Express Car Wash Investing: The Depreciation Math Explained

Car wash investing gets pitched as a tax play, and the reason is the allocation. On an express wash, roughly 15% of the purchase price sits in the dirt and the rest sits in the business and its equipment — and car washes, like gas stations, carry a 15-year depreciation schedule rather than the 39-year schedule that applies to most commercial buildings. Add Section 179 and bonus depreciation on equipment in year one and the write-off profile looks nothing like a multifamily deal.

Chris Salerno runs QC Capital Group out of Charlotte, a private equity firm that owns and operates express car washes, express oil changes, small-bay flex industrial and a virtual healthcare business across the Carolinas, Georgia and Florida. He started in multifamily, sold most of that portfolio after cap rate compression, and rebuilt around what he calls the infrastructure of daily life.

Below: the actual depreciation math on a $6.5–7 million wash, why he refuses to buy the business without the real estate under it, where the deals come from while rates stay high, and the questions he thinks limited partners should ask a sponsor before wiring money.

From the Real Estate Pros Show

This article draws on an interview with Chris Salerno of QC Capital Group on the Real Estate Pros Show, hosted by Scott Bursey.

Why a Multifamily Operator Pivoted Into Car Washes and Oil Changes

Salerno founded QC Capital Group in Charlotte at the start of 2019 as a straightforward multifamily shop. He got there the long way: a residential brokerage he built to roughly $40 million in annual sales within two years, then a COO seat at a larger firm he helped take from $92 million to $147 million, then divesting his single-family rentals in 2018 and 2019 into institutional-grade multifamily.

Cap rate compression ended that chapter. QC sold off the majority of the multifamily portfolio, kept a couple of assets, and rebuilt as a private equity firm around a single thesis: invest in the infrastructure of daily life. In practice that means express car washes, express oil changes, small-bay flex industrial in Charlotte and Atlanta, and a virtual healthcare business.

The argument is that these services get used in good markets and bad. You change your oil or your engine blows, and neglect is not an insurable event. Small HVAC, plumbing and landscaping businesses still need somewhere to park a truck and run paperwork.

The car care demand case rests on how long people now keep vehicles. Salerno points to drivers holding cars seven to ten years where they used to hold three to five, a large share of cars on the road carrying payments above $1,000 a month, and a new-car pipeline still distorted by the post-COVID chip shortage — dealers who once pre-sold next-next-year models are now working through current-year inventory. A vehicle you have to keep is a vehicle you maintain.

The Depreciation Math on a $6.5–7 Million Car Wash

Start with the allocation. Salerno’s rough split on an express wash is about 15% of value to the real estate and the balance to the business, overwhelmingly because of equipment — tunnels, conveyors, dryers, vacuums, pay stations. He is explicit that this is an estimate and that no two deals allocate identically.

That equipment weighting is what makes the tax treatment work. Car washes and gas stations fall on a 15-year depreciation schedule rather than the longer schedules that apply to most commercial property, and the equipment component can be expensed in year one under Section 179 and bonus depreciation provisions.

Run it on a real number. On a $6.5–7 million wash acquired with debt, Salerno estimates roughly $5 million to $5.4 million of depreciable basis against $2.5 million to $3 million of equity actually brought to the table. That arithmetic produces what he calls a 1.7 to 1.8x multiple of invested dollars in tax benefits.

His framing is direct: the tax outcome on this asset class beats traditional multifamily and residential real estate. That is his opinion, not a guarantee, and the amount any individual investor can actually use depends entirely on their own tax situation — passive activity limits, income type, entity structure. Have a CPA model it against your return before the allocation drives your decision.

One practical consequence worth noting: because the benefit is spread across the capital raised, raising too much capital dilutes it. Salerno said QC planned to stop raising around the beginning of December for deals closing that month, precisely so investors in those deals kept a larger share of the write-off.

If you’re buying a $6.5 to $7 million car wash, you can depreciate roughly $5 million to $5.4 million of it if you’re taking on debt. That means you’re only bringing down $2.5 to $3 million. It’s about a 1.7 to 1.8x multiple on your invested dollars that you’re going to get and receive as tax benefits.

— Chris Salerno, QC Capital Group

Why He Insists on Owning the Real Estate Under the Business

QC owns 100% of the real estate under its operating businesses, and the logic is two-sided. Operating the business and owning the dirt produces higher cash flow than a pure real estate play, because you are collecting the operating margin rather than a tenant’s rent check.

The second half shows up at exit. A buyer prices an express wash or oil change off EBITDA — it is a business sale, not a cap rate sale. But Salerno’s experience is that buyers pay a higher premium when the real estate conveys with it, because they are not inheriting a landlord, a ground lease renewal, or a rent escalator they cannot control.

He has passed on business-only opportunities that otherwise looked strong for exactly this reason. He is not religious about it, though. He said flatly that QC will not walk away from a great investment for its investors solely because the real estate is not included, and that the workaround he would pursue is an option to buy the real estate down the road.

The flex industrial side follows the same ownership logic with a different tenant. Small-bay units combine warehouse, office and a bathroom in a single space, which is the exact footprint an HVAC contractor, a plumber or a landscaping outfit needs to run a business. Those are the small operators who keep paying rent through a soft patch because the alternative is not having a place to work from.

Where the Deals Are When Rates Stay High

Salerno expected a slow Q4 and said QC had paused its own flex industrial acquisitions. The reason is familiar to anyone who has made offers recently: sellers want pricing from three or four months ago, and at that number the deal does not pencil.

The structural point is more useful than the sentiment. Commercial debt matures. A three-year term with two one-year extensions, a five, a seven — most banks are reluctant to write long fixed terms right now because it locks them in. Whatever the structure, there is a balloon, and at that balloon something has to happen. Refinance, sale, or a conversation with the lender.

That is the whole opportunity. A seller who had no reason to transact becomes a seller with a deadline. When that happens, price is not the only lever that wins — surety of close and speed of close carry real weight with someone staring at a maturity date.

On the macro backdrop, Salerno is openly skeptical of the published numbers, citing the roughly 800,000-job revision as reason enough to question employment data. His own signal is hiring: QC gets 80 to 150 applicants within six hours of posting a role, depending on the title. Two to five applicants would tell him the labor market is tight. That volume tells him it is not, regardless of what the reports say.

His broader read: the doom-and-gloom framing that there are no deals at these rates is wrong. The deals have moved, and which asset class you are hunting in determines whether anything cash flows.

Vetting the Sponsor Before You Wire: Audits, Allocation Pressure, and Personal Questions

Two structural checks come first. QC’s funds are third-party audited by Elliott Davis from January 1, 2026 forward, and they are listed on Charles Schwab’s alternatives platform, which carries its own approval process. Salerno’s point is that most syndicators and retail-facing fund managers have neither. Ask whether a fund is audited, by whom, and from what date.

Then understand the pressure the sponsor is under. Private equity firms receive allocations from pension funds, endowments, other PE firms and RIAs, and those allocations come with a clock. Deploy $250 million of a $500 million allocation and next year’s allocation shrinks. That incentive produces overpaying.

Salerno watched it happen. QC bid $190 million on a portfolio. The seller called and said another group was at $280 million and the deal was his if he matched. His answer was to tell the seller to hang up and take the other offer. He still talks to those owners and told them afterward they did a phenomenal deal. In his view the winning bidder substantially overpaid because it needed to deploy capital.

His third filter is personal, and it is the one most LPs skip. Ask the principal how he is doing financially, how his marriage is, how his kids are. Salerno has seen operators who were not personally sound make poor decisions with investor capital because they needed to make a buck. He has also had a business partner go through a divorce — and the ex-spouse, entitled to half, became his second business partner at the table.

The last tell is behavioral. A legacy investor brought him a coffee shop deal promising a 40% return. Salerno asked to speak with the sponsor directly. That sponsor cancelled two scheduled calls. Returns that sound too good to be true usually are, and a principal who will not take the call is answering the question.

What to Do If This Is Your First Private Investment

Salerno’s answer is blunt: hold your capital and educate yourself. QC only works with accredited investors who have experience, and the intake form screens non-accredited leads out entirely — click the wrong answer and you are told you cannot be worked with before your information is captured.

If someone told him it would be their first investment, he would tell them not to invest yet. The sequence he recommends is to analyze deals until you genuinely understand the asset class, reach out to sponsors, read their materials, and only commit when you have seen enough to have a real opinion.

The work is cheaper than it used to be. He built his first underwriting models in Excel from scratch; tools like ChatGPT and Claude now do a lot of that legwork, which means there is no excuse for not having run the numbers yourself before a sponsor call.

Two rules he repeats. Every investment carries risk, so only place money you are financially sound enough to lose. And understand the asset class, not just the deal — people buy into a category without knowing how it actually behaves.

His example is self-storage. Tenancy is month-to-month, sometimes six months or a year if you are lucky. The business is highly operational. And when household budgets tighten, consumers decide the $200 to $400 a month is not worth it and move their things back into the garage. None of that shows up in a pro forma built on stabilized occupancy.

Frequently asked questions

Why are car washes and gas stations on a 15-year depreciation schedule instead of 39 years?

Because so much of the asset is equipment rather than building. Car washes and gas stations are treated as 15-year property, which compresses the write-off period substantially compared with the schedule that applies to most commercial structures. Salerno points to the volume of equipment in these facilities as the reason the classification exists.

The equipment component can also be expensed in year one under Section 179 and bonus depreciation provisions, which is what makes the first-year number so large. Confirm the treatment of any specific deal with your CPA.

How much of a car wash deal’s value is the real estate versus the business?

Salerno’s working estimate is about 15% allocated to real estate, with the remaining 85% in the business and its equipment. He is clear this is an estimate and that every deal allocates differently.

That split is the entire reason the tax profile works. If the allocation flipped and most of the value sat in the building, you would be looking at a conventional long-schedule depreciation outcome rather than a front-loaded one.

Does owning the underlying real estate actually increase the sale price of an operating business?

In Salerno’s experience, yes. Buyers still price an express wash or oil change off EBITDA, but he says they typically pay a higher premium when the underlying real estate conveys with the business.

Owning the dirt also raises cash flow during the hold, because you are capturing both the operating margin and the value of the property instead of paying rent to a landlord.

How can an LP tell whether a fund sponsor is under pressure to overpay for deals?

Ask where the capital comes from and what the deployment window looks like. Firms funded by pension allocations, endowments and RIAs have to deploy within a period, and underdeployment means a smaller allocation next cycle — which pushes some firms to buy for unit count rather than returns.

Salerno’s own example: QC bid $190 million on a portfolio that traded at $280 million to a PE buyer he believes substantially overpaid. He told the seller to take the other offer rather than chase it.

What should a first-time accredited investor do before placing capital with a sponsor?

Wait. Salerno’s advice is to hold the capital, study the asset class at a high level, and analyze enough deals that you can form your own view before committing to any of them. Reach out to sponsors, review their materials, and use AI tools to do underwriting work that used to require building models from scratch.

Then confirm the structural basics: whether the fund is third-party audited, who audits it, and what platform approvals it has been through. And only invest money you could afford to lose.

The bottom line

If the depreciation profile is why you are looking at an express wash, get the allocation in writing and have your CPA model the first-year benefit against your own tax situation before you evaluate anything else about the deal — because a 15-year schedule and a Section 179 equipment write-off mean nothing if your return cannot absorb them.