Ground lease on a car wash? Thoughts
Hey guys,

Just wondering your thoughts. I know a guy who owns a small chain of 5 full-service car washes. It’s a really well known brand where I live its practically a household name in my area. 

The car washes have been in operation for 20 years. They are higher end and well maintained in extremely high traffic areas. 

He recently told me he’s think about selling them all or one by one. I happen to know a guy who’s also looking to 1031 some money into a safe real estate investment that’s more passive in nature. 

I was thinking a possible option would be going to the car wash guy and asking him if he’d sell the land on one of them and ground lease the land which would open him up to some capital to play with and give the 1031 guy a mild income stream. 

Thoughts?
[{"id": "eyh8q8c", "text": "Get financials on the car wash then back into the ground lease you can do with 1031 guy. Once you know what 1031 can do ground lease for, then you know what you want to offer car wash guy to purchase them. Obviously don\u2019t go hard/close on a contract if you don\u2019t have a signed ground lease.", "replies": [], "depth": 1}, {"id": "eyhsq6x", "text": "As far as I know, 1031 exchange only works for like-and-kind properties (within reason). So it\u2019s not going to work unless you\u2019re divesting from a ground lease and using the proceeds to buy another ground lease. I\u2019d double check with a real estate CPA.", "replies": [{"id": "eyhx9vd", "text": "Like kind property is basically from a real estate asset to another real estate asset. If he wants to 1031 an income property, it would work. If he is talking about a different type of asset he can not defer paying income tax.\n\nEdit: Is it in an opportunity zone?", "replies": [{"id": "eyi9wie", "text": "Not in an op zone. They are in high-traffic high-income areas.\n\nIt would be a 1031 from the sale of real estate assets. I\u2019m no professional on 1031 but as you said I\u2019m pretty sure as long as it would be a real estate asset to another real estate asset that would be a go.", "replies": [{"id": "eymnkxu", "text": "Is the owner looking to wind down his ownership of the car washes?", "replies": [{"id": "eymu8tt", "text": "Yes but I\u2019m thinking he would still like to own some of them but selling the land and having a lease-back would give him some capital to play with.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eyj0d8v", "text": "Get somebody in there to inspect those tunnels. Car wash equipment can be maintained, but it doesn't last forever, and can cost more than the building to replace", "replies": [], "depth": 1}, {"id": "eym3330", "text": "What market are you in?", "replies": [{"id": "eym7bvy", "text": "Southeast", "replies": [], "depth": 2}], "depth": 1}]