Car washes are gaining traction as a safe investment, akin to the funeral industry, due to the 100% bonus depreciation benefits introduced under the Trump administration. Camille Renshaw, co-founder and CEO of B+E, highlights that these properties often operate under triple net leases, where tenants cover taxes, insurance, and maintenance, allowing for lower base rents and greater tenant control.
For instance, a $2 million car wash purchase with $1.4 million in mortgage financing could yield tax write-offs of $2 million in the first year, translating to deductions of approximately 333% of the investor's equity. The car wash sector has evolved from cash-based operations to digitized businesses with subscription models, attracting private equity firms interested in stable, recurring revenue.
This has led to increased consolidation and M&A activity within the industry. Reports indicate a surge in car wash transactions, particularly in the latter half of last year, driven by the reintroduction of the bonus depreciation.
A notable example is a $10 million deal on Miami's Biscayne Boulevard, reflecting the heightened demand for net lease car wash facilities as investors seek tax relief before year-end