Should I buy a car wash with its land or on a leased site?

Many car washes sit on land the owner also owns, and some owners sell the business and the property together. Others operate on a leased site and sell only the business. The two are different purchases with different risks. This page sets out what to weigh so you can ask your lawyer, accountant and lender the right questions before choosing.

Capital and financing

Buying the property usually needs much more capital, and a lender will look at the real estate and the operating business separately. A business-only purchase leaves more cash for equipment and working capital. Ask a lender early how it would treat each structure, and what security it would expect, because those terms are set by the lender, not by the listing.

Lease term against equipment life

A car wash is built around fixed equipment and bays that are costly to move. If you lease, compare the time left on the lease, and any renewal rights, with how long the main equipment should last. Ask yourself whether the remaining lease is long enough to cover replacing old equipment, and test it against your own numbers. Have your lawyer read the lease and confirm who owns the fixed equipment.

Rent reviews and control

• How is rent reviewed at renewal, and who decides?
• Can the landlord end the lease or redevelop the site?
• Does the landlord need to approve a new owner?
• Who pays for repairs to paving, drains and the building?

Owning the site gives control, but it also makes you a property owner with that work to do. The lease terms explained by BDC are a useful checklist, and the car wash due diligence guide covers the rest.