Years ago, when I first started learning about and reporting on the professional carwashing industry, I was told that one of the big draws in traditionally investing in a carwash business was the real estate component of the venture. An investor would purchase a lot, build the business and remain in operation. As the business grew over the years, the real estate under it also generally appreciated.
This continues to be a big draw for many investors and buyers in the market.
Today, however, savvy operators are also using strategies that maximize their real estate equity in order to fund further growth and expansion.
I recently spoke with Ben Etskovitz and Sam Etskovitz, investment sales agents at Marcus & Millichap, during a PC&D Unscripted video interview for Carwash.com about current real estate trends and the popularity of such strategies as sale-leaseback.
A sale-leaseback is when an owner sells the real estate that he or she operates the business on to a third-party investor. One of the key benefits of a sale-leaseback agreement, as noted by the Etskovitzes in the interview, include increasing working capital to use for an acquisition or to fund a renovation, as examples.
While many operators, regardless of the wash’s size, could benefit from such real estate strategies, the Etskovitzes also noted some cons during our interview. Of course, going the sale-leaseback route also means paying the third-party investor, who serves as a landlord, rent for the property.
Still, the carwash market is currently a hot investment and real estate conditions are favorable, due to such factors as compressing cap rates. Therefore, real estate strategists, like the Etskovitzes, advise operators to at least consider a sale-leaseback at this time.
Whether it’s a quick conversation confirming that a sale-leaseback is not for you or a conversation that changes the course of your business for the better, operators are advised to seek out other operators using this strategy as well as real estate consultants who specialize in this market for more information.
One venue to pursue those conversations is at the 2022 SCWA Convention & EXPO, hosted by the Southwest Car Wash Association (SCWA). Scheduled for Feb. 27th through March 1st, the annual program is packed again with noteworthy industry and business names on the marquee.
We hope to see you in Fort Worth, Texas, this year at the SCWA event. Be sure to visit Professional Carwashing & Detailing at booth #851.
Did you miss the video interview Carwash.com did with Ben Etskovitz and Sam Etskovitz? Check it out now below.