Was it a right price?

[MrsNewMat]

Sorry for the long post!!! Thanks in advance!!!!

I am in the process of buying a laundromat. The owner has accepted my offer but then, I bumped into this great resouruce (CLA) where people are so helpful in answering qestions.

Was <font color="red"> $45K </font color> the right price to pay? Here are the Major numbers:

No WDF
Payroll - $10,400.00
Rent - $15,600.00
Insurance - $1,000.00
Property Tax - $500.00
Utilities - $15,400
Soap - $1,925.00

Total Expenses - $46K (Total including what's listed above)
Seller Cash Flow - $18K

<font color="blue"> Equipment: 14 front-load (5 yrs. old), 16 Dryers (age unknown) 3 yr. Lease remaining</font color>

[SecretarytoBraveDave]

Many expenses are not listed and the fact there is only 3yrs left on the lease leaves alot to be desired at this point. You have not stated the income or vend prices. 14 machines will have to turn many times to generate the 85-100K in revenue you will require to meet your expenses and give you a decent return.

[MrsNewMat]

Thank you very much for the reply!!!!!!!!!!!

Other expenses (ad, office supply, postage, etc.) are too small and according to the owner, the total expenses come to $46k. What other "major" expenses should I know about?

The owner does his own repairing of the machines, which I will not be doing when and if I buy it because I am not a handy person.

/ubbthreads/images/graemlins/smile.gif I am asking for a longer lease otherwise there is no deal.

Sorry for not listing this key info. -- Net Sales for 2003 were about $55K.

The 14 Maytag 14PD vend at 1.50 and 16 dryers run 10 min. for 25 cents. Also, there are four triple load IPSO machines that vend at $3.00.

How should Boiler's age affect the purchase price?

[SecretarytoBraveDave]

Utilities seem too low as does the insurance costs. I do not see repairs, nor telephone expense, cable? advertising? COS....... what is the stated gross income? Did you verify the amount?

[Kari]

One other cost that you want to figure in is your start up coins/cash. You have to make sure your coin changes are full before you open your doors. The amount could vary depending on the size of your changers and how many you have. If you are running a WDF serivce you need to make sure you have money to put in your register.

There are also the gas, electricity and water depostis. My gas deposit was $3,500 my water was about $1,500. The electric was a very small fee.

I agree with a few others here that the insurance is very low. You might want to call the company that the owner has insurance with and see if they still insure laundromats and make sure the costs did not go up. This happened to us. The previous owner had great rates (still higher then the one you posted) but when we went to get the insurance they said they no longer insured laundromats. So we had to shop around and ended up paying 60% higher insurance rates than he did.

Good luck!!!

[MrsNewMat]

Thanks - SecretarytoBraveDave

Telephone - $ 550
Ad - $140
No TV - No Cable

The owner has preety much suck the life out of the business. The biz is unattended.

The stated gross income is $64K (Avg. of last 3 yrs.) I have not yet verified the amount yet. I have demanded the utility bills and all but even then, I am not sure what he is going to share. As many posts on CLA suggests, tax forms cannot be all that reliable.

[MrsNewMat]

Thanks Kari !!!

You gave the insight that I did not even know of.

[petefritz]

45k is not a bad deal, but there are more factors to look at. The distance from your house would be a big one, you will be going over there frequently on a phone call over problems. You will also have to learn how to fix stuff, it is not that hard for the minor repairs. You may have to go unattended, I am assuming no drop off, or if there is drop off, increasing that side of the business. I would also assume you plan on working, taking over some of the attendants' shifts to be able to put more cash in your pocket. It takes about the same amount of time to run a mat that does 100k a year as it takes to run one doing 50k a year. The smaller volume means you have to use your time wisley to make it worth it. The rent is somewhat high, is there truley a possibilty for more revenue? Ie, the place needs a facelift? Realize what you are buying is what you will get, no amount of advertising will boost many mats reveunes. It is normally a remodel or retro fit of machines that increase business.