Here is the deal
Carwash sale price: 1,975,000 (with real estate) also included seller's discretionary cashflow: 201,000
17 year operation
Past 3 year net income of
215,000
201,000
201,000

I don't have the money for a downpayment, how can I work this deal. Possible 100% financing? Creative ideas please??

P.S. I also believe I can negotiate the price down.

100% financing = not possible in my opinion

What is the value of the real estate?

What is the basis for that value?

Revenue and expense details?

Elaborate on seller's discretionary cashflow.

What are your resources?

What is your background?

Real Estate value 1,100,000 (Building 600,000 Land 500,000) Owner's judgement
G & A expenses past three years average 89,000 per year
seller's discretionary cashflow is included in purchase price, part of how he determined price
goodwill 610,000 aslo included in asking price.
My resources are limited

My background is in automotive industry. This carwash is quarter carwash with one automatic bay. Not really labot intensive. minimal time managing this business.

The seller is willing to provide some financing. I'm just wondering if there is a way to get into this with minimal down.

" seller's discretionary cashflow"

Please explain to me what exactly is seller's discretionary cashflow, how is it computed, where does it show up, and where does it go?

" Owner's judgement" Hmmmm, not good, but it is a place to start.

" goodwill 610,000 aslo included in asking price." not good also. Does this mean that the rest of the assets are valued at $265,000? Why couldn't you build a similar business by buying the real estate and adding the improvements? I mean this is a one bay operation, right? Is it the location?

" My resources are limited." Not good.


So far, it looks like something next to impossible to fund from an unrelated third party. The thing about commercial financing is that deals can be highly customized. A lender would need to look at the financials, the location, and see some kind of contribution on your part.

seller's discretionary cashflow is the gross income minus the G&A expenses.. net income

no this is how he values it: sales price 1,975,00

real estate: 1,100,000
goodwill: 610,000
sellers discretionary cashflow: 201,000
FFE: 60,000

I believe I can negotiate down the goodwill. Basically he is saying that he has built up a good reputation over 17 years and values it at 610,000. Is there a way to get into this deal with little money down?

Does anyone have any other suggestions???

$600K+ Goodwill is not that good for the deal. You are looking at a possiable 60-65% LTV for the real estate (mind you, that is 60-65% of the value of the real estate alone). Option one: You can either get a loan based on the real estate value and have a seller and or second party take a second lein position with a secondary loan and then contribute your own funds etc. Option two, utilize an SBA or SBA type govt conduit that will finance the whole thing in addition to your down pymnt but be ready for tons of paper work as they are very adept at kicking the tires of any potential deal. I base my opinion on knowledge and experience....as per which i can tell you that for a property like a car wash, $600K good will is too high and if you do not have any BST (Blood, sweat & tears as we refer to as equity) in the form of a down payment, you will not be getting a loan. This is not to dishearten you but i think you may want to pass on this esp if you dont have solid financials (on paper) and if the good will is not lowered.

A couple of notes:

1- I don't think the deal is doable from the point of view of a lender.

2- The Goodwill is actually $811,000


Good luck

I would second admin's opinion.

u can cross colaterlize ur assets as a down pmt.call me i might do ur finanancing im a private investor e-mail deanna@vinecrestmortgage.com