purchase contracts

[phantom]

i'm in the process of buying an existing mat, and was curious as to what specifics i should look for in the contract . the owner seems to be in an awful rush , and is'nt taking any deposits (because of the low amount of money involved) therefore he's treating it as a first come, first serve basis. whoever pays him first is who gets it. he's getting out because he claims he's losing money there , because he can't be there to properly run the store. he took it over 7 months ago, and fanagled an unbeleivable lease out of the landlord. i think he wants to take a quick profit and run. the selling point of the mat is its lease. he claims to own 4 other mats and simply has no time for this one. he tells me he has a strong byer who wants to close right away, but i dont know if he's bluffing. his intentions and info seem to be right on the money. he seems to be up front about everything. but what to do? i'm kinda stumped . should i jump on it, or is this a scam? i'd hate to see a good thing get away, yet i'd hate to throw money away. although the amount is minimal. any advice?

[SecretarytoBraveDave]

Hello??? Lets start at the beginning. The current owner is selling after 7 mos and is currently losing money. You think he wants a quick sell to turn a profit, or may it be a quick sell to reduce his losses? Unfortunatley in this business so many people lose, because of the fact they do not understand the business, nor the criteria needed to be profitable. Never, never make a deal when you do not understand all the variables. If he is losing money, the reason is so much more than the lease agreement. What are you looking at? Whats the deal?

[phantom]

first of all, thank you for your reply. much appreciated. now, the current owner buys run down laundromats and fixes them up and sells them. i can only assume hes doing the same here. he likes to own the building , so if he cant get the owner to sell , he dumps them. he claims the mat will support itself, but is capable of more. his time spent running other businesses keeps him from doing any more to this particular one. if you can believe that. the place is small, (10 washers 10 dryers, but room for more. but the rent is low and the lease is long. it looks like it has potential. no other mats around either. im currently looking into theres any permits being filed for a new place being opened up in the area

[SecretarytoBraveDave]

10 Washers and 10 dryers? Vend Price? Rent? Not much income potential. You need to be much more specific if you are looking for answers. Whats the rent? Demos? Whos the customers? Same question, whats the deal?

[phantom]

don't understand what you mean by what's the deal? i know the money making opportunity won't be much, but i was thinking it would be a good way to get my feet wet without much risk. the rent is $600 mo. for 16 yrs. the washers are 6 yrs old, the dryers are 10 yrs old. the customer base is mostly walk in. its a neighborhood place where people just come from walking distance. there are housing projects down the street. the neighborhood is perfect. the purchase price is $4o,ooo. vend prices i dont have on hand , but ihave written them down

[SecretarytoBraveDave]

The deal is what your are spitting out slowly...:) The deal might be interesting iif there is traffic, and potential as well as the info that a new laudry isn't coming in.

Get the vend prices and we can get a better idea of what is what.

[phantom]

im sorry if im being a little slow at explaining , but i really didnt expect such a quick response. so again i thank you for your time. if i'm correct i think the vend prices are as follows: single loaders $1.25 , doubles 2.50 , triples i really dont remember. nor do i remember the dryer vend prices. but just for curiosity, what's the importance of the vend prices in this situation?

[SecretarytoBraveDave]

As I said there is a lot of variables that makes for a profitable mat biz. Most profitalbe mats aren't for sale, and most with potential with the location will utiize that issue. An owner stating they do not have time to promote the business and utilize the potential is full of $@#$#@ in my opininion. It is all about the return on investment. The vend prices, per machine size and amount of the machines per size will alow you to determine the income potential based on tpd. This will give you us a good start of whether it is potential or not. What do you see the your return on 40k to be? 10 washers 10 dryers? What are you purchasing?

[phantom]

i agree with you , i do think this guy is full of !#@! too. i just needed someone else to say it before i walked away. i know the return may not be much, but wouldnt i be better off learning the biz on a smaller investment then risking 1oo-2oo grand? then blow it all on inexperience?

[SecretarytoBraveDave]

What are you considering to buy for 40K? What do you see your return to be?

[phantom]

well, basically i really thought it would be a good learning experiance for me at minimal cost . if i made a few bucks in the process its a plus. then move on to bigger and better. as for a number . i really dont know what to expect

[SecretarytoBraveDave]

I'll teach you all you need to know for 40K.....won't do it because you truly want more than a learning experience. Before you jump, you need the pre education, prior to any purchase. ANy buyer in a hurry is one to avoid. Kool your jets and learn more of the business, and more of the sale and its potential. After that you can jump. Baby steps now.

[phantom]

words of wisdom. and i will keep you posted on the situation as it unfolds. i thank you.

[petefritz]

I use an intent to purchase contract spell out everything works, the seller is not lieing, and other considerations. You give yourself time to check everything out, then go to closing.
Will you make any money? A store for 40k will not put your kid thru collage, but should give you some spending money.
Don't worry about if HE is making money on the deal, worry about what you can make. If it is really loosing money, than it is only worth the equipment value.

[phantom]

the way i see it , i know its not going to make me rich, but i do think it has potential. whatever his reasons for selling, would you think its worth looking into? it caught my attention because of the lease and rent. i figured even if the guy was full of it , i could get some good experience out of it.i mean ,ive staked out the placew every chance i've gotten ,and it seems to keep reasonably busy. i've even talked to customers as to how the business does on weekends, what needs to be improved , what they'd like to see in the future, etc. and apparently , the owner cleaned the place up quite a bit since he's been there, according to one customer.

[SecretarytoBraveDave]

Did you find out the specifics of this deal? Type of washer and vend price, rent and payroll? You do not want to lose money like the current owner, youv'e got to be patient and determine the worth of the mat. Tell us what the equipment mix is, vend price per machine and current monthly gross income. What is the rent, payroll and potential remodel costs are.

[MrsNewMat]

Phantom,

I am in exactly same boat as you were. I have the same intentions of learning the biz at low risk. The only diff. I see is that I have quite an expensive lease and am not sure of customer base. The biz has been with current owner and in place for about 10 years.

I would be very interested in finding out if you went ahead with the mat or not. If you did, how your experience has been.

Thanks.