E15: Car Wash vs. Laundry Facility Investments: Sam & Rob Are Fighting Dirty!

Cash Flow Fight Club

In this episode, we explore two asset classes primed for impressive returns – laundry facilities vs. carwash. Discover the minimum investment required, projected returns, and the tax benefits that come with these investments. Joining today’s matchup are Sam Wilson, a licensed Realtor with expertise in laundry facilities, and Rob Wolfe, CEO of Wolf Strategic Partners, who brings a wealth of knowledge in maximizing investment returns from the carwash business model. Get ready for insights, rivalry, and a quest for victory!

Here are some power takeaways from today’s conversation:

[04:04] - Rob and Sam’s respective backgrounds

[06:59] - How to invest in laundry facilities

[10:09] - How to get double-digit ROI with laundromats

[16:21] - The best way to invest in car washes

[26:25] - Car washes from the ground-up through operations

[30:00] - Laundromat business strategies and innovations

[36:56] - Financing options for laundromat businesses

[40:13] - Business strategy and risk management for both asset classes

Episode Highlights:

[06:59] The Laundry Facility Investment Fund

Sam explained that investing in individual laundromats through single-asset syndications is not financially viable due to the high setup costs involved. Instead, they have introduced an investment fund model with the goal of raising $10 million to acquire 20-25 laundry facilities in a specific region. This approach allows for economies of scale in areas such as staffing, marketing, and supply costs. By pooling multiple stores into one fund, they can offer a minimum investment of $50,000 to accredited investors, while also improving diversification and reducing competition risks.

- Minimum Investment: $50,000 into a $10 million fund
- Projected Returns: 11-14% cash-on-cash, 16-20% IRR over 8 years
- Tax Benefits: Large upfront depreciation on equipment purchases can provide substantial tax write-offs

[16:21] Understanding the Car Wash Business Model

Rob explains that there are three main types of car wash facilities: self-serve bays, in-bay automatics, and express tunnels. Self-serve bays allow customers to wash their own cars using their own supplies, while in-bay automatics provide a wash by rotating equipment around the stationary vehicle. However, Rob invests in express tunnels, where cars queue up and are loaded onto a conveyor belt or track for a thorough cleaning using friction, chemicals, and high-pressure water. This model offers a quick wash time of just 3 minutes on average, preventing long wait times that can discourage customers.

- Minimum Investment: $50,000 for a single-asset syndication
- Projected Returns: 17-18% IRR, over 50% cash-on-cash returns initially
- Tax Benefits: Significant depreciation available, especially on tunnel equipment. Investors can expect a 40%+ tax write-off in year 1 on a $50k investment.

[40:13] Business Strategy and Risk Management

Laundry Facilities

• Focus on modernizing customer experience with clean, safe stores offering value-added services like delivery/drop-off
• Launch investment fund to aggregate multiple properties for economies of scale and strategic portfolio growth
• Main risks are security issues due to cash-heavy business and potential competition

Car Wash

• Invest exclusively in high-volume express tunnel models for optimal throughput and customer experience
• Leverage prime commercial real estate locations for maximum vehicle access and visibility
• Mitigate competition risk through thorough due diligence on surrounding sites
• Potential add-on services like pet washing to increase customer spend per visit
• Build in-house management team to directly oversee brand consistency and operations

Resources Explored

Rob Wolfe:
Wolfe Strategic Partners
Podcast: Car Wash Capitalist | a podcast by Rob Wolfe (podbean.com)
Car Wash Investing: Cowabunga Car Wash
Follow Rob on LinkedIn: Rob Wolfe | LinkedIn

Sam Wilson:
Bricken Investment Group
Podcast: How to Scale Commercial Real Estate on Apple Podcasts
Laundry Investment portfolio: Bricken Investments
Follow Sam on LinkedIn: Sam Wilson | LinkedIn