What do you think of this deal?

[rzele]

I am new to this and I'm visiting the facility tomorrow. I apologize for the length of this post but I wanted to provide all the details. Here are the financials that I have thus far. I am in the preliminary stage with this right now. What do you think of this deal?

Price: $725,000

Lease: May, 2001 10-year term with 2 five-year options
$7150.27 Rent including CAM

Gross Sales 2003: $314,327.37

Number of Machines:
98 Washers
28-18 lbs.
38-30 lbs.
26-40 lbs.
6-50 lbs.

84 Dryers
72 Stack
12-50 lbs.

Machines are still under a 5-year warranty. Approx. 3 years left I think.

Financial Details 12 months ending 2003

Revenue

Washer Income $180,627.13
Dry Income $ 73,539.35
Product Sold $ 11,867.86
Wash & Fold $ 12,189.83
Vending Machines $ 10,047.12
Phone Cards $ 3,630.55
Soda & Candy $ 11,801.63
Misc. Cleaning $ 19,308.02
Refund/Promotions $ -8,684.12
Total Revenue $314,327.37

Cost of Sales

Supplies $ 18,945.12
Cost of Dry Cleaning $ 5,142.94
Total Cost of Sales $ 24,088.06

Gross Profit $290,239.31

Expenses

Advertising $ 149.63
Bank Charges $ 608.29
Credit Card Expenses $ 516.35
Dues and Subscriptions $ 214.00
Insurance $ 13,407.27
License & Fees $ 2,332.34
Maintenance $ 1,176.54
Office Supplies $ 3,383.16
Rent $ 83,084.98
Repairs $ 00.00 Under 5 year warranty
Telephone $ 3,118.82
Utilities $ 38,837.58
Total Expenses $146,828.96

Net Income $143,410.35

I do notice that the rent of $7150.27 adds up to more than they included on the detailed expenses. It should be $85,803.24. I don't see any payroll listed and I believe there should be some.

Is there anything that is missing from here or do you see any red flags? Are there any specific questions I should be asking based on what is here?

How do you utilize utility bills to verify income?

Thank you in advance!!

[millenniumplus]

Looks like you have a lot of good data and are asking questions (eg: payroll).What is meant by
"misc cleanng revenue"? Verify the warranty is five vs three years. Do you have video security
system? Do you have a security company, if so is there an expense involved? Couldn't hurt to
see the last several years of revenue and expense. With a laundromat this size you have the
capability to accomadate WDF two or three fold no problem. Someone else can answer your
question about how to verify washer/dryer income based on utility bills. As always, factor in
your loan with the expenses. Good luck and keep us posted.

[petefritz]

I guess it depends on the area. Here you could buy about 9- 10 stores that made 25k ea a year for that kind of money. No big huge stores. It looks like someone went a a seminar, dumped a million into a mat and found out they are only going to get about a 12% return ( Figure at least another 30k a year for payroll, and yes, there are repairs no matter how new the machines are). So the question is , for around $110k a year cash flow, what are you willing to pay? The rent will keep going up, and the reveune will be level, so it is possisble the cash flow will decrease over time. 7x current may not be a bad deal, if you think no other mats will get built nearby and this one has complete control over its' market. Most look to buy mats 3-5 times cash flow, but some demand more becuase of specific location qualites, other get sold for much less becuase of the same factors.

[rzele]

Well I decided to pass on this deal. The actual numbers were really bad. I've found another that I am looking at on Saturday. I don't have the detailed financials yet but in general they are asking $230,000 with it grossing $124,050 and netting $84,000. That's so much better than the last one I looked at if this is the case. I'll know more after the meeting on Saturday. This one is more automated than the other on in that it doesn't have the wash and fold service and dry cleaning thus there is less expenses for employees.

Any suggestions would be most appreciated.

Thank you,

Renee

[mrcoinop]

Your gross number and net seems out to lunch I think you are are missing alot of expenses. get utillity statements. lease or rent very costly. equipment is it old or new. Boiler or water heater how old they are very costly

[rzele]

Thank you for your input. I agree with you. I am going to get the utility bills. The detailed expenses have not been given to me yet. That will tell me a lot more than the general information I have right now.

One item I need to look at is that the owner of the laundry now also owns the strip mall where it's located. He may not be paying himself rent and thus that's an expense that has not been taken out. I believe he will be asking $1,000 to $1,200 per month for leasing the space. I will post the details of the financials once I get them.

Thanks again!!

[Oliver]

rzele

How or where are you finding leads on these mats for sale?
Any help or ideas would be appreciated.

Thanks

Oliver

[rzele]

I find them on the internet or advertised in the newspaper. Some are through real estate agents or brokers. I know that most of the people on here say not to use a broker but rather go around and ask owners if they want to sell. I may do that later but going to the mats and reviewing the financials is a good education.