Why Car Washes and Boring Businesses Are Becoming Powerful Real

Chris Salerno (00:00)
Yeah, definitely. can talk to one. I won’t be naming the name in particular of a particular site, but a situation is when you analyze businesses, I always encourage to have tax returns, have audited tax returns and audited financials, bank statements, you name it. But even when you have all of that and you think all of your boxes are checked, you may run into situations, which we did in one particular

Michelle Tack (00:07)
No problem.

Chris Salerno (00:27)
particular

scenario, we realized after ownership that a particular owner was juicing up his numbers.

Michelle Tack (00:35)
⁓ no! Terrible.

Terrible. Terrible.

Chris Salerno (00:37)
And so

now we are going to start the litigation process for that. But we really took a deep dive. And I sat down with my head of ops. said, how could we have caught this before closing?

Michelle Tack (02:23)
Hi, welcome to Real Estate Pros podcast. My name is Michelle Tack. I am the podcast leader. We’ve got a great operator to showcase today. Chris Salerno, say hi.

Chris Salerno (02:34)
Hello, thank you so much for having me, Michelle, excited to add some value and some new ⁓ ideas when it comes to real estate investing too.

Michelle Tack (02:42)
Absolutely

what I was really psyched about when we prepared for the podcast is that You are getting great returns on your funds that you have And that it’s an interesting model specifically ⁓ What you are doing in terms of buying land ⁓ Creating Car washes and other things related to that but with a handsome return Can you

Describe for people that may not come from your world what your business is and the markets you serve, please

Chris Salerno (03:17)
Most definitely. again, thank you so much for having me. Chris Salerno, founder and CEO of QC Capital. Our headquarters is here in Charlotte, North Carolina. So right here on the middle of the East Coast. We started out in multifamily institutional grade investing through syndications on a per deal basis. We then involved with our investors feedback to get into high cash flowing operating businesses. But it has to come with the real estate. That’s something that is dear to our heart. Very similar to the movie founder Ray Kroc and McGrath.

McDonald’s is we have to own the underlying real estate and so we got into the express Car wash and express oil change industry Where we built a portfolio throughout the southeast and soon by the end of this end of December will be one of the largest Car wash companies in the southeast which we are very excited about with our partners we own and operate the business and then we also own the underlying real estate all under one brand called Aquashine Express Car Wash the lovely part is all of

investors that invest into our funds they get to participate in all of the sites within the fund so very nice diversification of their portfolio as well. But that’s our main primary focus is Express Car Washes and Express Oil Changes. We also have another fund which is Flex Small Bay Industrial. We love helping the the middle market type of businesses out there because it runs and fuels America. Those are all absolute triple net lease so they’re really really

Michelle Tack (04:22)
Okay.

Chris Salerno (04:46)
nice for diversifying your portfolio.

Michelle Tack (04:48)
awesome and do you I imagine that anybody across the United States could invest right or you just taking investments for these funds in a specific area.

Chris Salerno (05:45)
Great question. Anyone who is an accredited investor, all of our opportunities are Reg D’s 506C, so we only accept accredited investors into our opportunities. And another great key point too, is not a lot of funds out there, especially Car washes and express oil changes, are approved through Charles Schwab’s alternative platform. We are a company that has been vetted and approved through Charles Schwab’s alternative platform, and so all of our current funds that we have are on Charles Schwab’s alternative platform.

which is great for those financial advisors out there looking to diversify their clients capital. And then also those individuals that may have independent accounts with Charles Schwab, you can actually go directly through Charles Schwab and see our alternative funds on there.

Michelle Tack (06:28)
That’s awesome. Chris, when we were preparing for this, really was interesting to me is that you’re running a smooth business, but it’s very operational. There’s a number, you know, there is a physicality of the location. There’s water. There’s reuse of the water. There are just so many components that could break down in the business, right? ⁓ And can you explain how

Chris Salerno (06:48)
No, for sure.

Michelle Tack (06:51)
you are able to run the business smoothly. We know that there’s always things that come up, but how do you do it? ⁓ What are the major fundamentals of that?

Chris Salerno (06:57)
Thank

I’ve built a phenomenal team. it is the team that had that really runs the Car washes. Our VP of Ops, Chris Stevens, our head of maintenance, Chris Mellie, our head of development, ⁓ Heather Fry, our accounting side, Vic. I built a phenomenal operation operating team to where they know their rules, they can communicate. And as we were talking prior to the podcast, I’m a very blunt to the point type of person. And my team is as well. And so if something

is bothering them, they will communicate that amongst each other. as you notice, I do not have employees. I have teammates. all, we work together as a team, we win together, we have success together. And I think creating that atmosphere really helps them achieve very high levels when it comes to operational efficiency throughout all of our sites, which at the end of the day makes the sites operate better. It takes care of our teammates on the sites, which takes care of our customers that

Michelle Tack (07:40)
Mm-hmm.

Chris Salerno (08:02)
visit and they want to coming back, which at the end of the day makes them more profitable for our investors. And so that’s how I’ve built the team.

Michelle Tack (08:12)
That’s awesome. mean, that’s, you know, just the team aspect and getting the best quality people that you can find. You know, that’s 90 % of, know, 80 % of it, right? I mean, there’s obviously things change and morph, but that’s great. As you look into the next year, a year out from today, what would you say are the major opportunities that you’d like to actualize? And again, as we spoke earlier,

Define that opportunity any way you want. can be time, money, can be ⁓ locations. I’ll leave it up to you to describe what that may look like.

Chris Salerno (08:49)
Yeah, would say growth of the whole overall portfolio. We are working on some very, very large reputable acquisitions right now, ⁓ which would ⁓ really put us on the stage for the industries and asset classes that we’re in. And I would say growth of the whole overall portfolio because when the portfolio grows, the investors revenue and potential returns grow, the on-site team members grow because you’re helping families that work for you. And that’s what I love

tremendously is when we start to see that growth amongst all of our portfolio companies, we’re helping the families that work for those portfolio companies and we’re also having larger and greater potential returns for all of our investors that are involved. So I would say that’s really what my main primary focus on the next 12 months is, is that growth overall the whole portfolio.

Michelle Tack (09:41)
Every business has challenges, ⁓ you know, and if businesses didn’t have challenges, you know, we wouldn’t be working. So help me understand if you can share maybe a situation that started a deal or a situation started going sideways for you, maybe down, and you had to pivot quickly to address it. And either you were able to address it or what you learned from that.

Can you talk to that a little bit?

Chris Salerno (10:46)
Yeah, definitely. can talk to one. I won’t be naming the name in particular of a particular site, but a situation is when you analyze businesses, I always encourage to have tax returns, have audited tax returns and audited financials, bank statements, you name it. But even when you have all of that and you think all of your boxes are checked, you may run into situations, which we did in one particular

Michelle Tack (10:53)
No problem.

Chris Salerno (11:13)
particular

scenario, we realized after ownership that a particular owner was juicing up his numbers.

Michelle Tack (11:21)
⁓ no! Terrible.

Terrible. Terrible.

Chris Salerno (11:23)
And so

now we are going to start the litigation process for that. But we really took a deep dive. And I sat down with my head of ops. said, how could we have caught this before closing?

And he says, you really couldn’t. Because we did all of our check boxes. And this last situation that has happened was a manual type of input, which you’re not going to know until you’re in

Michelle Tack (11:48)
Almost. Yep.

Chris Salerno (11:53)
the system and you’re going day by day to check on it and then looking at the payments and cross referencing and things like that. And normally during your due diligence, those are things that you really don’t ask for. We still ask for them now and we require them now. But we’ve learned a very valuable lesson that way because now we have to go through this whole process which can take a year to two years going through. So we’ll see the outcome of it. But it happens tremendously and it doesn’t also just happen to

Companies like ours, but I mean look at JP Morgan it happened to them. They made a hundred and forty four million dollar purchase realized after purchasing it that all of the majority of the subscribers were fake and in were manually inputted and now had went back and went through litigation so you know it happens to even your bank in the world

Michelle Tack (12:26)
Right.

It happened.

It does. And we talked earlier about your diversification to mitigate risk. Can you talk about because it’s directly related to that, right? Can you talk to that a little bit?

Chris Salerno (12:55)
Yes and

that’s super important I’m glad you bring that up and I always use the analogy of Babe Ruth everyone knows who Babe Ruth was they always say the best hitters there was well he hit 714 home runs but he struck out almost 1550 so 1550 times he had an at bat average that he would strike out at 54 %

Michelle Tack (13:05)
Yep

Chris Salerno (13:20)
So he was roughly 54 % that he was going to strike out. And so when we do our and then put our investment opportunities together ⁓ that are only open for accredited investors, we want diversification within those investment opportunities. So for example, our fund number three, which is a $50 million equity fund, we’ve identified 20 to 25 sites in that fund. So if one site is having trouble, we hope that all the other 20 to

Michelle Tack (13:44)
Mm-hmm.

Chris Salerno (13:49)
⁓ 25 sites, 24 sites are operating and doing well. And that is why we diversify, is that we know buying businesses, buying real estate, you’re always going to have that one or two sites that are going to be a pain in your rear end, going to need more time throughout the week that you want to give it, but you need to give it. that is why we have all of these into a fund, so it diversifies the risk of all of our investors, ourselves, because we invest alongside of…

our investors as well when it comes to ⁓ identifying investment opportunities.

Michelle Tack (15:04)
That’s really smart. ⁓ Can you speak to your network? Folks are always interested in, obviously not the name of who your network is, et cetera, but just conceptually how the network is helping you, how you’ve grown it over the years, et cetera.

Chris Salerno (15:19)
Yeah, so our network ⁓

built over seven, eight years of strong relationships prior to me even founding QC Capital and it has evolved substantially from Ultra High Net Worth. It’s evolved into RIA, CPA firms, hedge funds, broker dealers, ⁓ and we still have the Ultra High Net Worth retail channel as well of doctors and lawyers and tech professionals. And so it’s definitely involved.

This

year with us getting acceptance in Q1 on the trial swab, we’ve seen a lot more attention coming to us from the RIA more institutional route, which is great because we’re able to offer a very unique type of investment alternatives to those individuals and their clients. But we are still will always keep the retail route open because that’s where we were founded off of. built, I built a company off of retail investors and we always want to give them an opportunity to compete with your big dogs like

Michelle Tack (15:58)
Mm-hmm.

Yep.

Chris Salerno (16:19)
Warburg and KKR and that’s what we’re doing here at QC.

Michelle Tack (16:22)
That’s very admirable. Speaking of that, can you share a little bit more, if you’d like to, ⁓ some minimum, if someone’s listening today and they have some funds they want to invest in, maybe the level of commitment or where they should start if they were interested in contacting you, what type of investments are we looking at? I know you’ve got institutionals that are very large and then you’ve got some others and we’re not here to scare anybody off.

Chris Salerno (16:30)
Sure.

Michelle Tack (16:52)
just to be plain about it, know, in terms of, you where do you start in terms of an investment?

Chris Salerno (16:58)
Yeah, again all of our investment opportunities are for credited investors and we built the foundation off retail So we’ll keep that especially moving forward our minimum investment for our funds are is a hundred thousand and you can use your ⁓ 401k IRA if you ⁓ have any capital with Charles swap you can also use your Charles swap custodian account or directly a ch and so that’s our minimum investment for all of our opportunities here at QC capital and you’re able to also

diversify with that. So if you want, which we would be willing to accommodate, and we have 50 in Car wash, 50 in the flex fund, but overall that minimum threshold is $100,000, we can do that. The best way to get a hold of myself personally is go to our website and fill out our form. It’s www.qccapital C-A-P-I-T-A-L, group, g-r-o-u-p .com. That is the best way to get a hold of me.

is just go to our website, fill out that form on the homepage there, and then we’ll reach out to you to see if it may be a good partnership.

Michelle Tack (18:05)
Thank you, Chris. You’ve been awesome. The content has been great. You’re getting great returns. I wish you the best of luck in the future. Again, for those that are part of our subscription service, we hope you got value out of the content today. And for those who have not subscribed as of yet and you found value as well, please do. Chris, continue good luck in the future. Thanks for your attendance.

Chris Salerno (18:23)
Thank you so much for having

me.