December 1, 2021
Joe Fairless

JF2647: These 5 Value-Adds Doubled Her Car Wash Investment in Just One Year with Steff Boldrini


 

Steff Boldrini took her car wash portfolio, originally valued around $2–$3M, and almost doubled its value to $4–$5M in just one year. From adding credit card machines to creating subscriptions, Steff used tech to level up her properties with a 46% cash-on-cash return. In this episode, Steff shares the wins and obstacles she’s faced managing three car washes and one storage unit, and the tech secrets that got her where she is today. 

Steff Boldrini’s Real Estate Background

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the Best Real Estate Investing Advice Ever Show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best advice ever, we don’t get into any fluffy stuff. With us today, Steff Bolrini. How are you doing? Steff?

Steff Bolrini: I’m wonderful. Thank you so much, Joe.

Joe Fairless: I’m glad to hear you’re wonderful, and it’s my pleasure. A little bit about Steph. She’s a full-time real estate investor. She began her journey actively seeking out long-term, low-maintenance, recession-resistant asset classes. Now her portfolio consists of carwashes –we’ll talk about that of course– self-storage and short-term rentals. Based in San Francisco. With that being said, Steff, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Steff Bolrini: Absolutely. I have been in tech sales my whole career just by being Silicon Valley, ended up working in startups, and started learning about commercial real estate with a person that I was dating, who was a very successful real estate investor. I decided to start learning as much as I could from him and taking all the notes that I could possibly take. That’s how I got into real estate.

Joe Fairless: What was it about that conversation or conversations with the person you were dating that piqued your interest in commercial real estate?

Steff Bolrini: I was investing as an angel investor in a few startups. As an angel investor, compared to real estate, it was hands down real estate. A much, much better, safer, and more profitable form of investment. That is why I decided to focus on real estate and forget about startups, at least from an angel perspective. Not venture capitalists, not buying shares in the secondary market which can be profitable, but as an angel investor.

Joe Fairless: Okay. So safer and more profitable – two incredibly compelling reasons to switch it up a little bit. But there could be alternatives to angel investing, where as you said, angel investing is incredibly risky or an aggressive investment. Why not scale it down into other types of investing? Did you look at any other type of investing before you went into commercial real estate?

Steff Bolrini: Does crypto count as investing nowadays? I don’t even know anymore.

Joe Fairless: Sure. I think so. I think it’s official now.

Steff Bolrini: I think so, too. I recently got into crypto even though I don’t believe in it; I think it’s all air. But you have to just adapt. And also in the stock market a little bit.

Joe Fairless: Got it. Alright. What was your first deal?

Steff Bolrini: First deal was a portfolio of carwashes and self-storage. I just came across it because it had a self-storage facility in it and I said, “How hard could it be to learn about carwashes and manage it remotely?”

Joe Fairless: Sounds super simple. No issues at all would ever come up with that.

Steff Bolrini: Zero. There are zero moving parts in carwashes.

Joe Fairless: You’re in San Francisco. Where is this portfolio of carwashes and self-storage?

Steff Bolrini: It’s in north of Texas.

Joe Fairless: In North Texas or north of Texas, like Oklahoma?

Steff Bolrini: North Texas.

Joe Fairless: North Texas. Okay. What city in North Texas? I’m actually from DFW so I might know the city.

Steff Bolrini: Amarillo.

Joe Fairless: I went to Texas Tech. So yes, just north of Lubbock.

Steff Bolrini: There you go.

Joe Fairless: Alright. So this is in Amarillo, you are not in Amarillo, you’re in the opposite of Amarillo, in multiple ways that are defined. You’re in San Francisco. So how much was it and then just tell us about it, please?

Steff Bolrini: Yes. I don’t really talk about numbers, but what happened was that I managed to negotiate better pricing, because carwashes, by nature, take a long time to sell. That’s a value-add in itself; you can negotiate there, the cap rates are higher, and there is a lot of value-adds in carwashes that I had no idea existed. It has been a crazy journey both good and bad, because those take a lot of your time, especially as you’re learning a brand-new asset class. But the returns are incredible. Determining if I would do it again, but in the process of putting things in a very organized manner, delegating as much as possible, finding the best employees in town; even though you have to pay them double, I do not care. Because obviously the returns, they make the carwashes smoothly and it pays for itself, as you know.

Joe Fairless: I’ve never owned a carwash, but I’m looking forward to learning more about that and the self-storage. Help me with specifics on this… Because you said there’s a lot of value-add and lots of stuff profitable… But in this show, we want specifics. Can you share some specifics of the deal?

Steff Bolrini: Absolutely. With regards to cash on cash, we are today at at least 46%, and it’s going to go up next year because we used the income to pay for some actual credit card machines in the property.

Joe Fairless: Who’s we?

Steff Bolrini: Me. Me, myself, and I.

Joe Fairless: You are we. Okay, got it. Sorry I interrupted.

Steff Bolrini: No worries.

Joe Fairless: So you used income to pay for credit card machines?

Steff Bolrini: Yes. That’s one of the value-adds for car washes. Today, there are a lot of people that are retiring, that is old school, that — they only accept coins, and that is definitely a number one priority if you want to add value to a carwash that only accepts coins. Because normally, with coins, the timer goes down, and people have that four minutes to wash their cars. With a credit card, the timer goes up, and they take their time to wash their cars. That by itself already adds value to obviously the income.

Another thing that you can do is add a $1 acceptor, which makes it a lot easier for people to not think about putting so many coins in there, especially nowadays with inflation. You can implement a subscription… I’m sure a lot of people here have subscriptions to car washes, and that’s just another value-add that you can add to these carwashes that were owned by some older people. You can add the pet wash, believe it or not. And one last thing that you can do is rent the piece of your land in the carwash to a snow cone vendor. So that’s another value-add. Apparently, they go hand in hand together.

Joe Fairless: Alright, that makes sense; snow cone, or food truck, or something like that.

Steff Bolrini: Exactly.

Joe Fairless: Any permits needed for that?

Steff Bolrini: Not over there. But definitely in California, you would.

Joe Fairless: Fair enough. The subscription for the carwash – what technology is used to track that?

Steff Bolrini: I have not implemented that subscription for this one yet, because it’s self-serve, so people wash their own cars… And I have not seen value being added for self-serve owners. However, obviously, with tunnel carwashes, they thrive on the subscription business. So there are quite a few vendors out there that do that for you.

Break: [00:07:54][00:09:27]

Joe Fairless: What would this be worth if you were to sell it today?

Steff Bolrini: Great question. We would have to take a look at the returns. I’d say, I don’t know, four or five…

Joe Fairless: Four or five million.

Steff Bolrini: Mm-hmm.

Joe Fairless: And that’s just the carwash or carwash and self-storage?

Steff Bolrini: Just the carwash.

Joe Fairless: Just the carwash. And you bought this as a portfolio.

Steff Bolrini: Correct.

Joe Fairless: And it was what – one carwash and one self-storage?

Steff Bolrini: Three car washes and a self-storage.

Joe Fairless: That’s what I was missing. Okay, so three car washes and one self-storage. How many units is the self-storage?

Steff Bolrini: It’s about 100. It’s a small facility.

Joe Fairless: Okay. And the three carwashes, the four to five million valuation would be for all three of those.

Steff Bolrini: Correct.

Joe Fairless: Got it. Okay, cool. How long ago did you buy it?

Steff Bolrini: A year and one month ago.

Joe Fairless: Wow. That’s a short turnaround for four to five million. But what range… You don’t have to give the exact numbers, but can you just tell us the range that you bought this for? Just so we have an idea of what it’s appreciated too.

Steff Bolrini: It’s around, let’s say, two, three, more or less.

Joe Fairless: Wow, that’s awesome. How do you learn that business?

Steff Bolrini: If I were to do it again today, the first thing I would do is to go to a conference and meet as many people as possible, so they can be your mentors, and help you, and guide you, and share which vendors are actually the best one for everything that you need to implement. I’d also definitely have the best team in town, so get to know the people there, ask for references, who is the best person that you have ever worked with, and build a very strong team. You’re going to learn, you’re going to come across people that are not that great, but just hire slow, fire fast, and take it from there, and continue the journey. It’s not without its bumps. So many things have already happened this year that gave me quite a few gray hairs, but it’s part of the game, in any asset class, in any job, n any entrepreneurship.

Joe Fairless: I’d love to learn more about those bumps, but before we talk about that… So that’s what you described as what you would do now, knowing what you know – you’d go to conferences, meet a bunch of people. But how did you learn the business? I mean, you’ve at least doubled the value of the carwash in a year. So how did you learn the business, and what steps did you take to successfully set this business up?

Steff Bolrini: Went there, spent some time there, installed cameras indoors and outdoors, alarm systems that notify me who’s in and who’s out… Again, a very good team; I have a great team of VAs that I hired to delegate quite a few things. But I learned by having the owner there available, which is another thing that I would definitely recommend, especially if you’re remote. If you’re on-site, be available for about six months; if your remote, for him or her to be available for a full year, because you need to go through all of the seasons – snow, rain, and everything else that could happen, and ask questions as you’re learning the business. So that’s definitely one of the very important things to do and put on your contract.

Joe Fairless: Just so I’m tracking – when you say having the owner available, does that mean after you purchase it, having the owner as a consultant, where you’re paying him or her a fee?

Steff Bolrini: Yes. However you guys negotiate it. If it’s free…

Joe Fairless: How did you negotiate it? What do you do?

Steff Bolrini: I didn’t. I just said, “Can you please help us? We have questions.” His son was also available to help, so we also paid him some money to be there at the beginning of the transition period.

Joe Fairless: Okay, so you paid the son to help out and to be there during the transition period. And by “be there”, will you just define that? The son there a certain amount of hours every day, or just he’ll answer the phone call whenever you call and he’ll respond to emails?

Steff Bolrini: In the beginning, he was collecting some of the money, and he was helping out whenever something broke, and also teaching the employees how to run the business to an extra level that they did not learn until that point in time. So it was basically educating the employees and collecting money, until I found somebody trustworthy that would be able to collect and deposit.

Joe Fairless: How did you find that trustworthy person?

Steff Bolrini: He was right in front of me, he was one of our best employees. We also have a coin counter machine in every single carwash, so we know exactly what’s coming in, and we can make sure that we understand if they’re collecting everything or not.

Joe Fairless: And when you say he was one of your employees, what was he doing before?

Steff Bolrini: He was actually working at the carwash doing just daily maintenance, and then we just gave him more hours to do the full management during the transition.

Joe Fairless: So these are self-serve carwashes…. And I must be picturing something wrong in my head. With self-serve I just picture a structure, some hoses, my car pulls up, I get out, I wash it, I leave. There are no employees there.

Steff Bolrini: Oh, there are… We have to collect trash, and collect money, and clean everything… It’s unbelievable how many things can break. There’s some vandalism once in a while, people try to break in as well… So there are all kinds of things that do happen that we do need them there daily, every single day of the week, and sometimes twice a day.

Break: [00:15:23][00:18:16]

Joe Fairless: How many employees per carwash?

Steff Bolrini: Oh, just one.

Joe Fairless: One. Okay.

Steff Bolrini: And they’re part-time.

Joe Fairless: You need to have one part-time employee per carwash.

Steff Bolrini: Basically, yes.

Joe Fairless: Basically. Okay, got it. Let’s talk about those bumps. What are some of the bumps that have happened in the first year and a handful of months since you’ve owned it?

Steff Bolrini: Within nine days, the roof caved on one of the carwashes. Thank God for Nationwide, they are indeed by your side… They paid within two weeks. My best employee quits without notice. We have thefts…

Joe Fairless: Why?

Steff Bolrini: He was just overworked, he had a full-time job. He did end up coming back, thankfully, but we hired somebody else, who was not great at all. Some of the pipes froze during wintertime, we had a very bad vendor for credit cards that initially quoted us 15,000 and it ended up being more than 60k. We had homeless people around the property… The latest one is that my best employee went to jail recently, for something that he probably didn’t do, but it’s part of the business. So you just have to deal with it.

Joe Fairless: Are you the management company?

Steff Bolrini: Yes. Right now, yes.

Joe Fairless: Okay. So you personally are the one who is overseeing the employees who then operate the business.

Steff Bolrini: Yes, because I did not know anything about this asset class, so I had to learn, and take all customer calls, understand what their problems are, understand what is going on over there, understand the vendors over there, and really build the strongest team so far that I can find.

Joe Fairless: When you say customer calls, that’s people washing their car, calling the number that’s on the machine because something’s not working?

Steff Bolrini: Exactly.

Joe Fairless: That goes to your phone?

Steff Bolrini: Yes, through Grasshopper.

Joe Fairless: Okay. In my previous life, I remember I knew what Grasshopper was. But remind me, what does that service do for you?

Steff Bolrini: It’s just a voice-over IP. They call the actual business number, it rings in your phone, so they never know, obviously, your number. You can text them back, you can issue them refunds, ask them to send them Venmo (or over there it’s CashApp) information, and just communicate with them a lot easier.

Joe Fairless: What was the last phone call you got from a customer related to?

Steff Bolrini: I put some money in the machine and they didn’t give me any money back.

Joe Fairless: And what do you say to that customer?

Steff Bolrini: We sincerely apologize for this inconvenience. If they are onsite, we try to refund them right away. If not, I will just ask them to send their Venmo or CashApp information, and we’ll just issue the refund.

Joe Fairless: Okay, so you’re going based on trust that they’re telling you the truth?

Steff Bolrini: Most people are telling you the truth. Yes.

Joe Fairless: Got it. Have you paid one customer multiple times?

Steff Bolrini: That’s why we asked them to text their cash app, so we can keep track of it.

Joe Fairless: Yeah, fair enough. This is fascinating. Anything else related to the carwash that we didn’t talk about that you think we should?

Steff Bolrini: Just use as much technology as you can for not only carwash, but all of your asset classes. Real estate is the last one to adopt technology, the last industry. So therefore there are so many opportunities out there for us to be ahead of the game and be ahead of all the other people that are not adopting technology.

Joe Fairless: What do your VAs do?

Steff Bolrini: They take care of the self-storage facility, they’re going obviously to be eventually transitioning all the phone calls to them, and they do whatever is happening that day. Purchase things for the carwash and everything in between.

Joe Fairless: Taking a step back, what’s your best real estate investing advice ever?

Steff Bolrini: If I were younger, I would definitely start by being a broker in the commercial field. That would be my best advice.

Joe Fairless: Why?

Steff Bolrini: Because you learn from being hands-on while you can still make money, you’re going to have access to so many deals that you can just make an offer before they even go into the market, you’re going to understand if they are good deals or not, and you can even put your commission into that deal. So it’s hands-down, I think, a phenomenal way to get started in your 20s.

Joe Fairless: We’re going to do a lightning round. Are you ready for the Best Ever lightning round?

Steff Bolrini: Yes.

Joe Fairless: What’s the Best Ever book you’ve recently read?

Steff Bolrini: I was going to just talk about conferences as a resource.

Joe Fairless: Sure, yeah…

Steff Bolrini: [unintelligible [00:23:03] is the business. But I recommend people go to conferences to build relationships and learn.

Joe Fairless: What’s one that you’ve gone to that you got a lot of value from?

Steff Bolrini: Real estate guys, actually, Cruise? I got a lot of really incredible relationships from these people.

Joe Fairless: Best Ever way you like to give back to the community?

Steff Bolrini: I love giving back to specific organizations and taking calls from new investors that have questions.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?

Steff Bolrini: They can find me on all social media and I have a commercial-only real estate podcast called Commercial Real Estate Investing from A to Z. We do not talk about residential or multifamily. Or my website, montecarlorei.com.

Joe Fairless: Which is in the show notes. Steff, thank you so much for talking to us about your three carwashes and answering all my questions. Because I didn’t know much about car washes so thank you for humoring me and I’m sure a lot of listeners enjoyed learning more about carwashes as well. Hope you have a Best Ever day and we’ll talk to you again soon.

Steff Bolrini: Thank you so much, Joe. I really appreciate it.

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