Advise on Buying an old Coin Laundry

[ChrisNguyen]

I am new to this business, and I am looking at purchasing a small (1500 sq ft.) existing mat. Can any of you give me some advice if the following is worth the investment? I will probably finance 50% of the purchase. Asking price is 220K

Grosses 100K and nets 45K. 3.5 year left on lease, 2 x 5 years option, with 3% increases per year, $1500/Month gross lease with No NNN, in a very crowded apartment. 60 Speed Queen washer and Dryer less than 2.5 years old in addition of 7 years old Speed Queen dryer

Utilities = $18,600/Year for 100K gross (most of everyone says utilities = 25% gross, then is it questionable in this case?

Note: Only 75 cent for Regular Wash & 75 cent for Reg Dry.

Thanks in advance for all the forthcoming advice

[SecretarytoBraveDave]

Have you verified the income and expenses? The net profit sounds awfully high for a low gross store. 220K sale price sounds pretty high as well, need more details......What washer size and vend price, attended? Ancilliary services? how much self serve/how much wdf? Hours of operation?

[ChrisNguyen]

The contract allow 2 weeks for income observation by counting the money with the owner and I did not verified the expense.

2 50# washer, 2 40# washer, 7 big dryers, 30 top load washer, 13 double dryer (=24). All Speed Queen less than 3 year old except 7 big dryers (more than 7 years old.

This is unattended mat. No wdf. 100% sefl server.

75 cent / 1 load - $2.5 for 40# washer and $3 for 50#

Operation from 7:00 am - 9:00 pm

Is $18,600 utilities / 100K gross is out of norm?

Also, I am living in Orange County, California. Where a 1500 sqf home, 3 bed, 1.5 bath, 50 years old, average price is $400,000. Will this factor effect anything in the Mat selling price?

Thanks so much for helping.

[SecretarytoBraveDave]

You need to verify the income to what his is stating he is doing prior to any onsight counting of sales, and you scertainly do not want him to know when you will be conducting your count. He could load the money boxes?? You need to know how many washers at what vend price so you can calculate the tpd he is doing, or says he is doing, then you can calculate the approximate amount of necessary expenses on your own.
Have you sat in the mat? 30 top loads are water hogs and in todays mats are becoming obsolete. Who are the customers in this area and what is the competition like?

[SecretarytoBraveDave]

IS the are saturated with mats? These prices are ridiculous

[ChrisNguyen]

I agree with you on the house price and we keep saying the price is a buble and it will burst. But it keep going up on average of 18% / year.

Most of the clients are Mexican living in a mass dense apartments next to the mats, there are 3 other competitor in each block away from the mat.

Please let me know if $18,600 Utilities / 100K gross is questionable or not? Most of everyone said utilities should be 25% of Gross, is it correct?