571: How One Side Hustler Bought Herself a $5k a month Income Stream -— with no Money Down

0:00How one side hustler bought herself a$5 ,000 a month income stream with no money down. What's up? What's up? Nick Aloper here. Welcome to the Side Hustle Show. Now a proud member of the Entrepreneur Podcast Network. It's the business podcast. You can actually apply. And we've got hundreds of episodes on building time-leveraged income streams. But what if instead of building, you could insert yourself into an income stream that's already happening? It might not be that far-fetched and it might not even cost a lot as today's guest illustrates. She's a real estate agent by day, but at the ripe old age of 22, bought a cash flowing car wash with seller financing and no money out of pocket.

0:42Today, that business generates thousands of dollars in profit per month for just a few hours of work every week. Hannah Hingram, welcome to the Side Hustle Show. Hey, thanks for having me. Happy to be here. You bet. Stick around in this one to learn how to go shopping for cash flow near you, what Hannah's done to improve the business after she took over and how much work is actually required. But Hannah, take me back a couple years. You just dropped out of college. You're 22. You got your real estate license already and you want to get started investing. But you're kind of in this position of, well, it takes money to make money and I don't have a ton of money in the bank.

1:19So take me back to that moment. Yeah. So that was the toughest part. I knew I wanted to become rich. I mean, at the end of the day, that was my goal, working toward financial freedom. And I was looking into all these ways to invest, ways to get into real estate, ways to do real estate investing, and everything needed money. So I was like, what can I do? I've got to find a way to get around this because, like you just said, I just dropped out of college, had like$2 ,000 in my bank account, and I'm over here trying to make moves, but everything requires money. So that's where it came into finding a way around that because you can go on YouTube, you can go online, you can check out these influencers and stuff and these gurus telling you how to invest.

2:01But trying to figure out where to get the money to do that at is the hardest part. So that's where I had to find a way around that. What attracted you to car washes specifically or the idea of buying a business or buying land with a business on it? I read this quote by Warren Buffett that said, if you don't find a way to make money in your sleep, you will work until you die. That really just like hit me like a ton of bricks right there. I was like, it hits you, right? Yeah. I was like, what can I do that actually makes passive income? Yeah. And for most people, that's like the traditional retirement path.

2:33Like I'm going to build up this huge nest egg and, you know, eventually going to live off the dividends interest appreciation or it's rental properties that I can build off that cashflow or I can build a business that spins off cashflow, but it absolutely hits you. You're like, well, shoot, I'd rather not wait or I'd rather not work until I die. I'd like to have some optionality here. Exactly. That was my whole thought press. And I think really long term. So I was like, man, I am not going to work until I die. Like I'm going to be retired by the time I'm 30, you know? So I was like, okay, I sat down.

3:06I was like, what businesses are actually making money? You know, if I'm at the gym, if I'm hanging out with friends, if I'm out selling real estate, showing a house or whatever. And that's when I was like, okay, like car washes, laundromats, storage unit facilities. So like those were like the three that I really went hard and put a focus on trying to acquire. Where were you shopping? I was looking around like on loopnet.com, crexie.com. I was doing driving for dollars, kind of like the whole wholesaling method, but with businesses and just scouring the internet. Can I pause you? What do you mean by driving for dollars?

3:40So driving for dollars, I was like driving around looking for kind of like ran down businesses and I would slide a note under the door. Okay. You know, with my number on it, asking if they're interested. Yeah, if they're like, the building is still there, but they're not, it doesn't appear that they're operational. That, or it looks really ran down because I'm trying to find a motivated seller. So I'm trying to find one that's ran down that doesn't look like it's been in business for a while or whatever. Okay. And so you come across, so LoopNet is one that I've heard of. Crexie is new to me. And so I was just, you know, looking around what might be available.

4:14I found a car wash for me, but they're asking$2.4 million in Seattle. And it still looks kind of run down. It's like it's marked as like a development project or something. So was it through one of those searches or had you come across the property that you landed on? So I've been searching for forever. And apparently this car wash had just hit the market. I didn't even know it was listed yet. And a friend of mine told me about it because I had mentioned it to her. And she told me, she was like, hey, this one's for sale. It was in my same town. So I just hadn't seen it yet, but it was like up for sale.

4:49I just had not actually laid eyes on it being listed yet. Okay, that's great. So what's your next step? Next step was I contacted the sellers, took a tour of the property, got the financials, made sure this thing was actually making money. Then we went from there. So what was the sticker price? Or do you remember what the sticker price was? It was$150 ,000 and I talked them down to$140 ,000. So I got it for$140 ,000. And that's based on a multiple of their last 12 to 24 months of earnings. I don't really know how they came up with the number, but that was just kind of what they threw out there.

5:25That's what they wanted. It included the business and the land or was it leased on top of the land? Nope. Land, building, business, equipment, everything. Wow. I got to move to Tennessee. That sounds way better than$2.4 million. Yeah, for sure. So the owner, they want out. They've listed it for sale. But then they're thinking, hey, I'm going to get this$150 ,000 payday. That's a big gap between expectation and like, well, hey, I've got$2 ,000 in my pocket. How am I going to buy this thing? So talk to me about convincing this seller financing deal to say, hey, I'm going to take it over. I'll pay you every month out of the proceeds of the business.

6:03He's like, no, that doesn't necessarily sound that attractive if I got a cash offer on the table. Right, exactly. Yeah. So like I said, they wanted out of it. It was for sale. So they had a motive. They did not want it anymore. They got it passed down. They didn't want it to begin with, really, from what I could tell. So the turnaround time with me doing the creative financing method was a no-brainer for them. I could take it off of their hands in two weeks. So they wanted out of that. And then with me paying down on the loan, I cut down on the capital gains tax that they had to pay whenever we refied it.

6:38as well as like they were still getting money every month and I had already taken it off their hands. So they were very happy to let me go ahead and have it. So they didn't have to go through a 60 day closing process with like a lender underwriting stuff like that. Yeah, I see a lot of similarities to what you call like real estate wholesaling, looking for these motivated sellers. Maybe it's a burnt out landlord. Cody Sanchez talks about lots of reasons why business owners would sell a profitable business, like it got handed down to them. I don't have any operational experience. Maybe I live two hours away.

7:10Like, I don't want to deal with this. Maybe I'm moving. Maybe just I'm done with it. I want to retire. Yep. And she talks about like the transfer of wealth from the boomer generation to Gen Z, Gen Y, and just lots of reasons why people would want to get out. That's what we're seeing a lot of the boomer generation. They're getting out of it. Kids don't want it. Maybe they're moving away. So yeah, that's definitely a big factor. I was going to ask, aside from reviewing the financials and doing cursory inspection of the property, was there anything else that went into the due diligence phase? I definitely looked at location.

7:44But really, for me, the main thing was looking at the finances and making sure this thing was actually profiting. Because I would be very skeptical to buy a business that was losing money. And looking at the financials, I also looked at maybe potential to earn more. So like, for example, they were paying for a radio ad every month, like 200 bucks, I think it was 100, 200 bucks. I cut that out. I could spend 20 bucks on a Facebook ad and get better results than a radio ad. So just different things, analyzing the financials and making sure that I could come out with profit every month. Yeah. And I like that task.

8:16And I'll ask some of your first moves after taking over, because I think that's maybe it's undervalued for somebody with a different skill set. or I could bring some fresh eyes, some fresh perspective in here, improve the digital presence, whatever it may be, improve some things operationally. Would you remember what it was earning on a monthly basis when you took over? It was anywhere from maybe two to 3 ,000, sometimes less. I think I saw on there, it was definitely in need of some sprucing up and stuff. A little bit of love, a little bit of new energy, new life breathed into it. When I'm thinking of like, okay, I'm signing myself up for no money out of pocket, but still I'm on the hook now for this 140 grand.

8:56I got to figure out how to go and do that. Like what if the market tanks, like, Hey, it's a car wash. It's got to be relatively, not necessarily recession proof, but like relatively consistent. I imagine there's some seasonality to it, but what kind of risks did you foresee or project out into the future? Like, Oh gosh, what if, I don't know, like what would happen? Worst case scenario type of stuff. It was definitely, of course, in the back of my mind, I try to think positive, but of course, there's always that factor. I actually had some land with the car wash. So I thought, you know, worst case scenario, I'm going to put storage units on that land.

9:31I could just, if a big car wash came in and took all my business, I could just convert it into storage units or maybe sell it to like an automotive shop and they can use the bays. Like I was just thinking of all these different backup plans, but that's part of me doing my due diligence and having confidence in the business before I even buy it. I definitely thought about the plan B there. What would I do if this happened or that happened? Yeah, as I'm looking around and maybe as you were looking at the storage facilities, the laundromats, the car washes, like anything that you're looking for if you're on LoopNet or if you're in conversations with these sellers, if you end up striking up a conversation, like either red flags or go signals.

10:14When I'm helping my students, So many of the times they're like, hey, this guy wants to sell, but he doesn't want to show me the financials. And I'm like, oh, my gosh, like how can you even make a solid business decision if they're not going to send you the financials? So that's already a red flag. I don't want to do business with anybody like that. I would walk. And then I also like to know like how they've taken care of the equipment. Like are they doing preventative maintenance? is this place going to blow up next month because you've not oiled the cat pumps in 12 years or whatever. So just getting a feel of how they've taken care of the equipment and stuff like that.

10:51And even if they haven't, I can still strike up a deal, but not sending financials, that is a huge red flag, like right up front. And that's when you don't even have to waste your time anymore. You can just walk because no way would I buy a business I couldn't see the financials on. Yeah. And you could see the business on it. Well, it really makes this much, But for tax purposes, this is like, well, that's great, but I can't go to the bank on that. Exactly. And that's where you can be like, hey, I'll sign an NDA, like a non-disclosure agreement, so that you know that your information, like I'm not going to go out there and post it.

11:22I'm not going to go out there and talk about it. So your financials are safe with me. Let me sign an NDA for you. Yeah. And you're like, what am I going to do? I'm not going to go and build a brand new car wash across the street to compete with you from scratch. Like, let's be realistic here. Okay, so the seller agrees. Hey, and how long was it listed? Like it must not have been listed very long before he agrees to this or they agree to this seller financing deal. It actually wasn't. Like I think it had maybe been on the market two days. I didn't even know about it. And usually the longer it sits on the market, the more motivated sellers usually are to sell.

11:55So they were very motivated. That's why I tell people like, you got to find a motivated seller, find someone with a motive to sell. So yeah, they were like, for sure, let's do it. All right. So this is May 2021. You get the keys, you take over. What are some of your first moves? Well, it was needing some like remodeling. So I took down the old signs and I didn't do all this like right up front. Like I didn't have$10 ,000 to just come in there and make over the whole place. This was just like, what I like to do is set aside 10 % of like what I made every month and like pump that back into the business.

12:28Whether that was making something run better, look better, you name it. Came in there, I redid the logo. I did not change the name just because for branding purposes, like that car wash had been there since the 90s. So like everyone knew it as that name. So redid the logo, redid the signage. The vacuum hoses had duct tape around the handles. So I replaced those. I was like, we're not doing duct tape down here at this business. I just made some like mechanical stuff better. So I had my car wash mechanic kind of tell me like, hey, this is running pretty poorly. Let's do this, stuff like that. replaced the foam brushes, replaced the spray guns.

13:07And then just this year, I had saved up enough to get credit card readers in. So it's not just a full cash business now they can, because, you know, I don't carry cash hardly ever. Most people don't these days. So they're wearing the credit card readers out. Like that was a great move, putting those in, even though it costs seven grand. Okay. Yeah. Some upfront investment there, but you widen the customer base, probably increase the average ticket, I imagine, too. It's like, well, it's on plastic. Let's charge it. Exactly. Exactly. And from looking at the videos, it looks like it's kind of a self-service.

13:42Like, it's not necessarily an automated machine where you drive through and they got all the brushes and stuff spinning. It's kind of like you pull into the bay and you do it yourself, where the alternative is like, well, you do that in your driveway or something. Yeah, exactly. And I also have vending machines down there for convenience, different products in there. Some of those vending machines weren't even working when I bought it. I had to fix them. So now all six vending machines down there work. So that was another thing. It sounds like a very much a fixer upper type of project where it's like, hey, even in this rundown state, in the state of semi neglect, it's still profitable.

14:14But by just tweaking a few things, we can probably double that. And I think that's really interesting. That's where side hustlers in particular have an opportunity to come in and forced appreciation, as they say, in the real estate world there. Did you know there's a disease running rampant alongside hustlers and new entrepreneurs? It's called superhero syndrome. Symptoms include a feeling like you gotta do everything yourself, thinking you're the only one who can do it right, and struggling to let go of certain tasks. Does that sound familiar to anyone? But the good news is there is a cure. Our sponsor Indeed can help you find the best candidates for the roles you need to fill and find them fast.

14:50Stop struggling to get your job posts seen on other job sites. Indeed's sponsored jobs help you stand out and hire fast. With sponsored jobs, your post jumps to the top of the page for your relevant candidates so you can reach the people you want faster. It's true. Sponsored jobs posted directly on Indeed get 45 % more applications because every superhero needs an amazing sidekick. That's why for my next hire, I'm using Indeed. There's no need to wait any longer. Speed up your hiring right now with Indeed. Side Hustle Show listeners get a$75 sponsored job credit to get your jobs more visibility at indeed.com slash side hustle show.

15:26Just go to indeed.com slash side hustle show right now and support the show by saying you heard about Indeed on this podcast. Indeed.com slash side hustle show. Terms and conditions apply. Hiring Indeed is all you need. A lot of side hustlers suffer from what if-itis. What if it doesn't work? What if I don't have the skills? What if I pick the wrong path? But one thing 100 % of our amazing guests have in common is they took their shot. They faced down those what ifs and they got their answers through taking action. Our partner Shopify helps turn what ifs into why nots. Shopify is the commerce platform behind millions of businesses around the world, from household names to the very guests on this show.

16:07What if I can't design a website? Shopify's got you with ready-made templates to match your brand style. What if people haven't heard about my brand? Shopify helps you find customers with easy to run email and social media campaigns. And what if I get stuck? You can tap in to Shopify's award-winning 24-7 customer support. Let's turn those dreams into and give them the best shot at success with Shopify. Sign up for your$1 per month trial and start selling today at shopify.com slash side hustle. Go to shopify.com slash side hustle. Shopify.com slash side hustle. Anything on the marketing front you You mentioned shifting from the radio ads to Facebook ads.

16:48Anything else on the marketing side of things? This business wasn't even on Google. Didn't even have a Google page. So I added it to Google and then got the reviews up. I would ask people that were down there and be like, hey, please go leave me an honest review. As you're out doing your daily maintenance, you just talk to the people who happen to be there. Would you mind dropping in a review on Google? Let me text you a link or something. Yeah, here's an air freshener. Please Google my business. Drop me a review. you know what I mean so also too like once you get the customer there first impressions everything so like I would keep the car wash as spotless as I could keep the trash taken out because when the owners owned it before me the trash was always piling up trash all over the parking lot looked bad keeping bay's hose down and keeping stuff working making sure you're testing stuff to make sure that when the customer first visits your business and they put their money in that the hose isn't busted and it's going to squirt soap everywhere and they can't even use it.

17:44First impression is big too, but getting them there, I got on Google, got on Facebook, got on Instagram, posted regularly, would ask people to share this post. I'd done giveaways. I would spend maybe$25,$50 here and there on an ad just like targeted within like a 10 mile radius of my car wash and just getting in front of more people's faces, stuff like that. What were you giving away? I just gave away like a gift card or something like that. And I think like first place won like a gift card, second place won like a free car wash, third place won like a free car wash or something like that. But getting on Google has been great.

18:22I've had a lot of people there from out of state because my car wash is about five, six minute drive from the interstate. If they're specifically searching for that, now I show up. Whereas before they didn't even know it was there. You got to drive about five minutes away. hey, I've had people from Canada stop by my car wash just to get the salt off. I'll see like the license plate says like Ontario. And I'll go over there and just strike up a conversation, you know, and they found it from Google or else no one from Canada is going to even know it's there. So very important. If you're not looking for it, you're never going to just happen upon it.

18:56That's really interesting. Are there, I don't know, give me a sense of the size of the town. Are there multiple competitors operating similar businesses? or are you kind of a market of one here? There's one literally two minutes down the street from me. If I stood on the roof of my car wash, I could probably see his car wash. But I live kind of in like a smaller town. There are like mine and his. And then the next closest car wash is like probably like a 12, 15 minute drive. Okay. On the Facebook ads, do you remember what the messaging was? I like this, you know, the ability to target people within a super tight geographical area.

19:34Do you remember what the messaging was there? It was just something pretty much just brand awareness. Just maybe like a picture of the car wash from like a drone perspective that looked real nice with the name and the address. And then I went hard whenever I got credit card readers. That's where like I have a continuous ad running because the guy down the street from me, he doesn't have credit card readers. OK, now you can differentiate. Yeah. So now that I do, I'm trying to let everyone know like, hey, if you use his car wash, but you ever find yourself with no cash, I got credit card readers come on down.

20:10So now I do have something that sets me apart. come on down yeah that's one of the maybe perceived risks is it's somewhat a commodity where especially if it's self-service where it's like i just i need to get this done i'm going to be doing it myself it don't don't really matter where i go so any level of branding and first impressions and loyalty that you can instill and say okay now i'm now hopefully hook a customer for life and they keep coming back here versus having to keep conquesting new people one-on-one So I like this call on first impressions. And actually the car wash near me or like the kind of like mini local chain, it's called Brown Bear.

20:49What they do is they sell a, I think$25 a month membership, like unlimited washes for 25 bucks a month. And I was like, man, it was one of these examples where like, everything must be a subscription now. And it's like, I never thought about this. It's like, oh, I guess that kind of makes sense. Like it's got to keep getting dirty. So it makes sense. I don't know, you ever experimented with something like that? I've thought about it. I've not really looked at it. Is that an automatic that's doing that? It is. So it's kind of like you put it in neutral and drive through the thing. Yeah. Yeah. See, I could see it from like an automatic.

21:17I don't know how I would set it up. Yeah. I'd have to like really think about it and look into it from like a self-serve standpoint, like the unlimited washing with the self-serve. So not sure how I'd structure it, but I've definitely thought about it and I'm going to keep looking into it. Yeah. I'm trying to think of what else, like maybe any commercial fleets nearby. I think they probably have their own on-hand staff to deal with that because it was like in the, I was in the car business and they'd have an onsite detail guy who would be in charge of washing the used cars as they come through.

21:45But yeah. So you're doing real estate by day. And this is maybe I would call it totally passive, but definitely time leveraged in that you don't have to be there for it to operate. There are some daily maintenance tasks required, taking out the trash, cleaning out these bays. Do you have a sense of how that fits into your daily schedule? Yeah. Just really when I get the time to go down there, that's when I go down there, whether that's in the morning, at night, middle of the day, really doesn't matter. And I'm usually there no more than 20, 30 minutes a day. If it's extra dirty, maybe 45 minutes.

22:20And then some days when it rains, I'm there for five, 10 minutes because no one's been there. I'm just in and out. So it's very convenient for me whenever I can get out there. And it's I know that I'm not going to be there past 30 minutes. Yeah. So you're stopping by, you're making sure, I guess, to clean out the money machine or take out the cash that's there that I imagine is a vandalism or theft risk to leave for any length of time. And just kind of this daily maintenance stuff. And so. Yeah, it's really just tidying up, cleaning up. Yeah, that's the interesting part is the detractors say, well, you didn't buy a business, you bought yourself a job.

22:56But it's like, hey, if your cash flow positive five grand a month in exchange for 30 minutes a day, that's 15 hours a month. That's 300 bucks an hour. So it's a$300 an hour job with equity, by the way. So it's like, oh, if I can improve the cash flow, the business is also worth more on the other side. So that's... Exactly. It was a pretty good job to go out and acquire for yourself. Is that, I think people will ask about the cash flow versus the expenses versus the debt service. Are you comfortable giving me a breakdown of, okay, top line revenue is 10 grand and what that looks like? I had a real estate balloon with contract for deed.

23:34The bank treats it as a refi. So refied it last November into my LLC. So like didn't even have an LLC. But whenever I refied it, refinanced it into the LLC's name. So what I did was I actually rolled the credit card readers into the loan. So the loan went from$140 ,000. I think I did like$10 ,000. I rolled it in. It went to like$150 ,000-ish. So now my loan payment's like about$1 ,200 a month now. whereas whenever I was paying on the seller's loan, it was like$780.83. Plus interest to them, it really comes out to be about the same for me now. Now, of course, interest rates have gone up. So that allowed you to cash out the original seller.