While this is a simplified overview for self-serve washes and there lots of variables that go into valuing a car wash.
An appraisal should be your first stop, especially in regards to location, a good rule of thumb has shown that on average a newer, well run wash will go for 5-6 times annual gross, A lesser quality facility will be around 3-4 four times annual gross, and poor facility 2-2.5 times.
When you are doing your due diligence, there is almost no way a wash can sell at 5-6 times annual gross and be profitable.
In spite of this rule of thumb, you still have to factor in your local market. There are instances where you may want to take the risk and pay a the 5-6x gross if you know more activity is coming. With one wash building permits were researched at the city and franchise restaurants, strip malls and big box retailers were expanding in close proximity. While more was paid for that property than any others, it is a highly profitable property because the higher traffic has increased sales.
Where a lot of people go wrong however is that they get too excited about doing a deal and through good sense out the window and pay too much. No matter what business you are in, you have to be able to walk away if the deal doesn’t pencil out. You can’t hope things will get magically better after you take over (even though that does happen with absentee owners). Additionally you need to be aware of the value of the bare land but and you can’t bank on rapidly appreciating real estate values.
The current fair market value of any property has almost nothing to do with the potential buyer’s prediction about what it will be worth some time in the distant future. That’s the sad fact few buyers will admit. Over the long run some go up, some down. OBVIOUSLY! Also what happens to the value of you car wash if a competitor opens up way too close?