How a Car Wash Turned a Young TikTok Sensation Into a CRE Mentor
23-Year-Old Hannah Ingram Espouses Owner-Financing, Passive Income and Entrepreneurship
At an age at which most people are fumbling around with their first credit card payments, Hannah Ingram was convincing the owners of a car wash to sell her the property on loan, in what would be her first commercial real estate investment and her ticket to establishing credit and capital for her next.
A realtor by day, 22-year-old Ingram knew she had to start investing young, and she did — despite the banks’ indifference.
Principal for the property she bought — directly from the former owners through an “owner-financed” deal — will come due when the two-year balloon loan she signed matures. That proposition might sound scary to less intrepid investors, but Ingram believes that by that time, she’ll be able to refinance with more conventional terms through any bank by using the income she’s collected from operations as a down payment. In the meantime, with a self-service car wash that generates passive income, she’s not required to do much more than go to the site to collect the jackpot.
That doesn’t mean she’s not hustling. She’s not only collected troves of quarters at the facility, but nearly 10 million likes and counting on her TikTok account from followers who hope to learn more about what’s brought her success so far. And she’s happy to share: while she’s not broadcasting the granular details of her loan terms, she offers an online course on investing in passive income real estate assets through the methods that have helped her.
The young entrepreneur sat down to talk to LoopNet recently, and below is a transcript of that conversation, edited for brevity and clarity. But before diving in to hear more of the details on Ingram’s story, get a taste for her style in her native habitat here.
You’re 23 with more than half-a-million followers on TikTok, and some of them even pay you to mentor them on CRE ventures. How did you get started?
Warren Buffett said, “if you don't find a way to make money while you sleep, you will work until you die.”
I was 18 years old when I read that quote, and I thought, “holy crap.” That really hit home.
I knew I had to start investing as soon as I could, and it became a goal of mine to invest in real estate. But I was led to believe I was going to have to save up what was a ton of money to me — you know, $50,000 at least — and have a perfect credit score.
Well, when you're 18, you don't really have that. I had started working at a fast-food restaurant when I was 16, but it’s not like I had saved up a ton of money to go out there and start investing.
I also got my real estate license when I was 18. I quickly learned that a lot of lenders and banks are looking for credit history if they are going to supply you with a loan, especially a commercial real estate loan, and that they usually require at least 20% or 25% down.
All these influencers and gurus out there will tell you to invest in real estate, and they'll tell you how to invest in real estate. But no one tells you where to get the money to do that or how to quickly establish credit history so that you can get started sooner.
So, I knew I had to find a shortcut, or a way around those things. Owner-financing has been around forever — you can really “owner-finance” anything, and I just started thinking about how to apply it to the commercial space. It kind of gives people the opportunity to invest without the credit and without the money [for a down payment].
But what about businesses that are passive income assets that allow me to make money in my sleep? Self-serve car washes, laundromats and self-storage facilities — those are really the big three that are considered boring businesses that no one really thinks have all this potential behind them to make money. I found this car wash, which is about 10 minutes from where I live [in a small town outside of Knoxville, Tennessee], and I was like, “I've got to find a way to do this.”
Owner financing was a way that I could skip getting my credit pulled and I didn't need 40 years of credit history and a perfect 800 score to start bringing in passive income from real estate. I approached the owners and said “hey, are you willing to finance this for me for two years?”
And they agreed to do it.
Now people ask, “how did you buy a car wash so young?” Well, it was with the creative financing methods that I just started applying to these types of commercial businesses. That’s kind of my story from A to Z: owner financing.
Tell me a bit about what attracted you to this property as your first commercial real estate purchase, and how the owner-financed deal went down.
I just started trying to get in contact with the owners. I didn't see a realtor's name or anything, but next thing I know, it's listed on the market. So it did make it on to the market, but I actually found it while it was off the market.
The owners and I met, and I took a tour of the place, and everything looked good. But you know, my main thing was that I wanted to see the numbers of what they had made in the past few years and make sure I wasn’t buying something that was losing $20,000 a year.
With [the seasons] in Tennessee, obviously a car wash will do better in the summer than it does in the winter, so I crunched the numbers and made sure it was still profitable in those winter months. No doubt, January and February were the slowest — but it was still coming in in the green. And the owners also said they actually made more during [the height of the pandemic in 2020] than they did before.
But I saw a lot of things that I could do better, like non-necessary expenses that I could cut so that it would earn even more money.
As for the purchase price, I felt like I got a pretty sweet deal. Of course, we didn't have an appraiser in this case, but I do feel if I put a for-sale sign on it today, I could get more than I bought it for.
So based on the sale price, they were willing to sell me the property with a two-year balloon loan to finance it. I probably wouldn't do a balloon loan for less than two years, but two years or more should show lenders solid credit history and work history. By the time the balloon loan comes due, money from the car wash will have generate enough for the down payment needed for a commercial loan, and I can look to get financing on it with my bank.
Whether the owners want to finance the asset until it's paid off or they want to do it for two years, either way, it’s great for me. When you put that property in your name, [depending on the loan terms], in a few years, you could have $20,000 of equity that you can use for a down payment on a laundromat or a storage facility or another car wash. It sets you up for future purchases: that first deal is going to make your second, third, fourth or fifth deal so much easier.
What was the seller’s motivation? What do they get out of the deal?
They were cool with owner financing because they wanted the property off their hands. One of them was getting married soon, and the other one had just taken a new job 45 minutes away, so they just didn't want it anymore. They wanted it off their hands as quickly as possible, and owner financing allowed us to do that. We didn't have to go through some brutal 45- or 60-day-plus closing period.
The turnaround time was very quick; I got the keys fast.
It was just me, the sellers and the lawyer who wrote up a contract for deed for us. We didn't have any major realtor fees or title company fees or lending fees in the transaction, which was very nice because neither side wanted to bring thousands of dollars to the table to pay all these people who would have their hands in this transaction.
Owner financing also cut down on the amount of capital gains tax they're going to have to pay because I'm going to drastically cut down that purchase price once we go to [refinance or re-sell] in two years when that balloon matures. So that will save them a lot of money as well.
Did you know anything about the business of running a self-serve car wash facility? What are some of the challenges and how do you navigate them?
I didn't know a thing about it. I was a bit nervous that first night I went there, I thought “wow, this place is all mine.” After a couple of weeks, it became second nature. Things that needed to be repaired can mostly be handled with a bit of common sense.
I’ve had my car wash mechanic out there twice. The first time was the day after I bought it, for him to give me a rundown of the place and tell me what preventative maintenance I needed to do. I asked what I needed to regularly check just to make sure that I can prevent any big catastrophes from happening. He showed me how everything worked, and that was pretty much it.
The vacuum might get clogged or the quarter machine may get jammed. If a hose needs to be replaced, you just unscrew it and screw on a new one.
How did you decrease costs to make the business more profitable?
It’s those little things.
That example with the hoses — the nozzles around the hoses were leaking and I was losing money on water. I found replacement nozzles on a car wash [e-commerce site] for around $2 each, and I replaced them. I made those investments for the long-term.
Also, the previous owners had been ordering soap from a vendor who was charging an extreme amount and my car wash mechanic said that the soap quality wasn’t even that great. And so, I ended up getting better soap quality for a lower price by ordering it from this website that I now get all my chemicals from.
They had also been paying their car wash mechanic to mix their chemicals for them. I simply looked up a YouTube video that showed me how to read ratios on the chemicals and now I mix them myself. It takes me 20 minutes and I don't have to pay the mechanic to come and do that, which is really an unnecessary expense.
They were also spending hundreds of dollars on a radio ad. I'm just not a fan of radio advertising. I'd much rather throw that toward some Facebook ads or something more targeted that can make the most of my money.
And they were giving out some major, over-the-top donations, which is super great. I still want to give back to my community, but for my first year in business, I definitely cut that back a lot.
It sounds like there are some hands-on elements to running the business. Is it still passive income? And on that note, how do you handle taxes?
The Wikipedia definition of passive income [which is similar to the IRS definition, but a bit more straightforward] is “income that requires minimum to no effort to earn and maintain.”
I'm at my car wash no more than two-and-a-half hours a week. Yes, I'll have to go there tonight and spend 20 minutes taking the trash out and refilling the coin machine. But I'm a realtor by day, so I'm out here selling real estate and that's my earned income. But while I'm doing that, the car wash is making me passive income. There are at least three or four [customers] at the car wash right now, and I'm not physically having to be there to earn that money.
As far as taxes go, [the income from the car wash business is considered passive income]. I've got so much stuff going on and I've bought so many streams of income now, that I basically hand all of that over to my accountant. I pay city and county taxes and all that good stuff. But here in Tennessee, we don't have income tax. It’s a cash and coin business, and I have to report to the government what I made at the end of the year, but at the same time I keep all my receipts, and a lot of my expenses — soaps and stuff like that — I can write off as tax deductions.
There's a great book called Tax Free Wealth for those who are like me, who don’t have an accountant bone in their body.
So what’s next? What are other real estate plays you’re interested in? And how’s your course on real estate investment going?
My next real estate project, which I’m actively working on right now, is to build some self-storage units on the land next to the car wash. It’s in a great location, a nice little commercial lot zoned R-2, and right now I just have to get someone to mow the grass there every month. Building costs are through the roof right now, and I’ve got to get it leveled out a bit, but that’s what I’m working on a little at a time, so that I’ll be making the most of the land by having the car wash on one side and storage units on the other. They’ll be two separate businesses, but both are still passive income-producing properties.
I’ll have to meet the setback and other county requirements, but I've actually already spoken with the codes enforcer, and he didn’t see a problem with it. So, I'm in the early stages of it, but by this time next year, I hope to have it almost completed.
The average millionaire has an average of seven streams of passive income. I have four right now, and by the time I'm 25, I would like to have at least seven.
So that’s kind of how I started the course. People on social media were asking me how I got started so young with no money and no credit, so I decided to explain a bit of my process and the concepts of owner financing on YouTube, and I got nothing but positive responses, so that’s where I got the idea to package it up into a course.
I launched it in July [around two months before the time of the interview], and I already have four students who are either about to close on their first property or who have already closed, and of this was done through owner financing. Those are pretty decent results considering how long it may take someone to find the deal, negotiate the deal and then close, right?
I also recently launched software I created to help not only passive income property owners, but all small business owners.
That’s kind of my story, but I'm really just getting started. I’m planning on building an empire over the next few years, no doubt.