Asset class 03 of 31

Car Wash

Express car washes and the real estate beneath them, often run on monthly membership plans. Here is how investors earn returns in car washes, the risks of an operating business, the questions to ask sponsors, and our verdicts on funds active in this space.

Operating businessReturns depend on running the wash, not just owning the land
Membership modelMonthly unlimited-wash plans create recurring revenue
Fast expansionRapid industry growth raises local saturation risk
Tax benefitsCar wash property can qualify for accelerated depreciation

What counts as car wash investing

Car wash investing blends real estate with an operating business. How much risk you take depends on whether you own the business, the land, or both.

Express tunnel washes

Fast, automated tunnels with monthly memberships, the fastest-growing segment and the focus of most current funds.

Development funds

Funds that build new washes, taking on construction and ramp-up risk in exchange for higher potential returns.

Acquisition roll-ups

Funds that buy existing washes and improve operations, often aiming to sell a larger portfolio to a bigger operator.

Net lease car wash real estate

Owning the land and building leased to an operator, with income that depends on the tenant’s strength.

How investors make and lose money

Where returns come from

  • Recurring membership revenue from unlimited-wash plans.
  • Higher margins from automated, low-labor express tunnels.
  • Accelerated depreciation that can reduce investors’ taxes.
  • Sale of a stabilized portfolio to a larger operator or consolidator.

What can go wrong

  • Too many new washes opening in the same area.
  • Slow membership growth at new sites.
  • Equipment breakdowns and repair costs.
  • Weather and seasonality affecting visits.
  • Dependence on the operator’s skill and franchise relationships.

Questions to ask any car wash sponsor

  1. Is this a development fund, an acquisition fund or a real estate lease?
  2. How many competing express washes are open or planned within a few miles of each site?
  3. How fast have memberships grown at the operator’s comparable sites?
  4. Who operates the washes, and what fees do they and the sponsor earn?
  5. Will the preferred return be paid during development, or only accrued?
  6. What is the exit plan, and who are the likely buyers?

Our verdicts in this asset class

Funds and sponsors we have reviewed that invest in this asset class.

7.2 PPR Opportunity Fund IISeven Tommy’s Express car washes in development with operator Olympus Pines; 10% accrued preferred return. Mixed

More car wash reviews are in research. Know a fund or sponsor investors should see reviewed? Suggest it here.

Explore other asset classes

Every asset class is scored on the same published method. Select one to see its reviews.

This page is general education, not financial, legal, tax or investment advice, and not an offer to buy or sell any security. Operating businesses and development projects carry significant risks, including the loss of capital.