Car Wash Returns

Spurred by a Tweet from @TripleNetInvest we’re going to talk about returns on car wash investments today.

They were asking where to find better than 15% returns in real estate (which is kind of the unofficial benchmark for RE investing IMO).

Fact is, 15% IS low for car washes.

We’re routinely seeing 25% returns - or much much higher.

How?

Let’s break it down with a real deal I’m looking at.

Purchase price: $1.2M, down payment 20% = $240k of your money in the deal.

We’ll also budget about $12k for card reader upgrades and new signage as we take over. Total investment $252k.

Now, a well-priced car washes these days are in the ~12-13% cap rate range. That means if it is listed for $1.2M, NOI should be 1,200,000x.125 = $150k in NOI (profit before debt service).

Ok, but we do have to actually pay off our loan, so let’s figure debt service.

Current rates are around 7.75% (!!) with 25 year amortization from a commercial lender. Plugging that into payment calculator we can see that the monthly payment would $7327, or ~$88k per year.

$150k profit - $88k debt service = $62k cash flow

$62k in cash flow / $252k investment = ~25% cash on cash return in the first year.

But wait, there’s more.

That doesn’t account for the fact that you’ve built about $13k in equity in year 1 by paying down your loan.

That doesn’t account for the value add you’ve done, which could raise the profit by an additional $20k in year 1.

AND, that doesn’t account for the tax benefit.

If you take bonus depreciation in year 1 at 80% of depreciable assets (basically everything but the land) on this $1.2M car wash, it could be up to an $800k loss in most cases.

Assuming you have some other income to offset, you now have a massive paper loss on your taxes of ~$700k.

So that could easily make your $252k investment back in a matter of months.

And, you can do all this with about 5 hours a week of work.

Can you see why I am now ALL-IN on this investment???!!!

Do I have your attention?

I’m sure you have more questions. This may have been confusing.

If you want the inside scoop on how we do this, actual numbers from my investment (I’ll even show you my tax returns!) and a video breakdown of these returns, go to TaxFreeCashCow.com and get my course.

It covers EVERYTHING you need to find, buy, and run your first cash cow car wash.

Honestly, this is hands down the best investment I have ever made (Bitcoin never nuked my $250k tax bill!!!) and I am happy to spread the wealth and show you how to do it too.

Don’t wait though, we’re going to raise the price as we add more value to the course.

Just click here and you’ll get everything in about 4.5 minutes: TaxFreeCashCow.com

Car Wash Guy Kriss.