Passive Income With a Car Wash – Cash Cow or Money Pit?

Passive Income With a Car Wash – Cash Cow or Money Pit?

I don’t know about you, but I think about passive income opportunities every day. No matter where I am or what I’m doing, I think, “How passive is the income that’s generated in this business?” Sometimes, it’s not at all, and other times, it’s nearly 100% passive. The concept just fascinates me – I think that I’m obsessed with creating a passive income.

Cleaning That Car of Yours

I live in Michigan and it usually gets pretty chilly here in the winter. The snow starts flying in November and doesn’t go away completely until March or April (this year is an exception, but I’m sure we’ll get loaded up with snow pretty soon). And, since it is so cold, the only way to get rid of the snow and ice is with salt.

The salt typically does a great job melting away the snow, but it’s absolutely terrible for your automobile. If you avoid getting your car washed, that salt will start to break down the structure of your metallic frame and body. Then before you know it, your car starts turning into a rust-bucket! Needless to say, where I’m from, car washes are pretty important.

Benefits of a Car Wash

Car washes are typically very passive. Once the machine is set up, all you need is a single employee to receive the payments and begin the wash (and actually, I can see this step getting automated soon as well). If your machines are built properly, there won’t be a huge amount of repairs, and your expenses are pretty low (water, electricity, soap, and…that’s about it)! This sounds like a money-making machine!

Initial Cost of a Car Wash

Initially, I started researching what it took to build a brand new car wash, and honestly, I don’t think it’s worth it. You’ll first need to find that perfect plot of land, then check the zoning, then you need to get a building permit, hire an engineer to make some drawings, contract a company to build the car wash, and then there’s absolutely no guarantee that it will make money because no one has tried to run a car wash in that location before!

The typical initial expense of a new wash can be anywhere from $400,000 to 2,000,000, depending on the number of automatic washes, and the number of bays if you’re running a self-serve wash.

If I were to invest in a car wash, I would start looking at the existing washes that are for sale. Then I know that the zoning is correct, I don’t need to hire an engineer or a contractor, and the best part is, I can look at the history of the business! The owner can show me the average washes per day, week, month, and the year. And, I can get a good look at the expenses!

I looked into the average initial cost of the washes in my area and they ranged  between $259,000 and $1,200,000.

Reoccuring Costs of a Car Wash

After a little research, I have found that the average reoccuring expense is provided per car that goes through the wash – it’s typically $0.55 per car. This includes things like the water, soap, and electricity like I mentioned above, but it also takes into consideration the air compressers, the bay cleaning, and preventative maintenance.

How Many Cars For a Profit?

In order to create a profitable passive income with a car wash, about how many cars do you think you’ll need to pass through your wash per day?

Let’s say you have a $500,000 loan on your business which costs $4,683 per month and you run the business by yourself. For each wash, you charge $7, how many cars do you need to run through your wash to make it profitable (wow, feels like we’re in algebra all over again huh??)?

 

To break even in the car-wash business, you would need to have 727 cars go through your wash each month. That sounds like a lot at first, but when you break it down, that’s only one car per hour!

What if you could run an average of 4 cars through your wash per hour? You’d bring in a profit of $18,576 per month! That’s $223,000 per year! If you find the right location, this venture could easily be one of the best passive income sources out there!

Have you thought about opening a car wash? What do you think about car washes after reading this article?

13 Responses to Passive Income With a Car Wash – Cash Cow or Money Pit?

  1. It is something that I have thought about, but the large upfront cost is what keeps me (and I suspect many others) from being able to make that initial investment. It might be a possibility many years down the road, but if it were real easy, why would anyone sell?

    • Derek says:

      I’m in the same boat CFM. I’ll get there soon, but I would like to have a substantial downpayment before entering this large of an investment.

  2. I smiled when I saw the title of this post–I’ve always been interested in owning a car wash! But I’m with Cashflow on why I haven’t–the initial investment worries me too much. I’d love to meet & speak with someone who’s made this work for them though!

    • Derek says:

      I love the idea too! But, you’re right, it does cost quite a bit of money! It’s a great idea to work towards though. Today, a blog, tomorrow, a car wash! :)

  3. Have to ask, do you watch Breaking Bad?

    I love the ideas for creating a passive income, but (with the exception of the iPhone repair you posted about) they all have really high startup costs, making it feel like it’s pretty easy for those with money to make more money, but really kind of hard for those without.

    • Derek says:

      I’ve never seen Breaking Bad – did I say something that’s similar to the show?

      Great point about the high start-up costs. Starting Monday, I’ll explore some cheaper passive income options! Thanks for the great comment!

  4. Jan says:

    I think anyone who wants to own a car wash should sit outside one for a day and see how many vehicles go through it. I had a relative who bought a franchise based on theoretical numbers and failed dismally. I do however like the idea of coin-op businesses in general. Now I have also met someone who owns several banking machines and makes a tidy some as well. Very little service and a couple of bucks a transaction. He does need a float of several thousand dollars to keep in the machines. I often wonder about coin-op laundry. Older neighbourhoods work here and real estate/rent is often cheaper in older areas.

    • Derek says:

      It’s always good to do your research before a major purchase! I know if I would buy something for half a million dollars, I would know everything about everything!!!

  5. 101 Centavos says:

    Some coin-operated businesses take a surprising amount of work to run. Vending machines, for example, need to be stocked and maintained, and goods purchased. Also, being a cash business, employees need to be completely trustworthy, or you must empty the coin boxes yourself.

    • Derek says:

      Don’t any of these machines have a credit card swiper on them yet? That would be a ton easier and way more passive.

  6. David says:

    Well, if anyone wants on, I got a nice one for sale in Mississippi.

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