Overview
Building a car wash on leased land can be financeable, but lenders focus heavily on the ground lease. Because the lender is funding improvements on land the borrower does not own, the lease must protect the lender’s collateral and provide long-term stability.
Why ground lease terms matter so much
The lease determines whether the project has enough remaining term to support construction, ramp-up, and loan repayment. Lenders want confidence the borrower will not lose site control before the loan is repaid.
Lease provisions lenders typically review
- Lease term and extension options that exceed the loan term
- Lender protections such as notice and cure rights
- Assignment and sublease rights so the lender can transfer control if needed
- Permitted use clearly allowing car wash operations
- Purchase option if available, which can improve lender comfort
How loan structure can differ on leased land
Some lenders are more conservative on leverage for leased land projects. They may require additional equity, reserves, or stronger sponsor liquidity to offset ground lease risk.
Construction and ramp-up planning
Leased land projects still require the same budget, schedule, and contingency planning as fee-simple projects. Lenders also want clarity on who owns improvements at lease end and how that affects collateral.
Bottom line
Financing a car wash on leased land is most successful when the ground lease is long-term, lender-friendly, and clearly supports the lender’s collateral rights.