hit me back with your questions…

Kriss the Car Wash Guy