How I set up the car washes I’ve bought: Opco, Propco, and Holdco (5 tactics)
Wanted to share how I set up the car washes I’ve bought, in case it helps anyone looking at deals with real estate attached. These are the five tactics I’d start with:
Structure. Three entities: an Opco (the operating company), a Propco (the property), and a Holdco.
Separate the cash flows. The rent from the lease is one thing, what the business operates on is another. Keep them apart.
Control. Put the right lease in place between the Opco and Propco.
Depreciation. There are different advantages between the building and the Opco, and you can’t depreciate land. Talk to your CPA and attorney about how that applies to your situation.
Enterprise value. Get the right mix of equity and debt so you’re set up for a refinance or a sale down the road.
I’m going through all of this on a live webinar October 19th at 5 PM Eastern, including how I bought multiple car washes with these methods. Happy to answer questions here too.