What is happening with the car wash and self storage investments? This is an update to the portfolio of properties that we purchased about seven months ago. Since the purchase of these car washes and self storage, it has been quite a ride, it has been very busy. My goal in sharing what has been happening is that so you all understand that some asset classes have more moving parts than others. And I also wanted to remind you guys of all the things that we all go through, because you are not alone when you're dealing with something, everybody that is out there doing something for themselves is going through things on a daily basis. And this is what could make you as a leader or break you as a leader, how you handle situations that come your way. I have seen really successful real estate investors deal with some of the craziest things throughout their careers. It's just bound to happen. And when it happens, we go look for the best way to approach it with our network, through technology, through masterminds, through reading, research, online communities, and anything that you can think of, and you just do the best that you can.

The first two months.
This portfolio was purchased in October 2020. Within nine days of closing, one of the roofs caved in one of the car washes because of snow. And thank God for insurance, Nationwide in this case, was phenomenal. And it's during those hard times that you really do not want to be dealing with an insurance company that does not want to pay out. They released the funds within two or three weeks of the incident. And they were really wonderful to work with. They were not part of my headache, to put it simply, during those times. And then about 20 days later, my main employee quit without any notice. And at that time, I thought this was potentially a blessing in disguise because we thought we found someone much better within a day of the main person quitting. And it turned out that this new person was actually not a great solution for that particular job. This person was just not doing the job. So within a couple of months, I was able to fire that person. A lesson reminder is that you should hire slow and fire fast. And this could not be further from the truth. You want to take your time on hiring slow, and really making sure that this person is the best person for you. And then if you realize that they're not a good fit for the team, you have to fire them as soon as possible. The reason why we had to hire fast was that we had zero maintenance person. We really had to find somebody within a day or two. The good thing that happened after that was that the employee that quit wanted to come back. I had an explicit conversation with that person. I said, Look, you you quit without any notice., we're going to give you this second chance, but please just give us a couple of weeks notice if you need to quit again. And so he agreed to that, and is doing wonderful at the car washes, as he was already doing.

Three months - now (total of seven months)
I want to give it one full year before deciding if this asset class is an interesting asset class to invest in or not. What I can tell you right now is that it has a lot of moving parts. We are in the process of automating as much as possible, delegating as much as possible, and creating processes as much as possible, and want to see what the results will look like once all of that is in place. And then we'll make a decision on, is carwash a good asset class to invest in, or not. In terms of time, I today spend at the very least one to two hours a day working on the car washes alone, the tasks vary greatly, it can be anything from ordering a test of the mud, all the way through what chemicals do we need to purchase, all the way to issuing refunds to customers.

Again, we are looking at automating as much as possible and delegating as much as possible. But because we never knew anything about this asset class, we have to work on it first hand on these initial tasks so we understand the entire grasp of the asset class. I did not have any idea what a bay was when I purchased the carwash, a bay for those who don't know is where you put your car in so that you can wash the car. This is how often I wash my car! I didn't know what a pump was, and many other things. But the point is that we really want to make sure that we know everything from A to Z, so we can delegate things accordingly. And also understand if something may not be going in the right direction when we delegate these things.

Let me just give you an example: I asked my VA to put in a calendar every little thing that the maintenance people have to do on a daily basis, on a weekly basis, on a monthly basis, on a six month basis, and on a yearly basis. Let me just give you an example. On a daily basis, they have to check every single bay that it is working and that things are coming out of the bay, like soaps and tire cleaners, etc. On a monthly basis, they have to clean all of the vacuums. On a six month basis, they have to make sure that the filters in the reverse osmosis units have been changed. And on a yearly basis, they have to check the freeze protection system, for example. Now that the VA put all of this information in a calendar, and she made it repeatable, the repeatable tasks that are repeatable daily, and so on and so forth. The tasks that are repeatable every six months, are going to show up once today, and once in six months from now. So the goal there is for her to send a text to our maintenance people every single morning, with the tasks that are supposed to be done that day, the maintenance person will be responding at the end of their shift with what got done and what didn't get done, and if anything needs to be fixed. And eventually, I will just be hearing on the things that the VA cannot handle. That's just one of the things that we have in the cards right now. There are many more in the works at this point in time.

The way to be very successful is, as some of you may know, for you to have a system in place so that anyone can come in and do the job. The goal is not only if something happens with me, but also if something happens with any of the employees because everyone has to be "replaceable". The business has to run without us in case something happens to anybody. That's how McDonald's and all of these huge franchises and businesses are able to be very successful, to have incredible systems in place that anyone can read and follow. The goal is to eventually have everything in place, and then look at the numbers and see if it's worth it.

The returns
We are at the moment averaging about 36 to 48 percent cash on cash return. This is counting our mortgage expense that also is building equity for us, which is how we're supposed to calculate cash on cash. We expect this to only grow with time because of all of these implementations that we're going to be doing. These properties do not have any outside investors, we don't need to do any distributions. And how did we get to this super high number is a few different things. You negotiate on the purchase price, and also you tie up the expenses. In our case, the expenses actually went up. And we were actually expecting that because we had to have an on site property manager. And with all of that in mind, we are today anywhere from 36 to 48% cash on cash return, the numbers are varying, because we still have some expenses that will not be recurring later, that are still happening today. And they change month by month. You're probably asking yourself, wow, 36 to 48, even 50% cash on cash return, why aren't you guys doing this every single day, all day long?

Should we continue or not?
Our time is so limited in this world that is this an asset class that you want to be working on? Do you want to be dealing with employees that might not be as professional as someone you might work with in the corporate world? Do you want to be dealing with zillions of moving parts, we literally have, seven months in, about 40 different SKU's for things that we need to buy for the carwash. And that's not counting office things and anything that is not carwash specific. It is a lot of moving parts. When we compare this with the self storage, that is probably, one to two hours a week worth of work. Obviously, the numbers are not the same. They're a little bit less, we're still finishing the analysis on the numbers for the self storage, but it is a lot easier to automate. It is a lot less phone calls, it's a lot less moving parts. At some point, you're going to have to determine if these are the kind of people you want to be dealing with, are these the kinds of tasks that you want to be dealing with? Or do you prefer to work with a different type of crew, to put it simply? So this is a personal choice that you you're going to have to decide at the end of the day. Who do you want to spend your time with? What kinds of things do you want to be doing with that time? And is all of this worth it? Or can you add value in different ways in another asset class?

What comes to mind is retail, with retail, yes, you're going to be dealing with a maintenance contractor. However, they're just going to come to clean the property. And that might not even be your responsibility at some point if you have a NNN lease with a single tenant in place. With retail, who do you have to deal with? You have to deal with the tenant and you have to deal with probably somebody in your office that is working with you. You get to groom that person and educate them on everything that you want them to do your way, and they understand, and they can do the job.

More carwashes?
I still cannot answer that, as of today, that answer is likely No. But I have a feeling that that can change once all of these processes are in place. There were quite a few other things that I dealt with during these last seven months:
1. The roof still has not been fixed because the construction company took many months to get the things approved by the city. And now it's going to take another six to eight weeks to receive the materials and then another, probably four weeks to get the roof redone. The good thing is that we were able to clean it up and get the things working again. But right now there is no roof on top of some of the vacuums.
2. We had theft: we had people not only steal the coin boxes here and there, but we also had people try to break into the main room where we have the coin exchange box. And I saw everything on camera! Thank God for alarm companies because once once the alarm went off they ran.
3. We went through the freeze that happened nationwide a few months ago, and we had some pipes freeze at one of the car washes.
4. We had employees putting more hours than they were working.
5. We had one very bad vendor experience.
6. At one point, I was actually fearing for my life when I was that one of the car washes, due to some crazy person that was near there.
7. We had money missing from the people that were collecting the cash, I literally do not want to see coins in my life again. I will do everything in my power to make all of these car washes coinless.

But, after all of this, I am so proud about the cash on cash that we're getting. Imagine when everything is 100% or 99% up and running, and running the way that I want it to run, how much more can we do. I'm really excited for the future. I'm still not a huge fan of car washes. So let's see what the future brings.