Acquisition for newbie

[MACH5]

Hi everyone, I'm glad that I found this forum I hope to learn a lot.

I'm currently considering a purchase of a laundromat in my area, which in the north shore of Long Island in Nassau county, NY. Does anyone here have comments/advise on the relationship between the following annual utility bills and the annual revenue for this area?

Electric: $4,900.
Water / Sewer: $7,560.
Gas: $13,200.

Claimed annual revenue: $184,000. (coin-op: 104k, drop-off: 62.4k, dry clean (outsourced) 3k, vend snacks: 4.2k and counter sales of 10.4k.

Claimed Net: $92,590. although the current owners have only family as employees. The payroll needs to be more like $44,000. including payroll taxes/burden of (8%?) as opposed to the $30,000. that they're showing as an expense. I'm assuming that I can get people to work for $7. / hour. Therefore the net is more like $78,557.

There asking 250k with 125k down.
I think that if the above is true 200k w/ 100k down is fair.

ANY COMMENTS WOULD BE GREATLY APPRECIATED.

[ipcass]

Hi Mach5,

On a quick look note your utilities add up to $25k and the industry avg ratio of utilities to Gross Sales is 20-25%. With your gross sales near $184k your utilities would have to be in the neighbor of $46k/yr at 25% ($184k x .25 = 46K).

The numbers your looking at express 13% utility cost which sounds like magic to me.

just my .02....

IP

[MACH5]

I really appreciate the response, where are you from? Maybe the area makes a difference, I will post all of the assets when I get a list, and I think there are 25 wash/dry units. It's a small space in a good location the rent is cheap, for LI. I would be surprised if these people are inflating the numbers that much, any experienced accountant will catch that, plus any contract will have a 2-week trial basis.

Here is the whole list of expenses:

Electric $4,900
Water / Sewer $7,560
Gas $13,200
Insurance $1,870
Telephone $780
Cable TV $324
Newspapers $300
Payroll $30,000
Rent $21,600
Garbage $880
Misc $10,000

Total $91,414

[MACH5]

Wow,

I just noticed how many people view threads but don't reply! Come on guys aren't we here to help each other?

Thanks again for the response Ipcass.

[Duane]

Mach,

I am with IP on this, the numbers don't add up. You need to do your due diligence and calculate what the mat is actually doing. Only believe what you discover from your own research.

How about these expenses:

Building maintenance
Cleaning supplies
Vending inventory
Machine maintenance
Workman's comp
Book keeping
And a whole bunch of little things each month....


Send me an e-mail and I can forward you some info to help with your research.

Duane


www.LMARIES.com (http://www.LMARIES.com)

[MACH5]

Duane,

Thanks a lot, any formulas or other means of
calculating revenues/profits would be highly
appreciated.

-Mach5

I sent you an email at Info@LMARIES.com from mine

[MACH5]

Duane,

I just saw your store on the web including the in store video; wow that is one hell of an operation! That is literally the nicest looking laundromat I have ever seen.

[ipcass]

Mach5,

It sounds like your experiencing the same things I am. Sellers are lying and "cooking the books" with their words and meaningless information sheets.

Maybe we must get serious and "make an offer" with money in escrow before we will get anything that is useful. It just seems pointless to keep jumping through hoops by opening escrows, talking to them on the phone, and driving by and visiting for an hour or two.

I'll keep looking with patience until.

IP

[Duane]

Mach5,

Thanks...

IP,

Patience and due diligence will save you a lot money.

[petefritz]

good mats are hard to find. Many factors can influence the value to YOU. I do not agree with the dead set utility ratio here only because of the huge amount of w/d/f going on. A true coin only store would probably run a 20%-25% utility, for an average. Here you are looking at a coin store PLUS a big w/d/f which skews the whole figure. Reconvert the w/d/f into coin rev and the utility is about right. Factors to consider, lease length, age of equipment, probability of the store continuing to make that same kind of money for the duration of your cash flow/purchase price ratio and then some, proximity to your home, your time to run the store.
Good luck.