Tax Return 4Cash Business (by Ray-N-Pa [PA]) Sep 13, 2021 7:57 PM|
Tax Return 4Cash Business (by GKARL [PA]) Sep 13, 2021 8:16 PM
Tax Return 4Cash Business (by Oregon Woodsmoke [ID]) Sep 13, 2021 8:31 PM
Tax Return 4Cash Business (by T [IN]) Sep 13, 2021 11:19 PM
Tax Return 4Cash Business (by Sisco [MO]) Sep 14, 2021 6:30 AM
Tax Return 4Cash Business (by Sisco [MO]) Sep 14, 2021 6:36 AM
Tax Return 4Cash Business (by Marv [IL]) Sep 14, 2021 8:38 AM
Tax Return 4Cash Business (by Ray-N-Pa [PA]) Sep 14, 2021 8:42 AM
Tax Return 4Cash Business (by plenty [MO]) Sep 14, 2021 8:59 AM
Tax Return 4Cash Business (by T [IN]) Sep 14, 2021 10:34 AM
Tax Return 4Cash Business (by GKARL [PA]) Sep 14, 2021 4:22 PM
Tax Return 4Cash Business (by Ray-N-Pa [PA]) Sep 14, 2021 9:33 PM
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Tax Return 4Cash Business (by Ray-N-Pa [PA]) Posted on: Sep 13, 2021 7:57 PM
I have been eyeing up a possible transaction - purchasing a car wash. Now based on what the seller has told me, it appears that this is a true cash cow and priced below market value.
The price point I figured was based on the deferred maintenance and the single niche that the place has.
Well I have been doing my due diligence on this place. I asked for the 2020 tax return and expected the numbers to be rather low due to COVID. Indeed the numbers were low. Instead of the 40,000 in sales that they report to me, they are reporting less than half to IRS.
Well at this point I asked for three more years of tax returns.......and guess what: they are all about the same amount of income. After you facture out the expenses there is a whopping $3,000 of positive cash flow.
So I am wondering, is this guy pocketing cash and if so how much.
I bring this up just to show the importance of reviewing past performance and comparing it to what the potential is. I guess I need to option the property for six months to see if it is making money.
Tax Return 4Cash Business (by GKARL [PA]) Posted on: Sep 13, 2021 8:16 PM
There are ways to back into the sales numbers. You may want to take a look at his water bills to get an idea about usage and extrapolate that to how much is used for the average wash and back into the sales number. That's what the IRS would do if they audited to him. I would probably also go with him to tally up a week's sales and use that sample to extrapolate out for the full year. Most cash washes take cards. He must have an old style one. --209.122.xx.xxx
Tax Return 4Cash Business (by Oregon Woodsmoke [ID]) Posted on: Sep 13, 2021 8:31 PM
He might be pocketing cash or he might be "forgetting" to tell you about some of the expenses.
My experience with commercial is that they always want to leave out some of the expenses. Really? You don't pay for any insurance? There hasn't been any maintenance expense?
You are a landlord. You might not know what his expenses run but you should have a pretty good idea of what sort of expenses you should be seeing on the books. --76.178.xxx.xxx
Tax Return 4Cash Business (by T [IN]) Posted on: Sep 13, 2021 11:19 PM
I have a retail strip with a laundromat in it. The owner is trying to sell the business. Claims it is a cash cow. But he pays me late or when his social security shows up. Once people starts digging into the financial part like you are... red flags come up. They leave..
If the owner has been pocketing the cash... you can only make an offer based on the reported income. Price you pay for screwing the govt.... --76.77.xxx.xxx
Tax Return 4Cash Business (by Sisco [MO]) Posted on: Sep 14, 2021 6:30 AM
Ray, you are dealing with a liar. Donít believe a single word he says, donít let his story influence you in any way.
The main problem as I see it is that you will likely waste your time. Seller knows that he has no business to sell based on his financial records, he also has an obsolete wash that other wash operators have correctly valued at zero (business). He is using the lie of big non taxed cash a the bait, and hoping to score. You will keep fooling your time away with this liar, trying to find out how much income is, and he will continue to tell you lies.
You need to become an expert in car wash equipment repair/ maintenance costs, the useful life / obsolescence cycle. I would start by contacting the equipment dealer/ installer/ service companies.
Once you are armed with more knowledge about old car washes, your offer for this property will likely be much lower than offers he already has received.
As a long time consumer of car washes, I observe that few maintain their facilities more than 8 years. My hunch is that replacement parts for 3-4 year old equipment are very expensive and unavailable after 7-8 years.
A massive cash call is required every 5-6 years for all new equipment is my thought of the core issue that is motivating the seller to sell.
Tax Return 4Cash Business (by Sisco [MO]) Posted on: Sep 14, 2021 6:36 AM
One more thought, I havenít used cash in a car wash since 1992. Nowadays they are mostly subscription based, but have been debit card centered since the early 90ís.
Demanding cash these days would assure no customer base. --149.76.xxx.xxx
Tax Return 4Cash Business (by Marv [IL]) Posted on: Sep 14, 2021 8:38 AM
Ask what busiest day is. Count the cars that day and then on another day. See for yourself what business it does. --67.184.xxx.xxx
Tax Return 4Cash Business (by Ray-N-Pa [PA]) Posted on: Sep 14, 2021 8:42 AM
There are three wand systems and one broken down automated system. I was thinking making the automated system CC or token based.
The net on this place over the past three years is $3,000 to $8,000.
I'll research the water usage.
I believe I can make this into an Owner finance deal, so that might be the only way to make this pencil out. Even then - do I want to buy a 30-45 minute daily job? Not at about $23 an hour...assuming the forecasted numbers are correct. Instead I am seeing a $3/hr pay day --24.101.xxx.xxx
Tax Return 4Cash Business (by plenty [MO]) Posted on: Sep 14, 2021 8:59 AM
I'm in visioning that we go to lunch to celebrate your new purchase. When the check comes you present a five gallon bucket of quarters and together we stack four quarters into short stacks until the bill is paid. Charming. Dealing with the coins is a whole nother job. Maybe we'll save the luncheon until you've bought it cheap. Turned it around and sold to the next and cleaned up! --172.56.xx.xx
Tax Return 4Cash Business (by T [IN]) Posted on: Sep 14, 2021 10:34 AM
Based on what you have posted... the only reason to buy this is IF you believe the change in management to you will yield big rewards. Then the payoff is when you sell in the future. Ultimately, this comes down to location of property and your mgmt skills. --76.77.xxx.xxx
Tax Return 4Cash Business (by GKARL [PA]) Posted on: Sep 14, 2021 4:22 PM
I'm constantly considering various business ventures. My criteria now is making sure it is as passive as possible for me. If I have to manage too many people, then that's a non-starter for me. If I have to work it myself, it's also a non-starter. One of the reasons I wound up in real estate is I find it takes less effort to manage versus the average business. It would be hard for me to take up anything that leaves me tethered to the business. In my younger days, doing all this would not be an issue and indeed I did it. I'm not trying to do any of that now however. --172.58.xxx.xxx
Tax Return 4Cash Business (by Ray-N-Pa [PA]) Posted on: Sep 14, 2021 9:33 PM
Here is why I was looking at it:
There are only about 9 car washes on loopnet. The cheapest of these nine is at about $695,000. The two that do have cap rates have them listed between 7-8.5%.
These folks want $100,000 and the place will need about $225,000 in upgrades. The most that they can accept in year one is $50,000. I was going to 1031 into that part and have them set up an installment contract.
So as much as there will be plenty of equity in this deal, I am not seeing the cash flow to push the value up on this place --24.101.xxx.xxx
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